With all of the prognostications of impending legal doom, DraftKings’ profits on a major part of its business have never been higher. Even as it faces a court battle on Wednesday in New York against the state’s attorney general, along with a growing list of lawsuits, the daily fantasy company continues to generate a consistently impressive “effective margin.”
Thanks to daily fantasy analytics site Super Lobby, stats are available showing how DraftKings has managed in its guaranteed prize pools (or GPPs) in the NFL season. The above chart illustrates the progression of DraftKings’ GPPs (which includes its famed “Millionaire Maker” competition). The obvious trend is that the crisis surrounding daily fantasy has hurt business from a “total entry fees” standpoint. However, the profits that DraftKings makes (determined by the difference in “entry fees” vs. “prizes paid”) has expanded.
Week 11 was actually a record for the company in this regard. Here’s the season’s “effective margin” (i.e. profit) rates to this point, excluding weeks one and three:
Sept. 20: -1.39%
Oct. 4: 8.13%
Oct. 11: 10.44%
Oct. 18: 7.26%
Oct. 25: 11.59%
Nov. 1: 8.86%
Nov. 8: 9.83%
Nov. 15: 11.53%
Nov. 22: 11.64%
The only week in the 2015 season that DraftKings didn’t make money on its GPPs was the season opener. And in the last two weeks, DraftKings (for the first time ever) maintained double-digit profit percentages.
Of course, the company would undoubtedly rather hit a higher profit margin because of ever-increasing entry fees (as was the case on October 11). That said, when faced with the most serious fight in the industry’s history, ending up with a greater profit percentage isn’t the worst idea. After all, the now-impressive legal team that DraftKings has assembled inevitably requires a reinforced budget.
The spectrum could change vastly in the coming days, as a New York judge may rule on daily fantasy’s mere survival in the state at Wednesday’s hearing. For now, DraftKings can simply be content with the knowledge that even in crisis, it has grown its profits.
Chart via Brian Warmoth
