Fantasy Sports Companies

Fantasy Sports Statistics

The fantasy sports industry is not short on cash, raking an annual revenue of $1.5 billion. Advertising is a major source of that revenue. It makes sense because advertising helps attract an audience. Collectively, both DraftKings and FanDuel spent 90% of their prize money just to attract players to the game.

But players are not the only thing Fantasy Sports companies have got going on for them. Media outlets like Disney, Google, ESPN, and CBS are major corporate partners in the leagues.

As far as investors go, they have the National Hockey League (NHL), the National Football League (NFL), and Major League Baseball (MLB), who has invested about $300 million into both DraftKings and FanDuel, making their valuation go up to billions.

Issues Regarding Fantasy Sports

Gambling Issues

According to the Unlawful Internet Gambling Enforcement Act of 2006, Congress specifically allowed fantasy sports to operate under federal law because they come under the category of . The only caveat to this act is that players may not bet on the outcome of a single game or the performance of a single player.

But fantasy sports are prohibited in five American states, which includes Arizona, Iowa, Louisiana, Montana, and Washington. However, the Fantasy Sports Trade Association is lobbying to change the laws in those states.

Legal Issues

Traditional fantasy sports are legal under the Internet Gambling Prohibition and Enforcement Act of 2006. The Act contained a carve-out which specifically differentiated fantasy sports from online gambling or sports betting.

The rationale behind fantasy sports was always about playing with your friends, not to wager money. Even if wagering money was the case, you would not know whether you lost or won the wager until the end of the season (which is six-months). In gambling, whether it is traditional or online, you tend to lose money in a matter of hours or minutes.

Moreover, there was not much luck involved with fantasy sports because the results were spread out over a season. While a player might have one unlucky game, they could always bounce back the next week to make up for it.

The law of large number states that over a particular period of time, like a 162-game MLB season, the elements of luck get averaged out. With that in mind, fantasy sports were thought of like a game of skills, because at the end, it was not about luck, it was about whom you drafted.

Later on, with the release of daily fantasy sports, it only took a few hours of time for participants to win or lose money. The results were seemingly based more on luck than traditional fantasy sports.

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