Daily Fantasy Sports Look to Become Profitable Again

The past 12 months have been a strange time for daily fantasy sports (DFS) sites, as the industry both peaked and hit rock bottom within this same span. But now, after several legal hurdles, leading DFS sites DraftKings and FanDuel are looking to get back to profitability.

FanDuel CEO Nigel Eccles says that his company is facing increased pressure from investors to return to success after a rough year.

“We are not profitable today but we are moving towards profitability, and we are sufficiently funded to get to profitability,” Eccles said.

Both FanDuel and DraftKings went through trials and tribulations last year, most notably when New York Attorney General Eric Schneiderman took them to court. The two sites were also banned in a number of other states.

Based on the heavy advertising revenue and legal fees spent by both companies last year, neither is profitable right now. Nevertheless, FanDuel doubled its revenue in 2015 to $100 million, with a company spokeswoman adding that this is based on a “U.K. filing that only gave half the year’s revenue.”

As CBS News reports, FanDuel, which employs 400 people, is rapidly hiring more workers. As Eccles says, the company still “continues to invest heavily in the product.”

A potential merger has been tossed out as an idea to cover heavy legal costs and lobbying efforts in different states. But Eccles was quick to dismiss this idea, saying that the companies are already sharing these costs with each other and the Fantasy Sports Trade Association.

In order to save money while they’re losing it, DraftKings and FanDuel have cut back on advertising. Last year around this time, both companies’ ads were plastered on every major television network in a total campaign valued at $300 million.

This year, FanDuel has only spent $1.2 million on TV ads, versus $12.7 million in 2015. DraftKings has cut back even further, only spending $3.09 million compared to $32.2 million at the same point last year.

Besides saving money, Eccles says that the public is already aware of FanDuel’s product, negating the need for another huge campaign.

“It’s not about generating awareness anymore,” he explained. “We got that in spades. It’s more about how we position and market the product” on different digital platforms.”

He added that last year’s campaign missed the mark by hitting too many people who weren’t sports fans. Now they’re trying to refine advertising efforts and target their key demographic more.

FanDuel and DraftKings recently settled their situation in New York, meaning they won’t have to exit one of their most-profitable states. And they continue to lobby states to legalize DFS so that they can enter more regulated markets and continue growing as companies.