Some have quipped that the original fantasy sports leagues were akin to fans on steroids, but the newest rage, daily fantasy sports, appears to be taking sports fanatics into a league of their own.
“The growth has been tremendous the last year or two,” said Andy Billings, Ronald Reagan Chair of Broadcasting at the University of Alabama, an academic who has researched daily fantasy sports. “People really want to get involved with following sports and daily fantasy is a way to do that.”
And it’s not just conjecture. Yahoo, recognizing a trend, on Wednesday became the first big player to introduce its own daily fantasy site and app. Participation in fantasy sports of all kinds totaled 56.8 million people in 2014, up about 40 percent from 2013, according to a new survey that’s been released by the Fantasy Sports Trade Association.
Daily fantasy sports are booming and capturing a greater share of the total fantasy sports market, the trade group reported. While traditional fantasy sports have competitors looking to have the best team over the course of a season, typically against around 10 other teams, daily fantasy sports allows players to build a team every day and play against large groups.
Typically, players receive a set amount of money to build a team — $100, for instance. Every player comes with a set cost for that night’s game, based on expectations, and a team can be entered into tournaments of vastly different sizes — from a dozen to hundreds of competitors.
“There’s a lot to like about this,” said Drew Dinkmeyer, co-founder of DailyRoto, an Internet site that provides insight, analysis and news about daily fantasy sports. “You have the ability to start fresh every day. That’s really compelling.”
An estimated 20 percent of fantasy sports participants are playing only in daily leagues and none other, up from 8 percent in 2013. Until Yahoo’s launch this week, the primary websites operating daily leagues and tournaments were New York City-based FanDuel and Boston-based DraftKings.
The surge in participation has prodded big players to jump into the fray and challenge the upstarts that launched the industry.
Yahoo, whose popular sports page already included seasonal fantasy sports and tournaments, hinted this spring that it would take a bigger leap into the industry.
“Our users spend nearly 30 billion minutes a year playing fantasy sports on Yahoo,” Yahoo CEO Marissa Mayer said in a conference call on April 21 with analysts. “And nearly all of those experiences have involved traditional season-long fantasy games. Recently there was a rising trend around daily fantasy games. We believe this is an area where Yahoo can and should compete.”
Sunnyvale-based Yahoo has been working for about a year to develop a daily fantasy sports offering, Mayer told the analysts.
There’s plenty of venture capital cash that has flowed into the industry’s pioneers. FanDuel has raised $88 million in venture and private funding, and DraftKings has raised $325 million, according to the online site CrunchBase.
The excitement stems from the amount of money being played every day, which many feel makes daily fantasy sports the closest thing to sports gambling available online legally in the United States. Competitors typically pay a set fee to enter their team into a tournament, and winners get paid out large prizes based on the entry fee and number of teams, with the companies taking a cut.
Yahoo users can pay up to $600 per day, and the company earns 15 percent of each entry fee.
Dinkmeyer, a Florida resident, plays daily fantasy for a living. In mid-December, Dinkmeyer won $1 million through a National Football League tournament organized by DraftKings. That has underpinned his ability to keep playing regularly.
“You don’t have to be stuck for an entire season with a team that turns out to be lousy,” Dinkmeyer said.
A former financial industry employee, Dinkmeyer spends about three to five hours daily researching athletes who are scheduled to play that day. Then he spends about an hour putting together a lineup. Dinkmeyer says his natural comfort and expertise with numbers stands him in good stead in terms of choosing players for a day.
Mark Paquette is a meteorologist by trade and says his knowledge of weather science helps for games being played outdoors. Not just whether it will rain, snow, or be sunny or foggy, whether it will be hot or cold, but how certain ballparks favor or hinder the performance of certain players.
“There are a lot of details to be aware of when picking a team for the day,” Paquette said. “It’s almost science.”
The rising popularity of the sport has brought revenues to the companies that arrange leagues and tournaments.
FanDuel captured $57 million in revenue in 2014, four times the revenue in 2013, according to the company. DraftKings in 2014 generated $40 million in revenue, up from $3 million in 2013, the company said.
Some major companies are jumping into this arena. Comcast Ventures and NBC Sports Ventures are backing FanDuel.
“The continuing increase in fantasy sports participation illustrates several core, engaging elements of fantasy play,” said Paul Charchian, president of the Fantasy Sports Trade Association. “Fantasy sports remains a social activity, made more enjoyable when playing with friends.”
Fantasy sports players during 2014 spent an average of $465 per year each, up from $95 a year during 2012, the trade association reported.
“We want to be more than a place for people to come and create their lineups, we want to be an entire platform,” said Emily Bass, a spokeswoman for FanDuel. “We want to be a place for content, where people go to read more news.”
Staff writer Matt O’Brien contributed to this report. Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.
