Friday, January 25, 2013

Daily Fantasy Sports Websites Generating Questions

The Las Vegas Review Journal exposed a sensitive question in their story that coincided with the Fantasy Sports Trade Association winter conference.  They took a look at the fantasy sports websites that focus on short-term or "daily" pay-to-play fantasy games and questioned whether the marketing tactics used by these sites blurred the perception line between legal skill gaming and online sports betting, currently not allowed in the US per the UIGEA and Wire Act.

If you look at the typical daily fantasy sports website, you would have a difficult time differentiating them from online gambling sites.  This is bad news since fantasy sports is a game of skill and is NOT considered gambling. 

In addition, some of the customer acquisition and retention aspects of these sites seem awfully similar to what online gambling sites offer.  Terms like signup bonuses, rakeback and rebate are common.  Some sites have also set up affiliate programs similar to online gambling sites as well as provide referral bonuses where individuals receive either a flat payment or a recurring revenue stream from their referrals' play.

Again, fantasy sports games are legal, but if regulators get the impression that these kind of sites are really no different from online sports betting, there could be bad news for the offending sites.  The better answer is to ensure your look, feel and operation is well within the legal safe harbors.  It doesn't mean that sites can't incorporate some marketing tactics common to other sites where it makes obvious sense, but in moderation.

The question that didn't get mentioned in the article, but could be an even bigger issue for the daily fantasy sports sites is the issue of income reporting for tax purposes.  Lots of money is risked and won every day.  For this kind of activity, just earning a net win of $600 for the year could trigger IRS reporting requirements.  Some of the customers on these sites might win that much per day.  Fantasy sports sites that play for money need to make sure their regulatory compliance processes are sufficient to not allow large amounts of contest winnings to go unreported.

Friday, January 11, 2013

Las Vegas' November 2012 Has Few Bright Spots

The numbers are in for November 2012, and Las Vegas doesn't have much to be joyous about.  The first story is from the Las Vegas Review Journal, cited by CDC Gaming reports.  Nevada year over year gaming revenues dropped 11% for November, to just over $782 million for the month.  In Las Vegas, the percentage drops were worse, with the Strip down 12.8% and Downtown down 17.2%.  The November reversal countered two previous months of year over year increases.  Could it be a quick reaction to the election results?  Perhaps, but I don't think that's a key driver.  It likely shows that the economy is still weak and we indeed could be headed for another recession dip.

The second story is from the Las Vegas Review Journal that shows some good news for Las Vegas.  Visitor attendance for November 2012 was 3.1 million, up from 3 million from November 2011.  That is good news.  Some of the increase was due to a couple of conventions making reappearances and existing conventions having slightly larger attendance.

This is interesting in that in the same month, there were approximately 100,000 more visitors to Las Vegas, but Las Vegas gaming revenue was down almost 13% on the Strip and over 17% downtown.  People showed up, but were not gambling as much.  The story does talk about hotel average daily room rate (ADR) being up 0.6% to $104 for the month and occupancy rates at 79.7%, up from 78.3% in the prior November.  Again, not too bad, but the story provides enough information to dig deeper and learn more.

The story provides comparisons to the highs enjoyed by Las Vegas in 2007 before the economy soured.  During the boom, occupancy was higher at 90.4% and ADR was $146.53.  Those numbers are much better than the current 79.7% / $104.  But this isn't all the bad news in the numbers.  The story provided the number of rooms in 2012 and 2007, which allow estimation of a different metric, revenue per available room or RevPAR.  RevPAR is a better measure than ADR since revenues are measured against the total number of rooms available, as opposed to ADR, which measures revenues against the number of rooms sold.  If you had a 100 room hotel and just sold one at a rate of $1,000, the ADR would be $1,000 but RevPAR would be $10.

So the estimated RevPAR for November 2012 was $82.89 and for 2007 was $132.46, based on the occupancy rates, ADR and number of rooms in the Las Vegas market at the various times.  So, estimated RevPAR is still down about 37% from the peak.  If you look at ADR, Las Vegas is down about 30%.  But look at room revenue and you'll see just how much money that isn't coming in.  If occupancy and ADR had stayed at the 2007 levels, Las Vegas would have brought in about $155 million more in room revenue, just for the month.  That would have more than made up for the lower gaming revenues.  Las Vegas has hopeful signs, but they've still got a long way to go to where they were before the economic downturn.

Tuesday, January 1, 2013

Week 17 ProContest Pari-Mutuel Results

To finish the NFL regular season contests, offered a free play NFL Week 17 game.  The game consisted of four yardage-based questions/races:  Quarterback, Running Back, Wide Receiver and Team Defense.

This was another early the offering of this new fantasy sports game that combines pari-mutuel wagering (Win, Place, Show) with fantasy statistics.

Here are the results for the various game elements along with their final odds to Win as determined by contest entrants:

Quarterback (QB)
Win    Brees NO / 9:1
Place  Rodgers GB / 11:1
Show  Manning DEN / 11:1
Favorite:  Romo DAL and Field/Other QB at 6:1

Running Back (RB)
Win    Field/Other RB / 12:1
Place  Morris WAS / 9:1
Show  Peterson MIN / 7:1
Favorite:  Peterson MIN at 7:1

Wide Receiver (WR)
Win    Crabtree SF / 9:1
Place  Other/Field WR / 7:1
Show  Johnson HOU / 9:1
Favorite:  Johnson DET and Field/Other WR at 7:1

Defense (D/ST)
Win    Denver / 6:1
Place  Other/Field DEF / 13:1
Show  Other/Field DEF / 13:1
Favorite:  Seattle at 5:1

For the QB position, three very good quarterbacks did well, even in late December.  And, in addition, the final odds for each were very nice.  Romo was expected to do well and interest was generated by the field entry, but neither of these two favorites finished in the money.

For the RB position, expectations and interest were high on Peterson MIN, and he did not disappoint.  The favorite did finish in the money, but just a bit shy of two other performances that were also spectacular, breaching 200 yards rushing each.

For the WR position, the field entry did Place, but the other favorite, Johnson DET, did not finish in the top three.  Smart folks did do well by selecting Crabtree SF to Win, with final odds at 9 to 1.

Denver was close to being the odds-on favorite, going off at 6 to 1, and getting the Win.  Two of the field entries Placed and Showed.  The favorite, Seattle at 5 to 1, did not finish in the money.

We'll have a similarly formatted game for the NFL playoffs ready to go on Wednesday, so keep your eyes peeled and get ready to register on and play (if you are residing in the eligible locations).  This game again will be free to enter.  This will be the last game of the NFL season, but we will explore crafting games for the upcoming Arena Football League season, so those fantasy football enthusiasts don't get too discouraged.

Also, we're looking at crafting a new game for the NFL never before seen.  Stay tuned to ProContest's blog for further developments on that, other games/sports, and general ProContest info.

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