Don’t call it a comeback: DraftKings and FanDuel ready to capitalize on sports betting

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The U.S. Supreme Court has lifted the federal ban on sports betting, leaving individual states to legislate—and tax—sports gambling as they see fit. The ruling could mean a renaissance for daily fantasy sports websites like DraftKings and FanDuel, which have faced declining sales in recent years while toeing the line between illicit gambling and permissible “games of skill.”

The sites reached the pinnacle of their popularity in 2015, before plunging headfirst into a regulatory quagmire they’ve been navigating ever since at tremendous legal cost. They’ve scaled back the once-rampant advertising that helped them reach their peak and, consequently, have seen their user bases shrink. In 2016, U.S. spending on both sites spiked predictably at the start of the NFL season, but combined annual spending at DraftKings and FanDuel fell by 30 percent.

DraftKings and FanDuel - U.S. Monthly Sales

New signups similarly dwindled and, when football season opened in September 2017, nearly three-quarters of U.S. players on FanDuel and DraftKings were repeat gamers. During the sites’ heyday two years prior the reverse was true—74 percent of FanDuel and DraftKings players were new to the site.

Monday’s ruling is expected to breathe new life—and new customers—into these companies. DraftKings was prepared for the verdict, with a developed gambling platform lined up in anticipation of legalized sports betting. The head start into a fresh market could give DraftKings a shot at returning to its peak valuation. FanDuel also issued a statement indicating it has plans to integrate sports betting into its offerings.

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