There was really ever one way I’d find myself involved with US Daily Fantasy Sports.
My knowledge of American Football is on the level of knowing who Dan Marino is because of Pet Detective. I do watch every Superbowl, but it’s not always because of the crushing late broadcasting times over here in Europe that I fall asleep. And I am yet to sit through an entire baseball game.
I’m a total sport junkie for sure. But no one was ever going to call upon my services due to my moneyballing abilities.

I do, however, know a thing or two about operating skill-based multiplayer games with real money stakes. And considering the many interesting similarities (and differences) between DFS and “my” game online poker it was probably inevitable that I’d eventually get involved.
So I figured it was time I wrote something about it. 

First off it is important to note that I’m very impressed by how the DFS companies have grabbed the opportunity granted to them by the UIGEA exemption and run with it. Stellar work. Although still only in its first or second wave of growth, DFS, as an industry, is already established in ways poker wasn’t even close to at a comparative point in time (if at all ever).

But alarm bells are ringing and some people are questioning if DFS companies are on the right track. From the sidelines it appears to me that those worries are warranted.

Last Thursday excellent gaming space analyst Adam Krejcik from Eilers Research wrote a couple of tweets that summed up where top two DFS  providers are right now very well. Given their massive marketing spend (DraftKings for example is allegedly on track to outspend McDonalds on TV this year) you have to look closely at the paying players metric. All that reach needs to convert into actually revenue generating players.

An interesting discussion (that would have been even more productive had it not been for the usual set of misunderstandings that twitter spawns) ensued.

The point I (tried to) make in that discussion is that the urgency to now produce the goods is putting DFS in a spot that I’m not certain it is ready to handle. It has to reach, grab and, most importantly, hold on to players beyond the heavily competitive, online gaming experienced first adopter demographic.
Is the overall experience catering to this new wave of players? Will they get the same value out of playing?

In my experience, intense growth phases tend to place innovation in the back-seat. Platforms require constant patching. New markets require new adaptations. Scaling needs explode. New deals require new short-terms initiatives.
Now that the transformation to a more casual player experience is inevitably happening in online poker, the industry is paying the price for headless market rushes where everything was about acquisition. Adjusting now – when millions of ex players have lousy expectations, trust issues, busy lives, no faith in their own ability, bad memories and generally feel like that they were that sucker you were supposed to spot – is a massive undertaking. You can make the game more casual friendly all you want. It doesn’t help if you don’t manage to forge a new context within which play can takes place.

Many poker sites failed to adjust to changing demands in time. And the way some of the DFS sites are going at it strikes me as eerily similar. And I think the consequences might be similar too. Burned out demographics. Insane drain.

Pocketfives co-founder Adam Small, who tweets DFS wisdom by the dozen, put it bluntly:

”It’d be helpful to not simply use each new user as bait for the next new user”

The response to the concern that new players are basically being acquired to “feed” existing highly skilled players is often that we who raise it fail to recognize that casual players are perfectly fine with losing.

Adam Krejcik:

1. ”…many fail to appreciate concept that large % of consumers willingly lose $ for entertainment value”

2. ”whether they admit it or not is besides point… ”

That attitude is  dangerous, Because it is true. But only to a degree.

Casual online gamblers are indeed ”willing” to lose in a sense. They don’t actively attempt to lose obviously. The don’t like losing. But they accept it – under certain conditions. Conditions made up by a number of factors that, depending on how they are combined, make ”willing losers” more or less willing to keep losing. Failure to create good enough conditions can wreak havoc on LTVs longterm.

Expected outcome is an interesting factor because of how online poker changed it. From the crass realization when you play the lottery that your chances of winning are slim to a strong belief in your power to win. That’s a great allure when attracting new players. Not great when you have to retain them and the absolute majority have come to realize they don’t have that power. Expecting to lose is one thing. Actually losing when you’re supposed to be winning is a whole other ball game. Cultivating a pro culture like I see happening in DFS sets the stage for other players to conclude that their role to play is that of cannon fodder.
No thank you.

Sense of fairness is a huge topic. Or rather, it should be. From the outside, and to my surprise, it appears as if the major DFS sites are copying poker’s arrogant stance.If it’s in a terms and conditions somewhere, it is technically legit.  Blah, blah, blah.
That a game features an element of skill and that some players have an advantage over others is perfectly acceptable. But how acceptable it is depends on the manner in which this edge is gained and what actual skills are rewarded. Knowing how to code a script is a great example of a skill that Joe Average probably isn’t all too keen on losing out to. Seeing the same nickname occupying 30 places ahead of you when you just miss the money is a terrible game experience.
Online poker’s short and turbulent history has proved that in the pursuit of profit, players are pretty much willing to overlook almost anything. Bots. Resource hogging software. Delayed payouts. Dodgy owners. But that applies to those for whom winning is a likelihood. Not the rest.

Randomness.  In DFS, the series of events that lead to one line-up scoring the highest leaves plenty of room for players to mentally inject randomness where there is none. And that is good. Because randomness, actual or perceived, is a great cushion against the suckage of losing.
I have a general rule of thumb: the more easily a player can mistake a skill-based edge as misfortune, the better it is for the game.

My (injury prone) guy hurt himself during warm-up. Bad luck.
Triple bogey (by guy with a lose-cannon driver)!? Bad luck.

DFS companies have to walk a fine line between recognizing that DFS is a skill game but also allow for players to feel that they got shafted by lady luck.

Required effort is another important factor determining a player’s ability to absorb losses. How much effort does it take for someone to be competitive and be in with a shot? Five minutes? An hour? Two hours?
How much of that is actual game time?
DFS has a huge up on poker since it does not require hours and hours of game time.  Or at least, it doesn’t have to. Research is time consuming for sure, but research is not a must. The smaller the effort the more willing a player is to rub off a loss. But what if every player has to register 10+ line-ups in every contest in order to be competitive?

The most common concern raised about DFS is that the skill-gap in the salary cap contents that make up DFS’s bread and butter is too big.
Feeling that you have a shot even if you’re the underdog is an absolute must for anyone to put money on the table in the first place.
And even if someone new to DFS is not deterred by the skill gap and willingly ponies up to play anyway, the risk is that he or she will bust through their  budget so fast that they burn out.
It can easily become a vicious cycle where a substantial skill gap forces a site to drive players to low-stakes games (in order to keep them playing long enough to experience winning – which increases the time cost) and then be forced to take massive risks (financial or other) in order to promote big enough prize money.
I tend to have a more liberal opinion about how big a skill gap in a game with monetary stakes can be than most people do but I has to be actively managed.

There are some great studies on how early results affect the LTV of an online poker player. I’m not going to share the findings since they belong to the people who conducted these studies but it suffices to say that a player’s play/loss pattern also matters. When exactly a player experiences his first win matters. How quickly he experiences his first major loss matters. Did he lose it all in one go or did he trickle-loss? Also matters.

Finally we arrive at the elusive concepts of ”fun” and ”entertaining”.
Do any of these other factors really matter if players jus happen to think DFS is a blast to play? Well, not really.
But what is fun? What makes something entertaining?
Fun is made up of a complex matrix of sensations.
Mastery. Exploration. Progression. Sense of accomplishment. Audiovisual stimulation. Expression. Relaxation. Escapism. Drama. Engagement. There’s a lot to consider. Many buttons to push.
Making something fun beyond carrot-dangling six figure prize money (which is a ton of fun!) requires a conscious effort to make it so. It doesn’t just happen.

To summarize: If you assume that the next wave of players trying out DFS will be a bunch of carefree losers who will show up with a fixed budget and a fixed smile  – regardless of what happens in the process – I think you’re gravely mistaken.

I don’t know the current industry leaders well enough yet to judge if they are ready and able to serve up an experience that adequately cushions, comforts and incentivizes losing players. But hiding questionable rules in terms & conditions and forcing players to data mine ESPN in order to figure out how they are doing are strong indicators that they have some work to do.
If they don’t it I hope there are startups out there who will. Startups with great software, a clear idea of what a casual DFS experience should be about and the resources to fight a tough uphill battle for player liquidity. And I hope they will get in on the action before reckless advertising pushes scorch the market.
One day, whether you like it or not, the donkeys will stop chasing the carrot.

I’m always up for discussing this and other topics on twitter.
You can find me at @infiniteedgekim