Daily Fantasy Sports scandal could drive users to theScore, says Mackie

The DraftKings/FanDuel scandal could drive users to theScore’s new daily fantasy sports offering, says Mackie Research Capital analyst Nikhil Thadani.

Yesterday, theScore launched QuickDraft, a daily fantasy game with cash prizes and no entry fees. The company said it has ensured that entries are limited to one per contest, and the use of scripts (computer algorithms that allow players to automate lineup edits) is prohibited.

“We wanted to provide a fantasy game that was accessible to all sports fans,” said CEO John Levy. “Fantasy sports has lost its way by allowing gameplay that caters to professionals instead of sports fans. We think this makes for a poor experience. QuickDraft provides a mobile-first and quick fantasy experience, with exclusive free-to-play cash contests that allows us to introduce this unique and fun game to as many sports fans as possible throughout the United States and Canada.”

The use of scripts in daily fantasy sports gained national attention after a DraftKings user named “Maxdalury” used them to make a last minute lineup change in an NBA game and won hundreds of thousands of dollars.

Thadani says it is a contrarian view, but he thinks QuickDraft could gain users who leave providers like DraftKings and FanDuel because of the ongoing controversy surrounding those services. The analyst believes there is still room in the space for theScore’s offering.

“There are ~150 mln+ sports fans in the US, ~60 mln fantasy players, which includes season-long players and likely ~5 mln DFS players amongst current major properties,” says Thadani. “In other words, there is a large addressable opportunity set with casual DFS players, especially if providers can engage users without incurring large customer acquisition costs.

Thadani, who today maintained his “Buy” rating and one-year target of $1.00 on theScore (a target that implied a return of 251 per cent at the time of publication) thinks the company’s marketing expenses could rise in fiscal 2016, but should be offset by increased advertising revenue from Daily Fantasy Sports user growth & page views.