Over the last few months you may have heard the name Draft Kings repeated in the newspapers and on TV. If you live in Nevada, you might have heard it a little more; something or other about a ruckus between gaming authorities and fantasy sports leagues? Well, it’s time to clear up any mysteries or misconceptions about Draft Kings which happens to be one of the most popular daily fantasy sports providers in the United States.
This in depth guide to exactly what it is that Draft Kings offers, why it is so popular, and what caused Nevada authorities to shut it down will help you understand the basics. Once you have the low down, you can make the choice on whether or not you should try it for yourself. After all, 50,000 active daily users can’t be wrong….or can they?
What is Draft Kings?
Draft Kings is a daily fantasy sports contest provider based in Boston, Massachusetts. It was founded in 2012 by Jason Robbins, Paul Liberman, and Matthew Kalish and it enables users to enter a range of fantasy sports contests. If users perform well in the daily and weekly competitions, they have the opportunity to win cash prizes.
The results are based on the performances of individual players, across a selection of five popular sports leagues. These are Major League Baseball (MLB), NHL Hockey, NFL Football, NBA Basketball, and PGA Golf. There are also competitions for leagues based outside of the US, such as UEFA Champions League soccer, NASCAR motor racing, and Mixed Martial Arts (MMA). Ultimately, users of Draft Kings earn money every time that their chosen teams or players come out on top.
At the moment, the company is jockeying for market dominance with another fantasy sports service – FanDuel. In a bid to become the most influential fantasy sports provider in the United States, both companies are pulling out all the stops to impress users. For the 2015 NFL games, Draft Kings is upping the size of its cash prices. However, as will be explained later, the company has more to worry about than wowing fans if it wants to become a market leader.
The great thing about Draft Kings is that, unlike a lot of other fantasy sports leagues, it does not tie users down with sign up promises, continuous line-ups, or fee obligations. If you want to take a break from play, you can do it without fear of the consequences. If work is on your mind and you haven’t got as much time to play as you might like; there is no need to worry, just give yourself a fantasy sports holiday and come back when you are ready.
What type of contests does Draft Kings offer?
As already mentioned, Draft Kings offers daily and weekly fantasy sports competitions in a range of ten sports. They are as follows: MLB, NBA, NFL, NHL (hockey), PGA, NCAA (football), NCAA (basketball), NASCAR, EUFA League, and MMA (UFC). The company is hoping to add to this roster in future and has discussed the possibility of ATP and WTA tennis being included in the years to come.
The competitions provided span across a variety of different proficiencies and there are specially designed contests for new players. These are called ‘Step’ competitions, as they encourage users to win tickets in order to move on to more sophisticated games. The next level of play is the ‘Multiplier’ or ‘Booster,’ which enables users to rapidly increase their scores.
Then there are ‘Three Man Leagues,’ ‘50/50’ competitions, and ‘Guaranteed Prize Pools.’ This latter contest involves a reduced number of players competing for a bigger prize. As Draft Kings offers contests with a much shorter lifespan than traditional fantasy leagues (usually played for baseball or football), it appeals to those who do not have the time to commit to full season tournaments.
The focus here is on rapid and self-contained sports competitions. A player must complete a starting line-up in order to begin playing. This line-up is regulated by various salary restrictions and it must be chosen in a matter of minutes. There is no chance for poring over names and performance statistics here. If you want them, you had better grab them and do it quickly too.
Once a game has started, no changes can be made. However, this does give players an advantage – if necessary, they can hold on right up until the ‘starting whistle’ to make sure that they are up to date with the latest injury and team news. The competitions are played live and the scores are kept alongside, with marks being updated minute by minute. Once the game is over, the owner of the best score is proclaimed victor.
What does the salary cap on line-ups do?
To make sure that the contests are never too easy, each user is restricted by a $50,000 salary limit. This is to be used in accordance with the price valuations attached to team players. The system is extremely easy to follow – once you pick a player for your starting line-up, their valuation sum is detracted from your salary bank.
It is a good way to keep competitions fair, because users who select the best players then have a much smaller budget to work with. In fact, the salary cap is one of the simplest, yet also one of the most important, features of the Draft Kings league. It turns the fantasy sports contests into a game of skill and stellar decision making, rather than just a pot luck grab.
How are Draft Kings winners paid?
The Draft Kings system means that winners are awarded their prize funds as soon as a game has ended. The size of the cash prize is directly related to the amount which the user originally wagered in order to enter the contest. So, for example, if a user wagers $4 in a heads up competition, they will receive $3.60 back if they win (not including the return of their entry fee).
Draft Kings is so popular because it offers some of the biggest prize funds of any fantasy sports league, anywhere in the country. The Millionaire Maker contest, which is played once a week, attracts hundreds of thousands of eager participants and it guarantees the ultimate victor a cool million in cash.
Does Draft Kings offer a mobile service?
Over the last year or so, Draft Kings has really pushed the mobile friendly angle. Now, users can enter competitions via their mobile phones, iPads, or tablets. In fact, iPhones, iPads, Blackberry smartphones, Windows phones, and some Symbian phones are compatible with the Draft Kings website. The company plans to increase its level of optimization and, in future, make it possible for all users to content to games using whatever device they prefer.
How was Draft Kings established?
As already outlined, Draft Kings was founded by Jason Robbins, Matthew Kalish, and Paul Liberman in 2012, after all three decided to leave high ranking positions at VistaPrint. For some time during its infancy, the business was run from home, with Liberman taking charge. The first ever Draft Kings contest was a head to head baseball game, timed to appeal to fans getting ready for the 2012 Major League Baseball Open.
Later that same year, Draft Kings released details of its first external sponsor – it was funded to the tune of $1.4 million by Accomplice. Twelve months later, Major League Baseball offered the company a concealed sum. It is still unclear how much money changed hands.as part of this deal, but it marked the first time that a professional sports organization sponsored a fantasy sports league.
In November 2013, Draft Kings was awarded a further $24 million by a series of shareholders at Redpoint Ventures, BDS Venture Fund, GGV Capital, and more. Yet, there have also been clouds on the horizon for the company – its journey towards becoming the number one fantasy sports provider in America has not always been easy.
How has Draft Kings grown over the years?
In July 2014, it was revealed that Draft Kings had dealt out close to $50 million in cash prizes to users over a twelve month period. It was around this time that the company also disclosed details of its player numbers; approximately 50,000 active daily users and a million registered users. This paved the way for what was to come next – Draft Kings, now the second most powerful fantasy sports provider in the country, offered to buy out the third largest.
The acquired provider, DraftStreet, was bought for an undisclosed sum and the merger resulted in a phenomenal increase to its user numbers. If reports are to be believed, the amount of Draft Kings players almost instantly doubled. In November 2014, the company cemented its status with its second major deal with a professional organization; this time with the National Hockey League.
In early 2015, Draft Kings signed a three year promotional agreement with ESPN Inc. The deal was valued at $250 million and incorporates the amalgamation of Draft Kings gaming with ESPN TV and online content. As of next year, the company will have sole advertising rights for the fantasy sport market. The move has, in effect, pushed main rival FanDuel to the side-lines for now, but it remains to be seen whether the competitor will eventually push back.
Why did Draft Kings get in trouble with Nevada authorities?
To understand why Draft Kings ran into so much trouble in Nevada recently, you must also understand that, just because an activity is legal under US federal law, it does not mean that individual states have to allow it. So, Draft Kings was recently forced to stop operating altogether in Nevada, due to a conflict about whether the service is a form of gambling.
Within the majority of states, fantasy sports are considered to be games of skill which do not constitute gambling. However, in Arizona, Iowa, Washington, Montana, Louisiana, and Nevada, the assessments used to identify gambling games are much stricter. This has led to fantasy sports leagues being outlawed in these regions of the country.
In October 2015, Draft Kings was dealt a blow from the Nevada Gaming Control Board, which declared it a gambling service and so, therefore, not permitted within the state. It demanded that both Draft Kings and FanDuel put an instant stop to Nevada based operations. The companies both responded angrily, accusing the Nevada gaming authorities of using ‘underhand tactics’ to protect the interests of casinos.
It was not the end of the bad news for Draft Kings in October. It received a letter from the NCAA explaining that it would be banned from promoting its services at any NCAA championship game.
Has Draft Kings been involved in any other scandals?
At the moment, Draft Kings is actually being investigated by state and federal authorities. This is a very serious matter, which follows allegations that company insiders stole user data to generate a profit with competing services. The trouble started in October when a piece in the New York Times described how a Draft Kings worker confessed to disclosing user information in the run up to the third week of NFL matches.
This worker, however, had recently won $350,000 from fantasy sports contests on competing platform FanDuel. It took less than twenty four hours for a major investigation to be launched into both platforms. The companies have been obliged to hand over a vast amount of business records, present evidence of fraud prevention measures, and answer to an inquiry board.
In response to the scandal, ESPN revealed plans to stop using promotional clips funded by Draft Kings. A major deal secured with Disney has also now been dropped, after the brand expressed concerns about the overall legality of fantasy sports contests. Whilst it recognizes that fantasy sports leagues are legal in a federal sense, it is no longer willing to be associated with activities which have been (very publically) deemed unethical in a number of states.
In the wake of the insider fraud scandal, Draft Kings released an official statement, describing its appreciation for the loyalty of fans and its commitment to fair and legal gaming. It promised to work closely alongside authorities to get to the bottom of the controversy and make sure that it is never allowed to repeat itself. At present, the company is still under investigation.
Despite its recent troubles though, the future continues to look bright for Draft Kings. It is, arguably, the most popular fantasy sports league in the country and it is already being inundated with new offers, in place of the sponsors who have dropped out. As far as fantasies sports contests go, this beast really is the Big Daddy, so why not give it a go and see what all the fuss is about?