Posted by: Mike Cornelius | March 2, 2017

Book Review: Swimming With The Daily Fantasy Sharks

Life moves fast in this age of short attention spans and information overload. It seems like ages ago when in fact it was just a year and a half. A mere eighteen months since sports fans across the country busily gearing up for a new NFL season were suddenly deluged by an unprecedented wave of television ads pushing a single product. As much as we all might want to block it out, who can forget the one advertisement that seemed to run at every commercial break?

Two young men in football jerseys are seen looking anxious, their faces lit by the reflected glow of what has to be a television screen. One is wearing a baseball cap backwards, and gnawing on his fingernails. As a crowd mills in the background, they pace back and forth nervously. Then suddenly, and obviously in response to something that happened on the unseen TV, they erupt in a joyful celebration as an announcer says “this is what it looks like when real people win a million dollars playing fantasy football.” The last shot has the two twenty-somethings holding a giant cardboard check and grinning from ear to ear. Beneath those smiles a line appears, telling viewers that over the past year the average user’s winnings were $1,263.

The two young men are, as the announcer suggests, real people – brothers Rob and Dave Gomes. In the fall of 2014 they really did win the Fantasy Football Millionaire Maker sponsored by Boston-based DraftKings. The ad first ran the following March, and then in August and September of 2015 DraftKings began an unprecedented commercial campaign, spending more than $32 million in a very short period of time, according to advertising industry estimates. The Gomes brothers were impossible to avoid, with their ad running over 15,000 times.

The Gomes ad and others like it quickly raised general awareness of daily fantasy sports (DFS), even if most people still had little idea how the contests on DraftKings and its larger New York-based rival FanDuel actually operated. By the thousands and then hundreds of thousands curious individuals, mostly male and mostly young, clicked over to one or both of the sites, made an initial deposit, and began playing. While many did so because of their existing interest in sports, unquestionably the lure of quick riches played a critical role in the explosive growth of DFS.

One of those who had started playing a few months before the advertising barrage began was Daniel Barbarisi, then the Yankees beat writer for the Wall Street Journal. Barbarisi was introduced to DFS by another member of the traveling band of writers following the Yankees from one stadium to the next. Signing up with the user name Pimpbotlove, he initially saw it as a way to pass the time while on the road. But he quickly learned that the DFS world was sharply divided between millions of amateurs, known as fish, and a select group of professional players, referred to as sharks.

His journalistic interest piqued, Barbarisi originally asked the Journal for a leave of absence so that he could delve into this rapidly growing form of gambling full-time. Not surprisingly, the newspaper wasn’t keen on having one of its reporters, even one on a leave, neck-deep in an activity the legality of which was starting to be questioned. So Barbarisi took the plunge, resigning from the Journal and committing himself to spending a year as a full-time DFS player, to see if a regular guy could go from fish to shark. In doing so he set an ambitious goal of winning one of the big money championships, while also hoping that he didn’t just wind up depleting his savings.

The result is “Dueling With Kings,” published by Touchstone and available next week. It’s an engaging and funny behind the scenes look at the people involved in an industry that enjoyed a meteoric rise and nearly as spectacular a fall just as Barbarisi, who certainly had the good fortune of perfect timing, was doing his research. The rise was fueled by the massive commitment of advertising dollars by the two major DFS companies. DraftKings spent millions in advertising in a determined effort to take market share from FanDuel, while the latter responded in kind in order to stay ahead of its challenger. The insane spending was in turn made possible by a surge of venture capital and sponsorship deals from a variety of corporate sources and ultimately the sports teams and leagues themselves; deals that pushed the value of both companies north of $1 billion. Many of the institutions that helped to fund DFS had to set aside longstanding objections to involvement with gambling.

Whether daily fantasy is a game of skill or just another version of a slot machine is a debate that goes on to this day. Those who think the latter had a lot to do with curbing what once appeared to be the unstoppable growth of DraftKings and FanDuel. But as Barbarisi makes clear, the likes of New York Attorney General Eric Schneiderman and others who led campaigns against DFS received enormous albeit unintentional help from the two companies.

What Barbarisi found were two businesses that catered heavily to the sharks, allowing full-time players who dropped hundreds of thousands of dollars to game the system with computer programs that automatically generated scores of entries far faster than a lowly fish could ever imagine. Those same players were using sophisticated metrics to set lineups, while amateur players were picking teams based on emotion. In the vast majority of instances it simply wasn’t a fair fight.

In an unregulated industry, the leaders of both DraftKings and FanDuel saw no problem with employees playing as well, as long as they did so at the other website. But many contests were similar enough that an employee with knowledge of what was happening at the site he worked for could use that knowledge to gain an edge while playing at the competitor’s. When DraftKings employee Evan Haskell won $350,000 playing at FanDuel, questions about insider knowledge led to suddenly critical news coverage.

At the same time, a lot of people were getting turned off by the advertising that was not just ceaseless but also misleading. The claim about average winnings shown at the end of DraftKings’ Gomes ad was arrived at by excluding everyone who lost money.

Hubris made the DFS leaders easy targets for those seeking to rein in the industry. The two companies were forced to wage expensive state by state fights to pass laws allowing daily fantasy to continue, even as many players left what they believed was anything but a level playing field. While in the end daily fantasy survived, it has done so in a reduced state, with the two companies that once were bitter rivals agreeing to a merger late last year, as their best route to survival.

Barbarisi recounts all of this, and clearly comes down on the side of gambling in the debate about the ultimate nature of DFS. But he also turns the professional players into human beings, and surprisingly sympathetic ones. It’s fair to say that on his journey through the world of daily fantasy Barbarisi made some unexpected friends. But what about his goal, did he become a shark and win big money? Buy the book to find out the details, but if you decide to enter a DFS hockey contest, you might not want to go head to head against Pimpbotlove.

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