DraftKings and FanDuel are capping off what’s been nothing short of an astonishing NFL season for daily fantasy sports.
These companies hit the ground running in early 2015 with ad campaigns promising fun, excitement, and the chance to win millions of dollars. Heading into the fall and winter, the frequency of these ads intensified dramatically. I live in Boston, and by the time September rolled around, I couldn’t really tell who ran the train system — the city or DraftKings. The 2015-2016 daily fantasy ad blitz will likely go down as one of the most successful paid user-acquisition campaigns in history. It could also end up as the campaign that turned regulatory tides and public sentiment against the emerging industry.
In 2016, we’ll see DraftKings and FanDuel fight, state by state, across much of the country. Judges will decide if the daily fantasy experience is indeed a game of skill and whether companies deserve gambling exemption under the Unlawful Internet Gambling Enforcement Act. While the likes of DraftKings and FanDuel address this legal onslaught, the question of how esports fit into the equation has become all the more prevalent. If DraftKings can’t operate, why can some kid at a League of Legends tournament win $100,000?
Many will question esports’ isolation from daily fantasy regulation. A significant number of legal issues surrounding DFS, however, aren’t focused on whether real-money competitions are permissible but whether daily fantasy is predominantly based on skill. Players succeed in DFS based on factors that are outside of their control, namely, how well a professional athlete will perform on a given day. In contrast, the outcome of an esports event is dependent on the player’s knowledge, dexterity, reflexes, and perseverance. With this in mind, esports competitions will likely not face similar legal issues because they are indeed games of skill.
Another harmful blow to DFS has come from players speaking out against the industry. These aren’t just minor complaints in enthusiast blogs or forums. Pieces like the one from Jay Caspian Kang in The New York Times Magazine and Saahil Sud’s Bloomberg interview have revealed how a group of DFS players are clearly upset. Even if DraftKings and FanDuel can continue operating in a majority of the U.S., these very public outcries against them will affect their continued growth.
To reach their potential, esports must do better than daily fantasy sports in building a secure, transparent, and fair community of people who are interested in playing at every level. Here are some steps we can start taking now to do just that:
Be an active leader in esports education
One of daily fantasy’s biggest failures has centered on candid communication with its audience. DraftKings and FanDuel were both so focused on acquiring customers through flashy ads that they didn’t take the time to educate the population about why they provide a game of skill and how people from all backgrounds can have fun playing DFS responsibly. We only saw the founders of DraftKings and FanDuel become more visible in 2015, once the lawsuits came rolling in.
Having people generally favor the existence of esports is critical to our industry’s continued growth. Whether you’re an esports company founder or player, get out into your community and start talking about what esports are, why they matter, and if appropriate, how your company is helping move the industry forward. When doing this, don’t just preach to the hardcore audience at gaming-specific events. Go to broader tech, business, and sports meetups where you’ll find large groups of people from all backgrounds who might not even know what esports are all about.
Make promotions clear, and don’t bribe people to play esports
If you ask someone why he or she plays daily fantasy, you’ll likely get a money-focused answer along the lines of, “I want to win millions of dollars!” This shouldn’t come as a surprise since so much of the marketing and advertising in DFS touts the massive prizes.
I’m the last one to pitch esports as a hug fest. They involve competition, and winners should be compensated. That said, the financial incentives should not be the primary driver for participation. At their core, esports are about the fun of playing against friends, colleagues, or people you meet online in games you know and love. When money does get involved, esports companies should be very transparent around deposit, loyalty, and referral promotions.
Build fair communities
Unfairness — through cheating, corruption, or any means — in esports competitions poses one of the greatest threats to our industry. While DraftKings and FanDuel investigated their employees who faced accusations of insider trading, DFS companies are still dealing with constant complaints from customers who feel that they’re losing money to players who have unfair advantages. On top of this, sites like FantasyUp and others have been unable to pay back customer deposits or have shut down all together.
As the esports industry grows, the companies providing competition platforms must ensure that they’re enforcing an absolute zero-tolerance policy for cheaters. This includes making sure people are not using hacks to improve their performance and preventing people from altering winning statistics in their profiles in an effort to misrepresent how “good” or “bad” they are. The industry won’t be perfect at any of this out of the gate, but fair play should be at the top of every company’s mind.
Keeping play fair and above-board should go hand in hand with running an equally fair operation internally. Esports platforms must follow best practices when it comes to finance, payments, and identity verification. The last thing the industry needs is a lawsuit centered on money laundering or underage competition. Yes, it takes time and costs a little more money to do things right, but it’s effort well spent. As we’ve seen in daily fantasy, it only takes one public event to ignite regulatory overview.
Esports are in their infancy relative to fantasy sports — a mere $748 million globally compared to $26 billion. Analysts predict that the esports industry will more than double in size over the next few years, growing to $1.9 billion by 2018. As a result, we need to start laying the groundwork now. That will be far more challenging than my three suggestions, but the core themes are what matter — focus on players, be transparent, and ensure fairness.
The rest is execution.
Nathan Dionne is the founder of Gamer Duel, an app that lets people win real money competing on console games.