Why fantasy sports are now big business

Fantasy sports have become a global financial reality

By Chad Lewis

First off, let’s talk about the stats. Americans are betting on sports more than ever. The Fantasy Sports Trade Association (FSTA) estimates that 56.8 million people participated in fantasy sports in 2015. This is a rather dramatic increase of nearly five-fold, up from 12.6 million just 10 years ago. FSTA estimates that fantasy sports players, on average, spent $257 in 2015 annually vs $5 in 2012 on daily fantasy sports and $162 on traditional fantasy sports in 2015 vs $15 in 2012. Based on those numbers, the fantasy sports world is a $26 billion + business. However. the FSTA estimates that growth in 2016 growth will be more tempered, a 1% increase to 57.4.

The American Gaming Association estimates that Americans wagered $149 billion on sports in 2015, with only $4.2 billion bet at Nevada’s regulated sportsbooks. FanDuel and DraftKings are far and away the top fantasy websites. However, it is estimated that there are well over 100 fantasy sports gaming websites.

This growth has come in spite of increased regulatory attention and questions around legalizing fantasy sports. Why?

Traditional ‘season long fantasy’ vs ‘daily’

For many fantasy sports players, it’s a chance to manage a team and engage in the action while competing with ‘old buddies and friends’ or as part of a larger pool. As with all gaming, there’s an element of excitement. Daily fantasy has an advantage over a season-long format in that if your team performs poorly, you can start all over again next week with no consequences (except the bet you lost).

Season long fantasy comes with its advantages as well. Selecting players that your hometown team may ultimately face. And let’s not forget the ever difficult conundrum of cheering for your hometown team or that running back to score against your team to win your weekly fantasy game.

The technology side of things

Players are more interested in sports because of fantasy. 61% say they are watching more live sports because of fantasy. Additionally, 60% say they read more about sports because of fantasy.

The ease of access with mobile devices is another reason technology is such an integral part of the growth of fantasy sports. 37% of fantasy sports players primarily use a mobile device today, compared to 25% in 2012.

Game of skill vs luck — Future regulation

Wagering money on fantasy sports, however, was deemed a game of skill — requiring knowledge of players’ likely performances — and not a game of chance.

Industry-leading DraftKings and FanDuel have been forced to cease operations for paid games in 12 states after daily fantasy was deemed illegal under respective state gambling laws: Alabama, Arizona, New York, Hawaii, Iowa, Louisiana, Mississippi, Montana, Nevada, Washington, Texas and Idaho.

DraftKings and FanDuel have been engaged in an ongoing legal battle with New York Attorney General Eric Schneiderman since the fall of last year and are not operating in the Empire State in addition to several other states. Nine state attorneys general have joined Schneiderman in declaring that daily fantasy sports violate state gambling statutes. This could all be changing soon though. On June 18, the New York State lawmakers set in motion a bill that would allow operators like DraftKings and FanDuel to operate in New York on the basis that it is not gambling, but a game of skill.

Other states, though, are attempting to legalize daily fantasy. Indiana, Tennessee and Virginia have passed legislation clarifying the legality, and more than 20 states are considering bills. Massachusetts has implemented extensive regulations. Being that fantasy sports is essentially interstate commerce with given pools across multiple states, a question that has arisen as to whether or not to legalize fantasy sports is “Will this be a Federal or State Issue?”

You possibly win what you put in against other players, as opposed to ‘the house’ or a ‘casino’. This can be an issue for ‘average players’ vs ‘professional players’ like poker.

Conclusion

Sports gaming has become big business and business is booming. This has led to questions over how the U.S. professional leagues will deal with the future of gaming, with NBA commissioner Adam Silver at the forefront of discussions around the legalization of sports gaming.

Will sports gaming and fantasy continue to thrive with an ‘underground’ following? Or will sports gaming be regulated and readily available for action on your mobile device? Only time will tell, but whatever direction the debate goes, the industry has grown massively over the past decade and despite some moderated growth, currently shows no signs of slowing down or declining.


Originally published at thewhyforum.com.

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