DraftKings Acquires DraftStreet: Daily League Aftermath

Monday morning brought quite the shock to the daily fantasy landscape with the announcement that the second and third largest daily fantasy sites in the industry would now be under the same banner with the Boston-based DraftKings’ acquisition of the New York-based DraftStreet. Details regarding the agreement were not immediately released to the public. According to USA Today, the move will bolster DraftKings ‘ customer base by 50% as the move places the new entity alone with industry leader and DLF partner, FanDuel, atop the daily fantasy industry.

As part of the customer migration process, DraftKings is offering a 100% balance transfer bonus to DraftStreet users. In order to transfer a DraftStreet account, a customer is brought to a DraftStreet branded page hosted on DraftKings. After entering their DraftStreet credentials, the user is asked to link that account to an existing DraftKings account or to create a new DraftKings account into which the balance of the transferred DraftStreet funds would be deposited.

As of Monday evening, DraftStreet was no longer serving games and instead was directing its users to migrate their accounts over to DraftKings. It was stated the two entities would proceed with a slow crossover of popular elements found on DraftStreet over to DraftKings. Additionally, they didn’t rule out further acquisitions by the combined entity and also believed there would be further consolidation within the industry.

[inlinead]The announcement on Monday was delivered to users of both sites in multiple formats, but by far the most interesting version of the announcement was a short YouTube video which featured the CEOs of both DraftKings and DraftStreet together outlining the benefits users could expect from the deal. DraftStreet CEO Brian Schwartz used his part of the announcement to promote features the DraftKings site possessed that DraftStreet users had long requested, but never materialized – key among those features, Schwartz highlighted the ability to edit and manage multiple rosters as well as DraftKings’ mobile application as important to DraftStreet users who would be migrating over to DraftKings. Meanwhile, DraftKings used their time to emphasize they would be committed to bringing popular formats DraftStreet hosted, such as pick ’ems and snake drafts to their site as well as expanding their sports offering to include soccer/futbol. The video struck a tone of partnership and clearly sought to allay fears from some DraftStreet users that features or offerings they enjoyed on the site would disappear in the new deal. You can take a look for yourself here:

Each of the two CEOs also took to their e-mail lists to announce the deal with DraftKings making the e-mail announcement first at around 5:45 PM PST/8:45 PM EST. In DraftKings CEO and co-creator Jason Robins’ email, he outlined steps users could take to migrate their DraftStreet account over to DraftKings while mentioning that both companies had appreciated the support of their customers. Schwartz sent his email out around 6:30 PM PST/9:30 PM EST in which he opened the email looking back at the success of his company and then immediately proceeded to look forward to opportunities the combined company would seek out.

Additionally, a letter to their customers was prominently posted on each of the two sites. The letter posted on DraftKings was penned solely by their CEO and highlighted what he believed was a benefit to the DraftKings existing users in that the site could now host larger games and an expanded lineup of contests. He then went on to explain how the migration and conversion process would occur between the accounts of each site before ending his letter with the offer of a 25% reload bonus for existing DraftKings users. The letter posted on DraftStreet was co-signed by both CEOs and touched many of the same chords, but sought to summarize the benefits DraftStreet customers would see by migrating their accounts to DraftKings.

Finally, both sites took to social media, especially Twitter, to both announce and promote the deal to their followers with announcements on each account occurring within five minutes of each other. A second tweet was posted to both accounts, again within five minutes of each other, which used identical language in each of the tweets and directed followers to a page that outlined the transfer bonus and featured a short frequently asked questions (FAQ) section.

Opinion in the daily fantasy world appears to be fairly evenly split with some excited for the newly merged site and others expressing their disdain for the deal. The second opinion appears to be more prominent on Twitter with some stating they believe FanDuel may ultimately obtain more market share as DraftStreet users flock to formats they became familiar with on DraftStreet and which currently are closely supported by FanDuel. However, others supportive of the move tend to be expressing their opinions less on Twitter and more on message boards frequented by the daily community – these opinions include those who feel the move will spur more innovation in the daily space as the two major players in the format will attempt to innovate more in an effort to one up each other.

Even Forbes has weighed in on the deal with a word of caution. Forbes Contributor Marc Edelman expressed some concern the deal may draw scrutiny from the Federal Trade Commission as it may have antitrust implications. He also pointed out that while some may view the deal as promoting innovation; those same people should also worry about the possibly that rakes in the industry could rise due to a lack of competition that existed prior to the deal.

The changing landscape of the daily league sites could expand further. Obvious targets for such a purchase would be DraftDay, located in Chicago and Massachusetts-based StarStreet. DraftDay presents a more traditional target with games more closely in-line with FanDuel’s offering, but StarStreet present an interesting target in that it’s games would expand FanDuel’s game offerings. Any future acquisition from DraftKings or FanDuel would likely come at a significant price as both companies stand to benefit from being alternatives to the two large competitors.

For as exciting as daily fantasy sports is, the intrigue behind the scenes makes for stories almost as exciting as the games themselves.

Remember, DLF is committed to providing content on daily games throughout the upcoming season and is also partnering with FanDuel to provide our readers a FREE year of Premium Content (new or renewal) just for opening a new FanDuel account and depositing $10.