One of the biggest industries in sports has become fantasy sports leagues. What started as some friends sitting around a table, drinking a few beers, putting up a few hundred dollars each in a kitty and drafting players for their teams has grown into a multi-billion-dollar business.
One of the biggest fantasy sports undertakings is FanDuel, a web-based “premium game” and the largest company in the daily fantasy sports. The model consists of traditional season-long fantasy sports leagues being compressed into a daily—and occasionally weekly—game.
The compressed competition with other individuals is really at the core of FanDuel’s overnight success. No longer do individuals have to set lineups, make trades and go head to head with other league members for an entire season. You can slip in and out and get your fix on a daily basis with a season-long commitment. FanDuel hosts an average of over 600,000 lineup entries per week into their daily games.
Get this: During 2015 FanDuel plans to pay out over $2 billion in prizes—up, remarkably up from $150 million in 2013, $50 million in 2012, and $10 million in 2011.
According to FanDuel’s support website, fantasy sports is considered “a game of skill” and received a specific exemption from the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA). FanDuel uses exactly the same rules as season-long fantasy sports games, the only difference is that its games last only a day.
Studies show that 22 percent of U.S. males aged between 18 and 45 with Internet access have played fantasy sports. It is estimated that fantasy sports has a $3-4 billion annual economic impact across the sports industry, and it is now supported by all the major leagues. The laws relating to fantasy sports vary by state, however in the vast majority of them, “fantasy sports is considered a game of skill and therefore legal.” In most states, a game of skill is classified as “a game where skill is the predominant factor in determining the winner.” The states where the law seems unclear or questionable about the legality of fantasy sports are Arizona, Iowa, Louisiana and Montana. FanDuel does not offer paid entry games to residents of those states.
I’ve never been into fantasy sports. It takes away from the pure enjoyment of watching and following the various sports and individual teams and players. But, it seems I am in an increasingly small minority that isn’t involved in some way in what amounts to allowed betting on sports. Of course, illegal gambling continues unabated and bookies are still getting rich off suckers who lay down their hard-earned money, mostly on professional and college football and basketball, although all sports have their devotees.
The rise in fantasy sports businesses such as FanDuel and DraftKings, with their enticing commercials that tout “the giant check” and nerdy young men “with bikini models” hanging onto their legs, is a bit troubling. I know at least one young man who got hooked on fantasy sports and wound up draining his checking account in the hopes of hitting it big. It’s only a matter of time before fantasy sports may become a real social problem. There needs to be more oversight (or at least studies of the affects they have on individuals and their financial and mental well-being) of fantasy sports businesses. While it is legal, it still amounts to risking your money in hopes of winning more cash. And the people who are risking that money are often those who can least afford it.
by John Torsiello