Officially today, Draftkings has acquired StarStreet just after about a month since they acquired DraftStreet in their quest to become the top daily fantasy sports site. Just like when they bought out DraftStreet, user’s accounts and funds will be transferred over.
In a Statement letter from Draftkings CEO Jason Robins, he says that this is a part of their “long-term vision of continuing to bring our loyal customers the very best in daily fantasy sports.”
But what does the two acquisitions of Draft and StarStreet mean? I fail to understand how this actually benefits us the players. With all the little guys being bought out, a monopoly is being formed and I don’t see how anyone benefits from it. The rake is one of the highest in the industry and players will be forced to pay it if there aren’t any other outlets to choose from.
I don’t believe that Draftkings is actually gaining new users because I believe if anything, there are a lot more DK users that were unaware of SS than the other way around. I would imagine that about 95% of SS users were fully aware of DK and either played there as well, or opted not to play on that site for personal reasons. In an article with Forbes, FanDuel wasn’t interested in purchasing DraftStreet because they claimed that 75% of DS users were already Fanduel users. So they really wouldn’t gain that many new users to make a purchase like that beneficial.
There was one thing that made SS “sexy” in the DFS world (pun intended), and that was their Playboy Mansion Championships. But Fanduel bought that contract and they, not Draftkings, get to have championships there.
This is disappointing to the most important people in this industry, the players! Acquisitions like this make it possible DK to have five contests this year awarding a million dollars to the winner. The prize pools keep getting bigger and bigger, but to quote Mark Cuban, “pigs get fat and hogs get slaughtered.” In week five of the NFL season DK has their millionaire maker. It’s a $27 entry fee and a million dollars goes to first. The thing is there is a max of 92,400 entrants. Last time I checked, aren’t these odds getting pretty similar to the lottery? I know that some players (like Napsterman) had 100 entries last year in the $200 dollar baseball finals. How many 27 dollar entries will a player like him have? Think of all the combinations of teams someone like that can put together with 1,000 entries. This is a professional’s job, so unlike the most of us who have to work for a living, they have the time for this. I don’t like those odds but I am curious to see if the tournament fills.
Fanduel has already taken advantage of being a top dog in the fantasy world by charging a 25% rake in their championship tournaments. That is insane! They claimed that the rake covered the travel expenses for the players but last time I checked, it didn’t cost over $1,800 to fly two people in coach and stay in a standard room for a weekend in Las Vegas. Not to mention they probably got a great group rate.
The players are paying the price and until we decide that it’s too much, it’s never going to stop. It just pains me to see our options being limited when the big guys keep buying the smaller sites. Eventually they are going to go too big (maybe a 10 million dollar winner) and the companies will take a huge financial hit if they don’t get enough people to play (overlay). When this happens, how do you think they plan on getting their money back? Through the players!
It’s a scary thought.