Daily Fantasy: Meteoric Rise, Legal Questions, and Unfolding “Scandal”

Now that we are into the second month of the football season – what is the biggest story of the season? Well, if you have a television, computer, or smart phone, you know that the answer is DAILY FANTASY. And that was before the “scandal” (to be discussed later) that unfolded just as I thought I had completed this article. Led by FanDuel and DraftKings, who have a combined over 95% market share, a recent Eilers Research Report (“Eilers Report”) made a baseline projection that daily fantasy sports entry fees will reach $2.6 billion this year and skyrocket to $14.5 billion by 2020. In fact, DraftKings and FanDuel were estimated to have collected approximately $60 million in entry fees in just the first week of the NFL season. Each company is valued at over $1 billion. The Fantasy Sports Trade Association estimates fantasy players have grown from 55,000 in 1988 to 46.2 million this year, with 8.9 million playing daily fantasy games. And daily fantasy isn’t just the talk of the football season, it was the talk of the recent Global Gaming Expo (“G2E”) in Las Vegas.

We see their marketing everywhere. The Eilers Report estimates that DraftKings and FanDuel have respectively spent $224 million and $97 million for marketing in 2015, equating to a per player acquisition cost of $190 for DraftKings and $110 for FanDuel. And where has much of their marketing money come from? The NFL, NHL, NBA, MLB, MLS, and NASCAR have all either invested in or entered into business relationships with FanDuel or DraftKings, as have many individual teams. Broadcast/media companies such as ESPN, Fox, Google and NBC Sports have also made investments or entered into partnerships with FanDuel and DraftKings. And the story does not end there. Yahoo and CBS have entered the mix, “drafting” off of their season long fantasy customer lists.

Daily Fantasy: Meteoric Rise, Legal Questions, and Unfolding “Scandal”.pdf

Date Published: February 7, 2017

Written by: Lynne Levin Kaufman

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