Future of DFS & Daily Fantasy Grind + THANK YOU!

I think you can sum up the DFS industry (which I guess includes this website) with one word.

Uncertainty.

I wish I could sit here an tell you how confident I am about Daily Fantasy being around when football season begins in 4 months. Bottom line is I’m not sure it will be around. At least in the form we know today. For many of you reading this – or probably not reading anymore because your state has already made playing daily fantasy illegal. One thing I have learned about government after following online poker legalization efforts. To get government to do anything quickly isn’t in their best interest. Instead politicians want to milk your constituents for every last dollar before finally passing a bill when all the donor money finally runs dry.

Not only that, we’ve got the elimination of Daily College Fantasy Football – which to be quite frank, was the backbone of this website. You can write about NFL, MLB, NBA … ect – but there’s hundreds of websites that do that – including SEO giants like ESPN, Yahoo and others. Daily Fantasy Grind was one of only a small handful of sites that covered NCAA Football from a pure daily fantasy perspective. You can imagine the amount of traffic (and revenue) a site can earn when your competition is too busy covering the NFL like every other website.

But it’s not like it came easy. I basically devoted my entire life to college football last season. To the point I was happy the season was over so I could focus on other things in life. I just don’t think the incentive to write about college football will be there this upcoming season, but maybe in 4 months something will change my mind.

I’m blessed I have plenty of other avenues to move into. One reason why I may seem down on the DFS industry – is because I’m one of the only independent analysts in the entire world that correctly telegraphed the demise of MGT Capital  … which bought DraftDay & FanThrowdown in what might be soon referred to as the “glory days” of DFS. I’ve always questioned the business model – even before government regulation. Add that layer of cost – and I KNOW these websites will NOT survive. Not DraftKings, Not FanDuel – NO DFS website will survive if the taxes/fees imposed become standard in every state.

Care to argue with me????

People have been for years.

What most people don’t realize – I’ve been saying the DFS industry has been in trouble since 2014. In fact, during this time – I’m one of the only analysts that had a bearish (bad) outlook on likelihood DFS being sustainable. You see, my real ‘job’ is being a financial analysts. That means (in my case) I’m paid to analyze stocks. It’s been clear to me for a few years now that the DFS industry likely isn’t sustainable.

I’m not 100% certain the daily fantasy sports website business model (as currently constructed) will even be sustainable in a few years, but that remains to be seen. – Nov 2014

daily fantasy sports is a seasonal business. It revolves around football season where all teams play for about 4 months out of the year. Additionally several US states don’t allow you to play at all including: Arizona, Iowa, Louisiana, Montana, Washington and the Canadian province of Quebec. So a thesis that fantasy sports will blow up is not analyzing that the market is already inherently limited to certain geographic locations. – Sep 2014

Below is a response to a private message I got back in April of last year.

DFS

Here’s an update if you’re not already familiar with what happened: MGT Stock now trades at $0.25 and is in violation of several NASDAQ/SEC listing requirements. MGT eventually sold 90% DraftDay (which includes now defunct FanThrowdown) off to two separate companies, one being another public company that changed its ticker symbol to DDAY – which is also in violation of several listing requirements. That company defaulted (didn’t pay) the balance due on the first installment payment … because they are broke. My guess it’s all a (semi) elaborate way for the insiders of all companies to suck more money into their pockets on the backs of investors who don’t personally read financial documents (due diligence). My other guess is the third company involved – Sportech – is in the deal because they will end up with the assets after management at MGT & DDAY finance the purchase by issuing shares (dilution) – all while earning rather generous salaries for basically doing nothing (greed).

I’m not saying this to beat my chest or to take a victory lap. I say this to wake you guys up. Government regulation is going to kill DFS. Period. End of story. The sites weren’t profitable already. Prize pools are going to shrink, combine that with player pools declines from states that can’t play and costs are going to rise. That’s going to sink FanDuel and DraftKings – just like it did DraftDay and all the other sites. Once the money dries up. So do the sites. That’s not an opinion – it’s a fact.

This industry needs leadership like the LA Lakers need a new superstar. Setting up a website, buying ads on TV, “sponsoring” rich sports franchises is easy. In fact, most of what I learned in business school was what to do when all that shit failed. Unfortunately I don’t see leadership. The times I’ve seen the Fantasy Sports Trade Association (FSTA) guy speak … he seems more like a fanboy with all kinds of conflicts of interest. He runs a website – which takes ad money from many of the FSTA members. I wonder if he’s the guy we should be waltzing in front of lawmakers???????????????

I could go on & on. Bottom line, this industry has been riding the backs of investors – who clearly aren’t as ‘sophisticated’ as people think they are. Spend enough time analyzing stocks – and you’ll realize the ‘dumb’ money is often the people with the most. Remember who it was that actually caused the financial crisis of 2008/09 …. THE BIGGEST BANKS IN THE WORLD! (they just want you to believe it was because of you the home buyer)

Just because FanDuel/DraftKings have financial backing – doesn’t mean the DFS model is sustainable. Certainly not the mega-giant guarantees and consistent advertising on TV. I would guess the CEO’s and upper management of these two companies don’t sleep too well. At least they shouldn’t. Football season is a long ways away.

With that. I’m not sure what the next 4ish months will entail. The effort vs traffic I would get for trying to put up fantasy baseball content probably isn’t worth it. If I’m wrong about the DFS industry – which is possible. Then I’ll gladly eat my words and possibly do something for the NFL season. I doubt college sports will come back. Which sucks because I felt I had an edge built up playing for 3 years straight (like many of you I’m sure as well).

Lastly & most importantly I’d like to thank all of you. I got many tweets, PM’s, comments on the site, e-mails thanking me. And that was often motivation enough to grind. But seeing how many people would visit each week was usually all the thanks I needed. It was my passion to be one of (if not) the best daily fantasy college football blog on the internet. While not all my picks worked out – I guarantee you I never half-assed anything. If I couldn’t put in the time – I’d tell you guys and/or not post. I appreciate everyone who had the confidence in me by going with my selections … even if you may not have heard of the guy, or felt differently. Maybe I’m wrong about DFS’ future. Maybe I’m not. Either way, I appreciate all of you – and I wish you all the best of luck no matter what.

I occasionally publicly write about stocks that peak my interest.  You can view my profile here – but most of my articles are locked behind a paywall I have no control over. If you want my opinion about a specific stock, please message me on the site I have linked above. Thanks again everyone who’s visited Daily Fantasy Grind – it’s been a blast.

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