Buying fewer ads means more money to deal with legal headaches.
Remember all those TV commercials from fantasy sports startup DraftKings that aired last football season? DraftKings says you do.
That’s why the startup is spending “orders of magnitude less this year” on advertising, CEO Jason Robins told Recode in an interview last week. “Last year we were in the process of becoming a known brand,” he added. “We created the brand awareness we were seeking to create last year. We don’t need that anymore.”
At least that’s the hope. DraftKings spent $156 million on TV commercials last year, according to the Boston Globe. Its archrival FanDuel spent even more. That turned out to be a mistake, and FanDuel is also scaling back this year.
“There’s nothing more interesting in life than your fantasy football team, but there’s nothing less interesting in life than your buddy’s fantasy football team,” FanDuel CEO Nigel Eccles joked at Recode’s annual Code Media conference in February. “I think what we did was we reminded you about your buddy’s fantasy football team every fifteen seconds for several months.”
Pay legal and lobbying fees, something much less sexy than TV commercials.
“[We plan] to take on some new expenses, more short-term than anything,” Robins said of his company’s new $153 million round. “New expenses with all the things we’ve been doing on the legislative front.”
Daily fantasy sports sites, which offer cash prizes for winners, are still considered gambling and thus illegal in many states. Many more are fighting to shut them down.
That was the case in New York before early August. The state’s Attorney General tried to shut down daily fantasy operations, and it took DraftKings and FanDuel almost a year to get legislation passed that would protect their businesses. That’s expensive, and some version of this process is happening, or will likely happen, in almost every state.
So, yes, DraftKings is no longer building a brand. Instead, it’s hoping to preserve the one it already has.