Thanks for Nothing: The Daily Fantasy Sports Industry’s Deposit Bonus Problem

October 14, 2015
Thanks for Nothing: The Daily Fantasy Sports Industry’s Deposit Bonus Problem

If you come from an online poker background, the idea of a 100% match bonus on your first deposit is quite familiar, considering it’s been standard operating procedure to offer potential customers a first-time deposit bonus since the industry was in its infancy.

But if you’re an astute online poker player, you know that when it comes to deposit bonuses, the details matter, and reading the fine print is a must.

Some bonuses look great on their surface: 200% up to $2,000! But when you read through the terms and conditions these bonuses start to lose their luster. Slow clear rates or a short amount of time to clear the bonus can often make these bonuses difficult to clear or pointless, particularly if the site is offering rakeback, cashback, or some other type of reward system that won’t kick in until your bonus expires.

With clear rates a fraction of online poker bonuses, useless is one way to describe the current DFS deposit bonuses sites are offering.

They look an awful lot like online poker bonuses, with 100% matches up to $200, or some other arbitrary number, but that’s where the similarities end. Clearing a DFS deposit bonus is an exercise in patience, and often ends in frustration.

Comparing DFS clear rates to online poker clear rates

Here’s the rate at which deposit bonuses clear at several prominent online poker sites:

  • PartyPoker NJ offers a 100% match bonus up to $1,000 that clears at a rate of 50% rakeback
  • 888 Poker NJ offers a 100% match bonus up to $888 that clears at a rate of about 20% rakeback
  • NJ offers a 100% match bonus up to $400 that clears at a rate of 20% rakeback
  • PokerStars (global) offers a 100% match bonus up to $600 that clears at a rate of about 27.5% rakeback

And here are the clearance rates at several prominent DFS sites:

How hard are these bonuses to clear?

Here’s what this means.

If you deposit $100 at FanDuel or DraftKings you’ll have to enter $2,500 worth of contests to receive your full $100 bonus. That’s a tall feat for someone who deposited $100.

On a positive note, you have plenty of time to clear the deposit bonus. DraftKings gives you four months to clear your deposit bonus, while FanDuel’s first-time deposit bonus doesn’t expire.

Unfortunately, most people will never last long enough to clear their entire deposit bonus. Actually you won’t even come close.

If you’re like the vast majority of DFS players you probably deposit $100 to start. And if Ed Miller’s and Daniel Singer’s numbers are correct you’ll have an average ROI of -51% – for every dollar you wager you’ll get $.50 back.

Week 1 you’d enter $100 worth of contests and get $50 back. Oh, and don’t forget the $4 in bonus money you’ll clear! This pattern would repeat itself for a couple more weeks, maybe six if you cash in a few contests, and each week you’ll clear another $1-$4 of your deposit bonus. Basically, after six weeks your account will likely be cleaned out and at least $80 of your initial $100 deposit bonus will remain unclaimed.

Even if you’re a much better player, you’ll have to risk $100 every week for 25 weeks (nearly six months) to clear the entire $100 deposit bonus.

An alternative that works for everybody

What the daily fantasy sports bonuses (or lack thereof) seem to demonstrate is if you have a desirable product, people don’t need to be incentivized to play, at least early on.

It’s unclear if this willingness is because DFS is new, or because it’s fun and exciting, or if the customer base is simply unaware or does not understand how iGaming rewards and promotions have been awarded historically.

What is clear is this: DFS sites will have to change the structure of their deposit bonuses down the road, so what better time than now?

When I realized how pathetic the deposit bonuses were at these sites ,my first thought was, “why give me anything?” It’s like the worker who receives all satisfactory scores on their review and finds out they are getting a $.04/hour raise — gee, thanks. I’d rather DFS sites just award me with a some free entries, even if it’s to a mere $5 contest, or even a $3 contest.

Right now, it seems like the bulk of DFS sites’ customers aren’t fully aware how daunting a task it will be to clear the deposit bonus, but as more and more people bust their accounts after having cleared only a small percentage of their deposit bonus, word will get around.

If I was a DFS site, I would immediately end the charade of giving players a deposit bonus (since it’s such a difficult bonus to clear at 4%) and simply give each new player a $5 ticket for every $100 they deposit up to $500, with a maximum of five tickets.

That way the “bonus” stays on the site, the player is immediately rewarded and doesn’t feel like they were getting ripped off with the promised bonus offer.

What DFS does right

Now, to their credit, DFS sites do offer some really good spontaneous promotions, particularly when an upcoming contest is going to have a big overlay.

When DraftKings ran a huge millionaire Major League Baseball contest following Week 1 of the NFL season (thinking there would be some cross-play between NFL and MLB), it offered a $20 bonus entry into next week’s NFL tournament to anyone who played in the $20 MLB contest. That’s essentially a free entry, or in bonus terms, a 100% clearance rate.

Last week FanDuel was struggling to fill its $25 NFL contest and offered 50,000 FanDuel Points for every entry, up to three entries. 50,000 FanDuel Points is worth about $20, or in bonus terms, an 80% clearance rate.

DFS sites should be doing more things like the above, and give up on the tiny deposit bonuses.

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