DraftKings and FanDuel were number one and number two in Eilers & Krejcik Gaming’s latest sports betting app performance testing.
According to E&K Gaming, DraftKings bested its longtime rival by “mere hundredths of a point” in its Q2 testing. In Q1 testing, the two apps were separated by thousandths of a point.
DraftKings’ performance raises an interesting question: if the FanDuel and DraftKings apps have a similar appeal, why is FanDuel outperforming DraftKings?
Per @EilersKrejcik ests, $DKNG had just 9% of NJ OSB market (GGR) in June—with June marking its 4th straight month of OSB GGR share decline. Could just be variance. But could also be DKNG paring back marketing spend as FLTR.L cements its stranglehold over the NJ-NY OSB market. pic.twitter.com/yLS8JirpCB
— Chris Krafcik (@CKrafcik) July 18, 2022
Macro vs. Micro Scores
One explanation is DraftKings scores exceptionally well overall, despite a weak link. Essentially, it’s possible to score poorly in one area and still receive a terrific score. But that single negative score could be far more critical than possessing a slightly better in every other area.
Further, a .1 advantage in one area could have a far more significant impact than a .5 advantage in another. The reason is there are almost certainly thresholds that, once passed, the law of diminishing returns kicks in.
The big difference between FanDuel and DraftKings in the E&K testing is what it calls “Core,” which is account management features like registration and payment processing. FanDuel is Top 5 in all five categories E&K tests for (and 1st in Core). DraftKings is Top 5 in four categories but outside the Top 10 in Core.
However, all that said, an app is only one part of the business. An important part, as it is the public-facing product, but still, it is one part.
An Alternative Explanation for FanDuel’s Dominance
I have previously written about the Hierarchy of Effectiveness and how it can be related to sports betting.
The Hierarchy of Effectiveness is a system to rank different but integral aspects in order of importance. For sports betting, that breaks down to five things:
- Mindset – The corporate mission statement. This includes clear goals, strong leadership, and confidence in the plan.
- Strategy – The plan of attack. This includes how a company positions itself in terms of market access and partnerships.
- Tactics – The execution of the plan and how it adapts. This includes promotions, advertising, and customer service.
- Technique – The details you’ve worked on. This includes what markets you offer, pricing, bet limits, and policies like limiting or banning winners.
- Kit – The product. Your platform and backend.
Notice where I place “Product” in importance; at the very bottom of the list. That doesn’t mean it’s unimportant, far from it. Product is extremely important, but only when everything else is in place. Everything else being near equal, a superior product will be the definitive factor.
So, where is DraftKings lacking? Based on E&K testing, it has the product. The company seems to have solid, stable leadership and clearly defined goals (Mindset). It’s also done an excellent job positioning itself in the U.S. market and has executed its plan well (Strategy and Tactics).
From my perspective, the only possible chink in the armor for DraftKings is its technique, the specific decisions it makes, and how bettors and potential bettors perceive those decisions.
Based on the divide between FanDuel and DraftKings regarding handle and revenue, DraftKings is lagging in an area that bettors care about and will need to identify and close that gap.
