While private tech startups DraftKings and FanDuel are the early leaders in the "daily" subset of the fantasy sports industry, Yahoo, this football season, jumped in for the first time with its own daily platform. The move was an interesting one when compared to the strategy taken by ESPN, another leader in traditional season-long fantasy football. While ESPN chose to partner up with DraftKings, Yahoo built its own daily platform in-house.
New data shows that Yahoo's strategy is working.
On Sunday, October 11, according to researcher SuperLobby, Yahoo became the first daily-fantasy platform apart from DraftKings and FanDuel to post a positive fees-to-prizes ratio, meaning that it brought in more in entry fees than it paid out in prizes.
That's an important milestone that shows Yahoo is quickly growing its daily product, even though it was late to the daily fantasy market (FanDuel has been around since 2009; DraftKings launched in 2012). If you ask David Copeland, CEO of SuperLobby, Yahoo "is clearly the third force in daily fantasy sports right now." It helped that Yahoo reduced its guaranteed prize pool from $1 million the week before to about $750,000. Critics could say that the reduction diminishes the positive gain, but Copeland says, "To me that shows how well Yahoo knows their market and are able to optimize their contests. People can pretend to avoid the signs, but Yahoo is strong and getting stronger. The securing of the number 3 position in next to no time with almost zero spend on marketing suggests they are cruising."
To be sure, Yahoo is still much smaller than the two billion-dollar "unicorns" vying to differentiate themselves from each other. It is a distant No. 3: DraftKings brought in $25 million in entry fees on October 11, while FanDuel brought in $20.6 million; Yahoo brought in $1.3 million. But that was more than any other of the 10 daily fantasy platforms that SuperLobby tracked. (All 10 are in the table below.) In addition to offering its own daily product, Yahoo sells adds to competitors on its own season-long fantasy app. In other words, Yahoo wins either way: even if you try DraftKings because you saw a banner ad for it in your Yahoo app, DraftKings paid Yahoo for the placement.
One caveat: SuperLobby warns that its data is "subject to error." Some daily fantasy sites report its data directly to SuperLobby; for the others, the company uses "publicly available sources plus our own technology."
The most significant revelation from this data, apart from Yahoo's gains, is that both DraftKings and FanDuel brought in more money than they ever did in the past—in other words, the major scandal over a DraftKings employee playing (and winning) on FanDuel actually helped the two companies. Existing users spent more on the two sites than ever before.
Entry fees are a good indicator of growth. But it would be even more interesting to see the numbers for new user signups in the last week—that would show whether the scandal also helped these companies recruit new customers. SuperLobby doesn't track new user signups—only the companies themselves have that information, and neither would share with Fortune new user signups from the last week. However: DraftKings told Fortune it had more than 220,000 new users sign up in just the first week of the new NFL season.
Last Sunday, Yahoo was still paying out more in prizes than it brought in: $1.17 out for every $1 in entry fees. This Sunday, it gave 98 cents in prizes for every $1 in entry fees.
Yahoo's platform is still young, and existing daily fantasy enthusiasts may feel that DraftKings and FanDuel are the better options simply because they're the experts, in a sense: their entire reason for being is daily fantasy, while Yahoo is a major tech giant that offers a whole host of products. But Paul Charchian, president of the Fantasy Sports Trade Association, thinks Yahoo is a major threat just by dint of its size and scope: "They’ve got easy, cheap access to so many existing users that they don’t need to make the same dramatic marketing spend,” he says. “That’s a huge advantage. And depending on whom you believe, Yahoo has the most—or tied for the most with ESPN—existing fantasy users."
Take note, DraftKings and FanDuel.