FantasyDraft Hoping Rake-Free Approach ‘Disrupts’ The DFS Industry

Posted By Juan Carlos Blanco on August 22, 2019
fantasydraft rake

Former Cowboys head coach Jimmy Johnson once famously told his 1991 underdog squad ahead of a road showdown against the undefeated Redskins: “If you got a big old gorilla there, don’t just go up and tap him on the shoulder. Hit him with all you’ve got!”

Charlotte, North Carolina-based FantasyDraft has been taking on those “big gorillas” of the daily fantasy sports (DFS) industry, DraftKings and FanDuel, for nearly five years now. It hasn’t been exactly direct confrontation, given the size and scope of both of those industry juggernauts.

Rather, the second-tier DFS operator has managed to carve out a solid niche with what’s proven to be an astute approach: Being different in what it considers to be all the right ways.

FantasyDraft’s latest bold move

The latest example of that innovative spirit was unveiled in late July. That’s when the company transitioned to a rake-free, subscription model. Unprecedented in the approximately decade-old DFS space, the new business paradigm offers users multiple subscription tiers to choose from. The associated costs take the place of traditional “rake” — i.e. the DFS operator’s cut of each contest’s entry fees.

The revenue generated from the subscriptions – there are six different plans in all — go toward funding a certain dollar amount in rake-free gameplay on the site per month.

The paid tiers break down as follows:

  • Starter- $5.99 per month- up to $1,000 of rake-free gameplay per month (also includes a free 7-day trial)
  • All-American- $14.99 per month- up to $3,000 of rake-free gameplay per month
  • Professional- $49.99 per month- up to $10,000 in rake-free gameplay per month
  • All-Star- $99.99 per month- up to $25,000 in rake-free gameplay per month
  • MVP- $499.99 per month- up to $100,000 in rake-free gameplay per month
  • Hall of Fame- $999 per month- Unlimited amount of rake-free gameplay per month

And for those casual players that don’t play frequently enough to make paying a monthly subscription fee worthwhile? A completely free “PlayersFirst” tier allows site users to play up to $100 per month rake-free with no strings attached.

There’s one additional new cost now associated with playing on FantasyDraft. However, it’s not one that turns a profit for the site — a 3% percent processing fee on all deposits. While new to the DFS industry, such fees have been part of other segments of the real-money-based gaming industry for some time.

A well-thought-out plan

FantasyDraft has arguably already beaten the odds in an industry that’s claimed its fair share of business casualties. Many a DFS operator has come and gone during FantasyDraft’s own life span.

To be clear, the company’s newest initiative is far from a case of being different for the sake of being different. The rake-free approach is something the company has experimented with on multiple occasions over the years. That included an extended stint with rake-free head-to-head contests.

The decision to be the first operator to move over to a subscription-based model as an alternate means of generating revenue was far from impulsive. FantasyDraft co-founder and Chief Executive Officer Steve Krombolz confirms there was plenty of number crunching and evaluation of user behavior over time to arrive on price points that make financial sense.

The whole idea is steeped in the company’s Players First philosophy – Krombolz mentions the DFS community’s frequent complaints on various online forums about ever-increasing rake in the industry as a major impetus for FantasyDraft’s new approach.

“When we were looking at ways that we could disrupt the marketplace, bring something to the consumers that they wanted and at that the same time could still be a viable business model and grow our business substantially, the answer was rake-free,” Krombolz said.

New business model off to a solid start from financial, public opinion perspectives

The universal caveat with trying any new business approach is what looks like a surefire idea on paper can fall apart in practice. And Krombolz emphasizes that’s not lost on the company.

“What we put out there today might be what we think was great and when we see the data over time, it may change,” remarked Krombolz. “But we think it’s a good start.”

Early returns seem favorable. Without delving into specific numbers, Krombolz confirms the company has already seen a “notable market increase for MLB contests”, the only major sport with regular-season games at present. That’s the ideal outcome in the eyes of FantasyDraft’s CEO. He sees rake-free as “a total game-changer” and a vehicle that will help FantasyDraft “grow substantially over years past.”

The lifeblood of FantasyDraft’s overall approach – customer satisfaction – also seems to be high if social media buzz is any indication:

FantasyDraft also expanding its corporate partnerships

FantasyDraft has mostly practiced a prudent approach in going around the industry bigwigs more so than going at them. But that’s not to say the company is devoid of lofty aspirations.

Krombolz emphasizes there’s plenty in the pipeline now that they’ve launched the rake-free model. Already in place is a multi-layered marketing partnership with Hooters. This includes a brand-new website, http://www.hootersfantasy.com.

The restaurant chain will have a substantial presence throughout FantasyDraft’s product offerings in the coming months, including:

  • The sponsorship of several NFL contests, an initiative that already includes preseason freerolls.
  • A $1,000,000 Hooters Kickoff GPP for Week 1 of NFL season. The contest is naturally rake-free, sports a $20 entry fee, pays $100K to first place, and issues five-figure prizes to 2nd-6th place finishers.
  • While FantasyDraft isn’t going into the paid prop-based fantasy contests segment anytime soon, Hooters will also sponsor a free-to-play weekly Pick’ Em-type contest this coming NFL season that Krombolz confirms will have some prop-based elements.
  • A new weekly private league product — Commissioner Leagues — which will serve as a hybrid of season-long and DFS. The first 1,000 leagues that sign up will receive $50 apiece in credit that can be utilized toward the league prize pool.

Is sports betting next?

The forthcoming NFL season clearly is shaping up as a momentous one for FantasyDraft. Yet it’s far from the only thing site users should be excited for in the months ahead.

There’s the early 2020 introduction of NASCAR contests for the first time in the company’s history. That will also feature a Hooters tie-in. The addition is expected to be a rewarding one for FantasyDraft, considering the increasing popularity of the sport as a DFS product over the last several years. And Krombolz confirms the company will always remain receptive to potential opportunities with respect to new product offerings.

Then there’s the industry both DraftKings and FanDuel have quickly made significant inroads in – sports betting.

FantasyDraft has plans in that area as well, albeit very fluid at present. Krombolz confirms that the company is talking to different sports betting operators about the possibility of working together and feels it’s “likely” that FantasyDraft will be involved on the sports betting front at some point down the road.

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Juan Carlos Blanco

Juan Carlos Blanco has served as a freelance writer for a wide variety of online publications and websites, with an intensive focus on fantasy sports. Juan has provided analysis and comprehensive coverage of the MLB, NBA, NFL, CFL, AAF and AFL while also reporting on news and developments in the daily fantasy sports and online gaming industries.

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