A fantasy sport is a game that lets participants own and manage a team, and those teams compete against each other using the statistics generated by the real life counterparts of each roster. Fantasy sports are generally played out over the course of an entire season, but daily fantasy sports, or DFS for short, is a relatively new concept that shortens that period to just a day, week, or month.
The first websites offering DFS games emerged around 2000. At first, sites were not dedicated to DFS but rather offered it as an alternative to core services. During that time, no one was sure whether fantasy sports with money on the line was a legal business. The government crackdown on online poker was on the horizon, and few real-money DFS services were available. This crippled interest. An exception to this were the daily games operated by companies like ESPN, which often offered daily prizes in the thousands and grand prizes as big as a million dollars. When it came to free leagues, season-long play was and still is king because of the inherent rewards of nurturing a roster over a long period.
Everything changed in 2006 when the Unlawful Internet Gambling Enforcement Act was signed into law. Although the UIGEA was a deathblow for online poker, the act explicitly excluded fantasy sports as a game of the skill, making DFS completely legal and legit at the federal level, and interest in paid DFS soared overnight. Fantasy Sports Live, which launch in 2007, was probably the first pure DFS gaming site. NBC joined the fray with SnapDraft in 2008, but the industry did not really take shape until FanDuel, which was founded in 2009, began to cater to DFS players in 2011. The other heavy hitter in the industry, DraftKings, did not open its virtual doors until 2012.
Development and Investments
Prior to 2009, DFS sites were still niche. Fantasy Football was a household concept in the U.S., but this was a game played among friends and coworkers with modest pots on the line. FanDuel advertised on TV and radio and was the first company to present DFS in a way that would attract casual gamblers. That was possible due to $4 million in venture capital from Piston Capital in 2011. The business world took immediate notice of the success of that investment, and that is in large part what made the substantial venture capital for DraftKings a reality.
In 2014, DraftKings landed a major marketing deal with Major League Baseball, and that resulted in more than $40 million in Series C funding. FanDuel responded with more than $70 million in venture capital, and the current investors for these companies include media giants like NBC and Comcast.
Leading DFS Sites
FanDuel and DraftKings are the companies that shaped this industry, and they continue to be the largest and most lucrative DFS enterprises. In 2014, FanDuel paid out more than $400 million in prizes, and DraftKings was not far behind. The third largest player in the industry was DraftStreet, but that company was acquired by and merged into DraftKings in July 2014.
FanDuel launched in 2009, but it was not until 2011 that it shifted gears to focus entirely on DFS. In 2011, it paid out $10 million in prizes and company profitability had increased substantially. Total prizes amounted to $50 million in 2012 and $150 million in 2013. Respected business forecasts expect similar growth in 2015 to what FanDuel experienced from 2013 to 2014. In 2014, FanDuel averaged approximately 87,000 lineup entries per day. In 2010, FanDuel began the highly popular FanDuel Fantasy Football Championship, and in 2014, the FFFC paid out $2 million to first place, $1 million to second place and $500,000 to third place.
Although relatively young compared to FanDuel, DraftKings has been an innovator. DraftKings was the first major site to look beyond the NFL and MLB, and it forced change in the DFS industry by doing so. The NFL and MLB are still the DFS kings in North America, but now participants can find action in nearly any sport any day of the week. Another way that DraftKings innovated was introducing deposit bonuses, reload bonuses and other types of promotions that had generally been the sole domain of online casinos and poker rooms. FanDuel soon followed suit, and these bonuses have made it very difficult for smaller operations to compete.
What Beginners Should Know about Daily Fantasy Sports
Although DFS is a skilled-based game, it is much more difficult to earn a steady income playing it than it is with a game like poker or blackjack. This is because the average DFS game has many moving parts, and no matter how knowledgeable the player is and how much research he puts in, there is a lot of opportunity for bad luck to undermine the best-laid plans. Nevertheless, punters can use DFS effectively to diversify their gambling portfolio, and fantasy sports fans who enjoy the carrot will experience more regular success and overall enjoyment compared to season-based leagues.
DFS leagues are available in many configurations. Know those settings because they affect athlete value. If a player has a particular strength, such as predicting batting trends based on the season-long normalization of batting averages, then he should choose leagues with settings that favor that strength. That will provide a substantial advantage right there over the majority of the field. Another important tool that players can use is Vegas. That industry does much of the heavy lifting when it comes to number crunching for sports on a daily basis, and players can have success just adhering to Vegas opinions.
Check out these additional DFS resources below: