Daily fantasy sports outlook: No profits, lots of uncertainty, and dying unicorns

The daily fantasy sports market rose dramatically in the past few years with the rise of DraftKings and FanDuel. But in 2015, regulators closed in, with some declaring the betting on sports outcomes amounted to illegal gambling, rather than legal skill-based wagering as the companies alleged.
A total of 29 states are considering legislation related to daily fantasy sports, according to a report by market analyst firm Eilers & Krejcik Gaming.
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Still, Eilers estimates that FanDuel lost $137 million before taxes in 2015, while DraftKings lost an estimated $280 million. The biggest expense is prizes for fans, while the second-biggest cost is sales and marketing. And roughly 70 percent of that cost was TV advertising. In other words, the companies have been playing an unprecedented user acquisition game on the assumption they could always raise more money.
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“While this massive ad spend helped drive record first time depositors (FTDs), it also resulted in a uptick in customer acquisition costs.” The cost to acquire a new user was somewhere around $125 to $175 in 2015.
http://venturebeat.com/2016/02/22/daily-fantasy-sports-outlook-no-profits-lots-of-uncertainty-dying-unicorns/