Fantasy Sports

Fantasy sports and its shortened timeframe variant daily fantasy sports have enjoyed a meteoric rise in the United States and Canada over the past couple of years. The two market leading fantasy sports vendors, FanDuel and Draftkings, are now targeting the UK market, and in preparation for this, they are both UK Gambling Commission licensees. This may be because fantasy sports is reaching saturation point in its core market or because of the number of states taking a legislative interest in fantasy sports. Whatever the reason, can fantasy sports reach the same level of success in the UK?

Fantasy Sports

Fantasy sports participants build their own sports teams from real players of a professional sport. The team choice is constrained by a salary cap or a performance-based value dictated by the fantasy sports site vendor. These teams compete based on the statistical performances of the players in real games.

Fantasy game results are not based on the final scores of any real world games. Participants can only pick a limited number of players from the same team when constructing a fantasy team.

Fantasy sports has been a popular hobby for decades. The Internet and rise of mobile devices have massively accelerated the popularity of fantasy sports in recent years. The Internet enabled fantasy sports to be played not only among friends, but also among players from around the world, many of whom had never met. The Internet also gave players access to downloadable statistics (a branch of this sports analytics based approach, Sabermetrics, was depicted in the film Moneyball) and to have third-party services collect league entry fees and pay out the league’s prize winners. In short, the Internet facilitated the fantasy sport’s transition from social activity to commercial pursuit.

The Fantasy Sports Trade Association’s (FSTA) current estimate for 2015 is that there are 56.8 million people playing fantasy sports in the USA and Canada. 37% of fantasy sports players primarily use a mobile device compared to 25% in 2012.

Daily Fantasy Sports

Daily fantasy sports (DFS) is a similar to traditional fantasy sports with the main exception being that the entire contest starts and ends in a much shorter time frame. Contests last a single day for sports like baseball and basketball while NFL football plays two or three days to get the Monday night games in. DFS is a booming industry that is expected to continue growing at a rapid pace. The appeal for DFS players is twofold:

• People like the shorter time frame.
• Serious players can make big money. People don’t try to make a living by playing traditional fantasy sports, as it takes too long to get a return on their money.

FanDuel are a daily fantasy sports (DFS) provider. Other DFS providers include DraftKings, Yahoo Sports and FantasyDraft.

The market leading DFS providers are FanDuel and DraftKings (as measured by metrics such as registered users, amount wagered and Google trends.

Skill Or Gambling

FanDuel and DraftKings claim that daily fantasy sport betting is a game of skill. This is significant in the US because the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) excluded fantasy sports (games of skill) from prohibitions against Internet gambling (games of chance). (The resultant mass exodus of online gambling sites from the US marketplace left a void, which was filled by fantasy sports sites, further fueling the genre’s uptake and popularity.)

To date neither Fanduel nor any other similar company has faced prosecution for violating state gambling laws. The continue legality of fantasy sports relies on the ability of companies such as FanDuel and DraftKings to demonstrate that their product is more a game of skill than chance. The skill is in the selection of the teams based on superior analysis of the available statistics. The elements of chance are:

• The lottery mechanism used to determine which DFS player gets to pick the real-word players first.
• The absence of a player through injury or a match being called off because of unforeseen circumstances.
• The impact of one-off lucky shots such as hole in ones.

The success of any legal action against DFS will rest on proving that these elements of chance outweigh the skill-based elements.