Daily fantasy sports betting has impressive side effects

Daily fantasy sports betting remains the hot topic in the United States at present, with the major newspaper USA Today carrying a large article on the phenomenon over the weekend.

The article highlighted the interest of major sports leagues in the USA – traditionally strongly opposed to any form of gambling – in daily fantasy sports due to the impressive benefits the genre generates in some interesting areas.

The NBA, NFL, MLB and NHL have all partnered up with top daily fantasy sports league companies which the piece claims have business models that rely on fans “…trying to make fast money every day based on player performances is games.”

It’s legal in almost every state. And its popularity is soaring, especially among young adult males, USA Today notes.

Industry experts told the newspaper that the involvement of the sports leagues could have major implications for American sports, boosting television revenues as fans pay closer attention to what’s happening in sports in order to sharpen their predictive skills and reap rewards.

The NBA has already announced its deeper involvement with daily fantasy sports giant Fanduel, where it has become an equity investor. The site hands out $10 million in weekly cash prizes, but NBA players are not permitted to play the games, which are based on real player performances.

In trying to rationalise the apparent conflict with the association’s anti-betting policies, NBA spokesman Tim Frank told the newspaper:

“Our policy is that NBA personnel are prohibited from participating in NBA fantasy leagues that require payment of an entry fee or award prizes to participants.”

NBA Commissioner Adam Silver is already well known through his outspoken advocacy for the wider availability of sports betting in the United States (see previous reports).

Not all sports bodies are comfortable with daily fantasy sports involvement; the NCAA maintains that it still constitutes gambling and bars players, coaches and administrators from playing for cash.

“NCAA member colleges and universities have defined sports wagering as putting something at risk, such as an entry fee, with the opportunity to win something in return,” NCAA spokeswoman Emily James explained this week.

The NHL, MLB and two NFL teams have a different approach and seem to regard d.f.s. as a business opportunity. They recently teamed with DraftKings, a rival of FanDuel.

And USA Today itself has a partnership with FantasyScore and RT Sports.

Paul Martino of Bullpen Capital, which has equity in FanDuel, pointed to an impressive statistic that is likely to influence continued investment in daily fantasy sport firms: Fans consume 40 percent more sports content across all media once they start playing FanDuel.

Other experts explained to the newspaper that daily fantasy sports players give longer and more immediate attention to sports results on internet, mobile and television channels because they have money riding on the performance of the athletes and teams involved.

That boosts the amount of time they spend devouring media information…and that boosts league visibility, advertising revenues and lucrative sports rights agreements for the national leagues.

The latter is particularly big money; starting in 2016, the NBA will begin a nine-year, $24 billion deal with ESPN/ABC and Turner Sports, nearly triple its current annual average.

Viewers of TV run-of-the-mill programs are known to record such productions on their DVRs and then skip through the commercials that are helping fund the content. By contrast, sports fans tend to watch games live with commercials and all the way through, especially if there’s money on the line, and this has an obvious appeal for advertisers.

Comcast and NBC Sports both have venture-fund investments in FanDuel, along with the NBA.

Nigel Eccles, the CEO of FanDuel, told USA Today that daily fantasy sports additionally helps expand television viewership. “This is the way to bring the younger consumer into watching sports,” he said, noting that the average daily fantasy sports competitor is in his or her early 20s.

USA Today notes that the digital revolution has transformed traditional fantasy sports gaming. The genre has been around for years, during which traditional season-long leagues paid jackpots once a year. Participants would draft a team of real-life players before the season and then wait until after the season to see who racked up the most points based on seasonal statistics.

Digital media has transformed that into an exciting daily experience which better resonates with younger sports fans who are completely at home with today’s comprehensive and dynamic technologies…and are accustomed to almost immediate gratification.

The goal is now to select the group of players who rack up the best statistics in that day’s games, based on individual and team player performances.

The leagues feel that there is less chance of corruption in fantasy sports because it would not be feasible to fix a fantasy game involving a group of real players who are on multiple teams. And there is no doubt that the evolution of daily fantasy sports is contributing to higher viewer statistics for live sports events.

Some legal experts, including the respected i-gaming law professor I. Nelson Rose, told USA Today that the partnership agreements with fantasy sport companies entered into by the national sports leagues were breaking down the league-imposed barriers to gambling, especially as regards internet betting.

Inevitably, not everyone is happy with the d.f.s. trend; Les Bernal, the executive director of Stop Predatory Gambling, told the newspaper that the old problem of experienced “sharks” making money at the expense of average, not-so-well-informed players was a risk, whilst the organising firms keep 10 percent of the pot.

“Better names for these fleecing operations are Rip-off Kings and ScamDuel,” Bernal said. “The only way the daily fantasy sports model works is by attracting poor players, the fish, to feed the good ones, the sharks.”

But a FanDuel spokeswoman claimed that the full-time professional daily fantasy players represent only a negligible portion of its users.

Justine Secco said that fantasy sports companies also object to any association with gambling, noting that federal legislation in 2006 specifically permitted paid fantasy sports, because these are considered to be games of skill and not chance.

The future could be bright for d.f.s. Less than 3 percent of the potential market has been turned on to this relatively new phenomenon, the newspaper reports.

FanDuel, which claims about 70 percent of the daily fantasy sports market, says it has more than a million active users and should quadruple its revenue in 2014 to nearly $60 million.

A FanDuel spokesman said, “We’ve barely scratched the surface.”