Sports Illustrated recently had an article listing their experts’ take on why NFL TV ratings are down an overall 11% from last year. Number 7 on their top 10 list was the Daily Fantasy Sports (DFS) bans. Should the past year of condemnation, litigation, regulation and legislation lead to congratulation to aggressive state attorneys general and legislators for this downturn? Perhaps. But to the delight of the NFL (and ESPN, CBS and NBC), most states are now saying “Give Peace A Chance.”
First, DFS were flying under the radar and gradually creating a buzz. Then, DFS exploded last year spurring increased NFL interest and TV viewership. Because of this popularity, many legislatures took an interest and decided they had to investigate this (new) phenomena. A number of state attorneys general issued formal opinions condemning DFS and some filed lawsuits against DFS operators. Now, the dust is starting to clear, and it appears that most states are recognizing that DFS is a form of legal contest.
Currently, DFS is not operating in Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada, and Washington. But a number of these states (AL, AZ, DE, HI, IO, LA, WA) have pending litigation to expressly legalize DFS. Legislation has been enacted allowing DFS in Colorado, Indiana, Kansas, Massachusetts, Mississippi, Missouri, New York, Tennessee, and Virginia. Legislation to expressly legalize/regulate DFS has been proposed in Alabama, Arizona, California, Delaware, Florida, Georgia, Iowa, Kentucky, Louisiana, Maine, Michigan, Minnesota, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont, West Virginia, and Wisconsin. And the states of Hawaii, Illinois and Washington have conflicting proposed legislation both for and against DFS. Suffice to say, this is a big issue across the U.S. When all is said and done, there may be as few as three states prohibiting DFS.
Does DFS boost NFL TV ratings? It is reported that NFL TV ratings are down across the board: 13% drop from last year on NBC’s Sunday Night Football, 18% drop on ESPN’s Monday Night Football, and 13% down on Thursday Night Football – these are primetime games people.
Last year the major DFS sites advertised aggressively on 20 networks; this year – only 5 networks. It has been reported that Draft Kings and Fan Duel have spent $23.9 million to run 12,307 national TV commercials, while during this same period last year the numbers were $256.7 million for 73,716 national TV commercials. The lawsuits and money spent defending those lawsuits and in settlements, as well as PR and lobbying expenses surely had an impact. Perhaps because of this decreased advertising, reported data shows that unique visitors to these major DFS sites have dropped this year by about 75%.
Marketers have always known that promotions generate sales. For example, research has shown that consumers are about 40% more likely to buy a product when combined with a sweepstakes, and a cause marketing campaign could increase sales by 75%. The recent effect the negative activity directed toward DFS had on the NFL and the major TV networks also demonstrates how promotional activities have a direct impact on other companies’ bottom lines. Hopefully, the legislators are taking notice of this domino effect when urging regulation allowing DFS (and not just focusing on filling their own coffers with tax dollars and licensing fees). And hopefully, legislators are learning the lesson that over-regulating or outright banning legitimate promotional activity is bad for business.
And for those of you Monday morning quarterbacks living in the “allowed” states, Good Luck on this week’s picks!
