Gambling On Fantasy Sports

We have read recent headlines that focus on DraftKings and FanDuel’s legal troubles. The two prominent Daily Fantasy Sports (DFS) companies have had to deal with the scandal about employees winning big on their sites, and they have had to face legal wrangling of whether they are actually gambling sites or promoting “games of skill.”

Whatever the outcome will be, you can’t ignore the large fan base, and dollars that DFS attracts. Fantasy sports are currently a multibillion-dollar industry. Todd Eilers, CEO of Eilers Research, was quoted in Forbes, saying “that daily games will generate around $2.6 billion in entry fees this year and grow 41% annually, reaching $14.4 billion in 2020.” I assume that’s if they are allowed to continue. Currently, DFS is legal in 45 states, but recently the states of New York and Nevada have been forcing DFS sites to close until further review. Closing down operations in those states may be the downfall of DFS, and Marc Dunbar, partner for the firm of Jones Walker, noted in the New York Daily News that “the federal government has the ability to take away the entire brand.”

But if you are involved with marketing teams or leagues associated with DFS, you would want the industry to continue. Primarily because the rise in DFS participation will increase the amount of those interested in your team or sport. Think about it. If you are one of the millions of office workers who participates in office fantasy leagues (no betting, of course, just bragging rights), you tend to not only follow your selected players, but will watch more games and, in turn, see more advertising. You may even buy some merchandise. The increase in viewership leads to an increase in fan base.

Professional teams have already jumped on the DFS band wagon. Most all NFL teams have sponsorship deals with DraftKings or FanDuel, and Dallas Cowboys owner Jerry Jones and New England Patriots owner Robert E. Kraft both have equity stakes in DraftKings. Other investors at DraftKings and FanDuel include the MLB, MLS, NHL, NBC Sports, and Fox Sports. The NBA has an equity stake in FanDuel in exchange for an exclusive with their site.

I recently travelled to England for the first time and noticed how easy it was to find a sports betting hall. And apparently FanDuel and DraftKings want to establish themselves in the UK, too. (Although, contradictorily they are applying for a gambling license there, while in the U.S. they want to keep their “games of skill” definition.) The English Premier League runs a legal sports betting book in Wembley Stadium, and in 2012-13 the UK generated £9.6 billion in tax revenue from gambling, close to 0.5% of the nation’s GDP, and employed over 100,000 people. DFS would be a part of that industry and make it grow. Those dollars are hard to ignore, very hard for sports marketers to ignore.

In order for sports leagues and teams to attract the younger audience, used to playing video games, DFS is a way to market to that growing audience who see online gambling (I mean gaming) more as the way the federal government has it defined — a game of skill. It helps that billions of prize dollars are paid out to those gamers each year. And each DFS player wants to be a winner.

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