The debate over daily fantasy sports was front and center Tuesday at the Global Gaming Expo.
Jason Robins, the CEO of DraftKings, one of the largest daily fantasy sports websites, took part in a panel discussion on whether or not fantasy sports is a form of gambling. The interest was so large that the G2E breakout session took place in the main conference ballroom at the Sands Expo and Convention Center, rather than one of the smaller meeting rooms.
At the outset, Robins said daily fantasy sports was a game of skill, similar to chess or playing the stock market. He said the players attracted to Boston-based DraftKings were predominately millennial men ages 21 to 35, who are analytical and favor data and research. He said under 15 percent of his customers have placed a sports wager in a Nevada sports book or with an off-shore sports wagering website.
"They do their homework," Robins said. "It's like the stock market. They enjoy looking at something and trying to figure out something that someone else doesn't see."
The number of states exploring the legalities surrounding the booming daily fantasy sports business is growing as fast as the business. Massachusetts and California have joined Nevada in taking a potential stand on the business that has inundated the television airwaves with advertisements and sparked possible hearings in Congress.
In a research report last week, Eilers Research gaming analyst Adam Krejcik estimated daily fantasy sports entry fees will hit $3.7 billion this year and $17.7 billion in 2020. Krejcik said DraftKings overtook FanDuel and collected more than $10.9 million in revenue in the first two weeks of the NFL season. Fan Duel took in $9.6 million.
The combined $110 million in weekly entry fees by all fantasy sports operators in the first two weeks compares to an estimated $90 million bet on NFL and NCAA games In Nevada, Krejcik said.
Krejcik estimated DraftKings has spent $224 million in marketing this year, making customer acquisition costs $190 per user. FanDuel has spent $97 million, or $110 per user.
Robins was the speaker the audience came to see. He was featured with Jeff Burge, the chief financial officer of sports book operator CG Technology and Chris Sheffield, the managing director of interactive for Penn National Gaming. Moderator Tom Roche of Ernst & Young and a former member of the Nevada Gaming Control Board, said at the outset the gaming industry is often resistant to change or a competitive threat.
Before the session, he spoke briefly with American Gaming Association CEO Geoff Freeman, but he didn't stay around for follow-up questions from reporters. A spokeswoman for DraftKings said Robins had "other meetings."
He outlined many of the safeguards in DraftKings, such as placing customer funds in separate banking accounts for company operating funds, and creating games for players with different levels of skill. Robins said players can randomly block other players from competing against them.
"It's important for us to retain customers and create a fun experience," Robins said. However, he never addressed any responsible gaming program offered by DraftKings.
Burge said CG has an "extensive responsible gaming program."
Robins said he sees "a huge synergy with the gaming industry," but said many of the previously relationships he's forged are now "at an arms length." Several casino and sports book operators have labeled daily fantasy sports as gambling.
In comments during a press briefing, Freeman said daily fantasy sports is an important part of the discussion the AGA is having concerning the legalization of sports wagering. He called daily fantasy sports "a gray area" but the trade organization wants to make it a black or white issue.
"If it's legal, our casinos need to be involved in it," Freeman said. "We're focused on clarity."
Freeman said the casino industry views fantasy sports "not as a threat, but as a partner we hope to work with in the future."
When he spoke with Freeman, Robins said, "We want to help you out any way we can but I hope you respect what we're doing."