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[KingBroly]

They ad spammed themselves into bankruptcy.

You gotta spend money to make money, but unfortunately they were shocked and ill-prepared at how the public (and more importantly State Governments like Nevada and New York) took to their business practices.

 

[Squalor]

DraftKings spent $80 million on commercials in 2015 alone.

Employees $200k
Data Center $150k
Office Rent $800k
Commercials $80 million
Utilitied $150k
someone who is good at the economy please help me budget this. my family is dying

Buy less commercials

no

Laughed way too hard at this exchange.

 

[RandomExpletive]

^

I was wondering where those commercials had all gone

 

[Squirrel Killer]

Not sure if Donald Trump reference…

Honestly, I've been doing everything I can to tune out the election this cycle. I promise if something I said could've been taken as a Trump reference, it was unintentional.

How in God's name do you lose so hard running a gambling business with such low overhead?

Did you not see the $80 million in advertising post in this thread? There's your answer.

As I've said before, "So just up the rake. Sure there's a back and forth to find a profitable equilibrium, but you'd think such a stat-heavy company could work Excel enough to find it PDQ." Advertising costs, even exorbitant ad costs, are just a business expense, this kind of gambling enterprise has tremendous flexibility to adjust their margin. Even more so before all the regulatory action against them.

 

[Nategc20]

lol

 

[Squalor]

Honestly, I've been doing everything I can to tune out the election this cycle. I promise if something I said could've been taken as a Trump reference, it was unintentional.

Failed gambling/casino.

 

[border]

Did you not see the $80 million in advertising post in this thread? There's your answer.

Advertising is not overhead though. Those expenses can be completely controlled, somebody just chose not to. It sounds like they blew all their investors' money trying to outspend each other. They could have increased their rake, or simply waited for their competition to run out of money.

 

[Squirrel Killer]

Failed gambling/casino.

Ah gotcha. I stand by my original assertion.

 

[Frozenprince]

While what that companies do is wrong because they cheat. Sports betting should be legal.

 

[ElectricBlanketFire]

Don't be surprised if this happen in short order

Indeed. There have been talks of this for a while.

 

[gutshot]

Laughed way too hard at this exchange.

It's a reference to this brilliant dril tweet.

 

[LudicrousSpeed]

As I've said before, "So just up the rake. Sure there's a back and forth to find a profitable equilibrium, but you'd think such a stat-heavy company could work Excel enough to find it PDQ." Advertising costs, even exorbitant ad costs, are just a business expense, this kind of gambling enterprise has tremendous flexibility to adjust their margin. Even more so before all the regulatory action against them.

So, part of it is because they were running these headline contests with guaranteed prize pools. They were doing this to try to draw more users. What that guaranteed prize pool meant was that they could advertise "Play for a chance at $5,000,000!", but usually they can only guarantee that once they have enough players to grow the prize pool to that size. Instead, they were basically fixing the prize pool ahead of time and hoping it was enough of a draw to bring in at least $5m worth of entries. If they fell short, the company covered the difference.

They also ran a bunch of promos where they did stuff like "deposit $25 and we'll credit your account with an additional $50", which was meant to be incentive to keep them playing in hopes that they'd deposit more real money once they spent through the first stack.

This combo could particularly hurt them, where people using the deposit promos would play in the guaranteed pool contests.

They have to be constantly drawing more and more users, and the methods they used to try to get to the mainstream market were both costly in terms of money and costly in terms of attention to a business model that was likely illegal.

 

[Dick Justice]