Not shocking. Professional gambling sites are only profitable for a small percentage. Most people lose money. Same thing happens at any casino. Heck the same thing happens in a regular fantasy football league, it's just generally for smaller amounts of money since you aren't buying in every single week.
This isn't quite casino gambling. Casino gambling is literally designed to cheat the player. The trick is to design games that look 50/50 but aren't. You've probably heard that blackjack is a 51/49 house advantage, but you're far lower than 50/50 to win any given hand. Your odds of winning are
You score more than the dealer - you win
You score less than the dealer - they win
You bust and the dealer doesn't - they win
The dealer busts and you don't - you win
You both bust - they win
That last one is the killer. The house has a huge, I mean enormous advantage because they get to go last. So big that they'll even offer you extra stuff, like splitting pairs when you want to and doubling down and even giving you 150% of your money if you get a blackjack.
Fantasy sports is more like poker. You play against each other. The games aren't rigged but the house takes a big bite out of every contest. In the long run if the house takes a 10 percent commission you have to win 10 times for every 9 you lose just to break even because you win 9 bucks 10 times and lose 10 bucks nine times.
The secret sucker part though is that a lot more players lose and quit than win and quit. If you win 5 times and lose once, nobody's going to convince you that you shouldn't play again. But if you lose five and only win once, you're probably going to give up. That's what builds those beautiful casinos and pays for shiploads of ads.
They don't want you to quit. That's why they design ways to keep you there. Free drinks at the casino. Bonus bucks you earn by playing more on the fantasy sites. Ads. Radio, web and television content with tricks the pros use to win. It's all designed to get you to start playing then keep you playing longer than you otherwise would. Because nobody quits when they're up and the longer you play, the more you lose, even if you're an above average player. Those are mathematical certainties.
The house is the house. They don't care who wins and loses, they make the same amount on every contest entry so all they want is to get more people to play. The players don't care how many people play they just want easier competition. So both parties have a huge interest in seeing new, bad players start gambling.
Let's assume there's no skill in predicting player performance. Even then there's a basic skill in setting lineups - checking at the last minute to make sure your guy is playing. If the pros never accidentally start a hurt player and the fish sometimes do, that's enough to gain an edge. Over hundreds of games that's enough.
Now add in another skill - choosing players who are unlikely to be in many rosters. That makes it more likely that if a low owned guy blows up, you'll be one of the few guys that owned him. Like Jeff Janis this week. If you know who is owned on a lot of rosters on Sunday morning, you have an advantage. A lot of pros get this by entering Thursday rosters with a bunch of cheap lineups, seeing the percent ownership stats that the site doesn't provide until after rosters lock, then using that extra information to set their more lucrative Sunday entries into big prize money tournaments. It's the equivalent of counting cards in blackjack - you bet a dollar a hand until the deck is in your favor then you bet a thousand a hand. Except unlike card counting, the house doesn't care - they make the same whether you win or lose. It's the other players who are paying for their wins, but they don't even know it, because their odds of winning a tournament were so low to begin with and they enter so few times that they can't even tell they were being cheated.
The list of small edges goes on. And the pros don't see it as cheating. They are using publicly available information to make better decisions. The sites don't care. The pros enter a lot of times and the fish only a few. If anything, they want to help the pros, as long as they don't help so much it scares away the fish. It's the fish who are getting screwed and they don't even know it.
Picking the players is an important part of the game. It's definitely a big part of the skill of winning. But it's the other stuff where daily fantasy players are playing on an uneven playing field that makes it almost impossible to win for the average player. You need to know all the good tricks, set all your lineups correctly, and beat the vig. It's too much for all but the most dedicated people to overcome.