DraftKing’s New Peer-2-Peer Play

DraftKings made waves this past month announcing not one but two new features. Their ‘progressive parlay’ feature will be added to their sportsbook product, while they also debuted a new standalone fantasy app in 6 states. 

This standalone app, called Pick6, is described by DraftKings as: “The product is simple: customers can build a lineup of two to six players from two or more teams, choosing more or less of a statistic for every athlete on their team.

Rhymes with RizeRicks

Now if that sounds familiar, you are right. Single player fantasy sports apps have dominated the DFS space in the past few years, with PrizePicks and Underdog Pick Em among others creating massive playerbases dedicated to against the house overs and unders, or 'Pick Ems.' 

DraftKings has been lobbying heavily against these operators, in some cases going directly to regulators to blow the whistle on what they claim to be possible violations of fantasy regulations. 

That is why this product comes with the label of peer-2-peer, and DraftKings spares no opportunity to remind you of this fact. In fact, the onboarding guide for the Pick6 app reads almost as a message to DK’s single player competitors, with an unnecessary amount of mentions that the product is peer-2-peer. 

Don't Ask How it Works

But the fact that the product is peer-2-peer might be the only legible takeaway from the onboarding flow at all.

I’ve attached it below for you to see for yourself. 

Before writing this, I imagined I’d be able to articulate the complexities that DK is deploying for this product to function as a peer-2-peer product while simultaneously being an instant replica of their single player competitors.

I’m not quite sure I can. So I fed ChatGPT4 the entire terms of use, how to play guidelines, and other relevant materials and I asked it to do so for us. 

“Pick6 by DraftKings is a fantasy sports contest where participants create lineups of 2 to 6 players from the same sport, aiming to predict athlete performances against statistical projections. The game uniquely automates entry distribution across multiple contests, with each $1 entry fee representing a single contest entry, and prizes are determined based on the number of correct picks in a consistent, peer-to-peer competitive format.”

Good start GPT4. But let’s dive into the details of what makes this ‘P2P’ game actually peer-2-peer.

The first thing to understand is that the game automatically distributes pick lineups into contests when you submit your entry - far from salary cap style DFS. Each of these contests only has a $1 entry fee, but the automatic system will file your entry into the recommended and appropriate contests. That means your $20 entry is actually $20 different entries into potentially different contests.

The user never tracks each contest, rather only has to track their pick lineup. In fact, uniformity is a clear goal, as DK’s website says, “To ensure a consistent entry experience, all participants’ entries are distributed in the same manner across eligible contests."

Wall Street Innovation

The goal here by DK is to get the user to behave exactly the way that PrizePicks, Underdog, and other single player fantasy users do. In fact, they never want the user to ask how the app works at all.

The difference here, to me, is that DraftKings hired a force of Wall Street consultants to find out a way to devise a game format that didn’t feel peer-2-peer at all but complied with the regulations DK and FD helped develop across the US. 

This game style effectively commodotizes player entries, and puts each entry into a contest of which you are not shown the details or even the name of by the time you’ve spent your money. The contests serve as little more than liquidity pools.

I am always going to be an advocate for innovation in fantasy sports. I myself advocate for my own peer-2-peer fantasy sport product in Verse Fantasy. But to compare this current Pick6 iteration to any other form of P2P fantasy offered by DraftKings is difficult to do. 

Even in the largest of salary cap style pools, the opponents and contest details are placed front and center for the user. Instead, Pick6’s product hides both of these core components to simulate the exact style of fantasy gaming that DK has crusaded against.

In the end, regulators must enforce the letter of the law. Both single player DFS companies and FD and DK are arguing which interpretations and re-regulations are appropriate. 

But DraftKings might be onto a larger trend here. While they have spent their fair share slowing single player fantasy’s growth, they have also been slow to act in their own product innovations.

Precedent Setting?

Already, PrizePicks and Underdog have developed new products in states that have raised concerns or built requirements for fantasy games to be peer-2-peer. 

PrizePicks, after pulling out of the state due to updated regulations, released their own P2P, Free-2-Play game in Michigan in November. The product acts similarly to Pick6, without paid entry fees. Each PrizePicks F2P entry is submitted to a pool of players in that player’s local region. Of all the players in that region, a preset prize pool is distributed to the top performers. 

It is only a matter of time before this game style that PrizePicks is obviously testing in Michigan goes live in other states and adds paid gaming functionality. 

Ironically, in an attempt to squash single player fantasy, DK might have just published the handbook for their single player competitors on avoiding the devastating reregulation they funded.

But I must say - the perversion of fantasy sports rules employed by Pick6 are, in my opinion, aggressive. Anonymizing and randomizing every user action and profile is a strategy that may be by the book, but it feels deceptive. 

The product has one other main question that stands out. Across all terms of use, how to play guides, and prizing breakdowns on their website, there is no mention of how DraftKings generates revenue from these paid contests.

Each of these entries requires a KYC approved user in one of the 6 current operating Pick6 states to deposit. And despite this, the rules are clear that in instances where some players drastically underperform, the prize pool will always be distributed across the winning tiers. These tiers are based on the amount of picks the entry gets correct.

To automatically distribute the entirety of contest entry fees doesn’t seem to indicate DraftKings is taking their traditional rake on this newly debuted app. The possibility that this app exists purely to beta test behaviors is strong, and perhaps because of that revenue is not a priority here. 

The introduction of this product in a curious 6 states - Maryland, Minnesota, Oklahoma, South Carolina, Tennessee and Wisconsin - seems to indicate that the product is a test of some sort. 

That begs the question - what is the end goal here for DraftKings? Is it to slowly train a replacement for what they see as an inevitable attack on single player? Or is it the start of a whole new wave of innovation from DraftKings? 

My bet is we won’t hear or see much about Pick6 for some time, and that its purely a beta test at the moment. As a betting man, I’d say Pick6 is used as more of a prop in court debates than a customer acquisition tool for the 6-12m. After that, perhaps there will be more appetite to expand the ‘peer-2-peer’ game into a money maker like the single player companies have done so quickly.