26th of September 2010 Author: Johnny Karp
Legislative carve-outs for fantasy sports betting line have sparked a lucrative business
Good weekend reading came from Associated Press this week in an article on the growing popularity of online fantasy sports gambling, a pastime sanctioned in all but 6 states by US law despite the banning of other internet forms of gambling.
In fantasy sports, participants pick a team of real-life players in baseball, football or other sports and compete based on their real-life statistics. Such competitions typically last a season, but more websites are springing up that offer prize money for teams that last only one night.
The AP report notes that rivalries among friends or co-workers are building new nightly online betting into a hit for the $800 million fantasy sports industry, with over a dozen websites managing daily fantasy sports wagers, earning a percentage for doing so.
Paul Charchian, president of the Fantasy Sports Trade Association, which represents 120 companies, revealed to the AP that commissions amount to $35 per player per month at one of the largest new sites, FanDuel.com , and that nearly 7 million Americans and Canadians were already playing fantasy sports for money by 2008, with the total expected to soar.
One of the market pioneers, Fanball.com, launched a daily game in late 2008 called Snapdraft, and quickly attracted players; another was FantasySportsLive.com, which launched daily games with gambling in mid-2007.
Charchian observed that fantasy sports betting is not considered sports gambling because gamblers can't wager on scores or team wins or losses, and they can't create fantasy teams that mirror real-world teams. These are what-if teams, where individual performance is the most important factor.
Newer arrivals in the sector include FanDuel, which launched in the spring with $1.8 million in venture capital funding and now averages 20,000 users per month who have placed more than 65,000 bets, according to CEO Nigel Eccles.
Eccles said the site's use increased 10-fold with the start of the NFL season this month.
"Whereas season-long drafts have already had their single bite ... our daily draft model enables us and our partners to continue to add players throughout the NFL season," he said. FanDuel has expanded into Canada and now has deals with seven major U.S. newspapers to attract players. The two businesses evenly split the commission FanDuel collects on each bet.
In 2008, an Ipsos survey showed that fantasy sports gamblers were spending an average of $134 per year on their leagues as the daily gambling sites were just starting to take off. The research firm found that of the 27 million Americans and nearly 3 million Canadians who play fantasy sports each year, about three-quarters do it just for bragging rights.
Media owners like the fantasy sports concept because it gives their readers comething new and different, Yoni Greenbaum of the Philadelphia Inquirer and Philadelphia Daily News, told AP. "It's a niche that fits into a larger strategy," he said, adding that the hope is that links like this will get readers to make Philly.com part of their daily routine; already some players have complained that they can't bet enough each night, he said.
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