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How Daily Fantasy Sports are Changing the Game

December 7, 2014

 

If you are not playing fantasy sports you are sorely missing out..


Fantasy has become much more than a fringe pastime (Fantasy Sport: No Longer a Fantasy Business), it is a way to stay connected with friends, compete against rivals, and now most importantly, make money…. And potentially lots of it. Yes, you could win a couple hundred bucks winning your university buddies season long fantasy football league. But that takes a full season, not to mention a whole lot of luck to dodge injuries and other misfortunes. On the other hand daily fantasy sports (or DFS) is on a daily or weekly basis. Millions of dollars are won each week on daily fantasy sports platforms. It’s simple, enter a contest, construct a lineup of players, and win cash… assuming your good at fantasy.


Games can be entered for as little as $0.25 and reach into the thousands, depending on your risk preference. People are honestly becoming millionaires regularly on these sites. However playing is still very accessible and contests can even be entered for free. For anyone that is a season long fantasy player, DFS is a must try. There are contest types for everyone ranging from extremely risky tournaments to 50/50’s. It also offers the opportunity to play players that you don’t have on your season long team and provides instant gratification (again assuming you are good at fantasy sports). So if your season long first round draft pick was suspended for the year (cough cough Adrian Peterson) or your team underperformed (cough cough Shady McCoy) DFS is a great opportunity regain your fantasy dignity.

 

 

However if you already spend too much time on fantasy (never too much time in my opinion) playing DFS will double it. I have spent every Sunday morning for the past 10 weeks completely engrossed in any source of information I can get my hands on. This includes the first screen, the second screen (Sport and Second Screen Consumption), and even the third screen. Then spend the rest of the day cursing at the television while the players don’t meet my expectations (Brandon Marshall…). It is by far the best day of the week. Period.

 

Playing DFS contests for cash may seem unlawful, however gaming laws in most of North America allow such monetary contests. This excludes Quebec and states such as Arizona, Iowa, Louisiana, Montana and Washington where the companies cannot offer paid contests. Although in a few of these places, legalizing fantasy sport is in the works, and will likely be seen in the near future (Tasch, 2014).


The Massive Growth of DFS

 

It is no coincidence that many people are becoming more and more into the DFS scene. This format of fantasy is a large reason for the huge growth in the fantasy industry (1.2 billion dollar industry in 2013 and growing). The two major players in the DFS industry, Fanduel and Draftkings, have received massive amounts of funding.Fanduel attaining $70 million and Draftkings gaining $41 million in recent rounds of funding through investors (Tasch, 2014). To put the massive growth of these companies into perspective, Fanduel‘s reported earnings for Q3 of 2014 are $8.9 million (Heitner, 2014). We have also recently seen a surge in the amount of marketing and endorsements of these platforms. Draft kings and Fanduel have recently been pushing out a high degree of television advertisements on major sport channels increasing their brand awareness. In addition they have been targeting newer media platforms such as sport podcasts to gain access to an engaged audience who are incredibly attached to fantasy sports.

 

Over the past few months, there has also been a blitz on partnerships with professional sport leagues, teams, and players. While in the early years of DFS the legality of this format was in question and the leagues and teams didn’t dare endorse them. However following the legal success of DFS, numerous of these partnerships have sprung up. These partnerships are providing fans with the opportunity to play free DFS contests to win great prizes such as tickets to major sporting events. The following is a summary of the current DFS partnership landscape.
 

The MLB

 

Although the MLB had previously seemed to be completely adverse to DFS in a statement by the chief executive thatstated fantasy sports are “akin to a flip of the coin, which is the definition of gambling.”They have seemed to change their minds (Edelman, 2014). It is important to note that this quote was said while the legality of DFS was in question, however now that it seems to be clear of that mess they have jumped on-board. The MLB are now partners withDraftkings and endorse the site as the official mini game site of the MLB (Edelman, 2014).

 

In addition DraftKings has had official relationships with 8 MLB teams including the Kansas City Royals and Boston Red Sox, however these contracts are up and will be renegotiated for the upcoming season (Heitner, 2014).

 

The NHL

 

Recently Draft Kings announced a league-wide 2 year partnership with the NHL making it the official DFS game of the league.DraftKings gains prominent placement on NHL’s media platforms and will serve as the presenting sponsor for daily video previews for regular season match-ups on NHL.com, NHL Mobile, and more (Heitner, 2014).
 

The NBA

 

Fanduel and the NBA have recently reached a 4 year deal which established the DFS site as the official daily fantasy outlet of the NBA. This deal also includes the NBA becoming an investor in Fanduel (Barrabi, 2014). The site also recently reached an agreement with the Dallas Mavericks, which adds them to the stable of NBA team partnerships that includes the Orlando Magic, Brooklyn Nets, New York Knicks, and Chicago Bulls (heitner, 2014).
 

The NFL

 

The NFL is seen as the top property in fantasy sports, as it garners the most participation. Although no partnership has been currently made between a DFS site and the NFL, it will likely be in the near future. Currently Fanduel has a partnership with the Washington Redskins whileDraftKings is partnered with the New England Patriots. It is likely that these two sites are battling for the rights of the last of the 4 North American pro leagues (heitner, 2014).


Although these leagues are showing great support for the growing DFS industry, they are still hesitant to endorse cash games. For example, MLB only endorses their free entry Fanduelcontests, and the NHL endorses free DraftKings contests. However the leagues are developing ways to leverage these partnerships through prizes that will draw fans to the DFS sites to play. This is especially important as it is known that fantasy players spend more time consuming sports through all mediums.

 

Summary

 

The DFS industry is more than a fad, especially as the major sports leagues are legitimizing it through endorsements and partnerships. There are definitely more hurdles for the industry to overcome legally for it to become more prevalent, however I do not foresee its recent rise slowing down any time soon. It is changing the way that sports fans “gamble” by making it more about skill and less about luck. That is why it will continue to thrive, and I will be along for the ride.

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