Daily fantasy sports industry mired in...
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Dec 14, 2015  |  Vote 0    0

Daily fantasy sports industry mired in controversy: Mudhar

Daily fantasy sports have been one of the biggest sports media stories of the past year, even though it feels like they have come out of nowhere yet are everywhere


The first thing I asked the guys at The Score was: “Are you crazy?”

That was my reaction when the Toronto-based sports app developer gave me an early briefing on QuickDraft, the company’s new mobile-first, fantasy sports game aimed at a casual audience.

It launched on Thursday, being released when the nascent daily fantasy sports (DFS) industry seems to be imploding, so the timing feels like it couldn’t be worse.

And Friday, as if on cue, both DraftKings and FanDuel were told to temporarily close down their New York operations after a judge said the two leading daily fantasy sports sites can’t keep operating while at the same time fighting against a bid to declare them illegal under state gambling laws. But within six hours, that ruling was overturned by another judge, and the two companies can continue to operate until another appeal hearing occurs sometime in January.

But this is just another skirmish in an ongoing legal and regulatory fight as the nature of these games is decided.

Daily fantasy sports have been one of the biggest sports media stories of the past year, even though it feels like they have come out of nowhere yet are everywhere. It’s been well reported the growth stems from a loophole in regulations that classifies them as games of skill as opposed to chance. Much of their fight is about being classified as gambling, but there is much about it that is fascinating.

First off, there’s the snake-eating-its-own tail theme, one that is central to these companies’ current growth and likely continued existence. It seems like every giant media company, sports league and team has financially backed or signed a promotional deal with either FanDuel or DraftKings, who together account for 95 per cent of this market in North America. Then, in turn, both of the companies have reportedly invested hundreds of millions of dollars in television advertising. It certainly looks like a cycle of continually lining each other’s pockets.

A perfect example is that Fox Sports led a $300-million financing round in July 2015 for DraftKings and, as part of the deal, the company promised to spend $250 million in advertising over three years with the broadcaster. The NHL and MLB also have marketing deals with DraftKings, while the NBA has an equity stake in FanDuel. In October, MLSE signed a four-year promotional deal with DraftKings.

Beyond the controversy over whether it is indeed gambling, there are the fantasy players. There are the sharks — those who use scripts and algorithms to make hundreds of entries — and the fact many pools are won by the employees of these companies who run them. The New York Times has done a good job investigating the many allegations against the industry.

I am one of the 56 million people who play in a weekly fantasy league — and my team is in the first round of the playoffs this week — so I can understand how they want to convert us to these more short-term games. There are plenty of weekly pool players on the outside looking in right now, and these are exactly the players they want to give DFS a shot.

The Score’s new QuickDraft game is aimed at casual users, with free entry and a smaller roster of five players to pick. It is a much lower stakes, with smaller prizes and a limited number of entries.

The explosion of fantasy sports has obviously had an effect on how we watch sports and how they are being broadcast. As for what’s next, there absolutely should be regulation of these ventures although, at this point, these DFS companies almost feel like they are too big to fail.

But the weirdest thing about the incessant advertising blitz, their ubiquity and so much coverage, is that anecdotally I haven’t seen very many of my sports-fanatic friends talking about signing up or trying to convince me to join them in trying this hot new thing.

Obviously, the huge prize pools means people are playing — and paying — for these games, but there is a reason these companies don’t disclose any actual user numbers. That might just prove that it really is a small number of people playing these games compulsively.

Once again, that certainly sounds an awful lot like gambling to me.

Toronto Star

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