{"id":4609,"date":"2016-09-21T13:27:50","date_gmt":"2016-09-21T17:27:50","guid":{"rendered":"http:\/\/ncjolt.org\/?p=4609"},"modified":"2020-06-04T20:53:00","modified_gmt":"2020-06-04T20:53:00","slug":"daily-fantasy-sports-pulse-check","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/daily-fantasy-sports-pulse-check\/","title":{"rendered":"Daily Fantasy Sports: A Pulse Check"},"content":{"rendered":"

At the beginning of last year\u2019s NFL season, it seemed like you couldn\u2019t watch football for ten minutes without finding yourself bombarded with advertising for the two largest<\/a> <\/span>daily fantasy sports websites operating in the United States, FanDuel and DraftKings. This aggressive advertising campaign triggered a high profile look at the relatively new world of daily fantasy sports, and its inherent ability to offer unprecedented levels of convenience and quick access to online gambling. Today, this advertising is virtually non-existent<\/a><\/span>, and activity on the sites has declined<\/a><\/span>. What caused the daily fantasy sports spiral? Was it the pressure of legislative and judicial challenges or simply the natural result of a business model doomed from the start? Let\u2019s take the pulse of daily fantasy sports.
\nFirst\u2014for the uninitiated\u2014let\u2019s get some background out of the way. A Fantasy sport<\/a><\/span> is a game, usually played among friends, which allows players to take on the role of owner of a fictional sports team. The \u201cowner\u201d picks, or drafts, their fantasy team from a pool of current real-world players of the sport (professional football is the most popular and well-known fantasy sport<\/a><\/span>). Generally speaking, the team you draft is the team you\u2019re stuck with for the duration of the season. When the players you\u2019ve drafted do well in real games, your team scores points. Scoring is tracked online via free web services through sites like ESPN and Yahoo Sports. At the end of the season, a winner is crowned. Through the traditional setup, sites like ESPN and Yahoo Sports are not involved in the betting that typically backdrops fantasy leagues (ESPN even states its fantasy sports are \u201cstrictly for entertainment purposes and may not be used in connection with any form of gambling<\/a><\/span>\u201d).
\nThe fantasy sports industry has grown into a behemoth in the last decade, with an estimated 57.4 million<\/a><\/span> participating in the United States and Canada in 2015. This participation begets real money, with the average player spending over $550 a year<\/a><\/span> on fantasy sports.
\nEnter daily<\/em> fantasy sports. The daily fantasy sports business model has the player draft an entirely new team each week, and directly facilitates the placement of wagers on the success of these week-long\u2014or sometimes day-long\u2014teams. Money changes hands daily, with the host site (DraftKings, FanDuel, Yahoo! Sports Daily Fantasy) taking a cut. Rather than playing with friends, most daily fantasy sports are played amongst individuals who are complete strangers and are located throughout the United States.
\nWeek 1 of the NFL season last year brought a barrage of advertising for daily fantasy sports websites, triggering a nationwide conversation about the perils and merits of gambling, and whether or not daily fantasy sports even counts as gambling. DraftKings alone spent over $23 million<\/a><\/span> on advertising in the first week of the 2015 NFL season. DraftKings and FanDuel ultimately spent over $200 million<\/a><\/span> on advertising during the 2015 NFL season. At the time of writing\u2014week two of the NFL 2016 season\u2014neither site is anywhere to be found amongst the top spenders<\/a><\/span> in TV advertizing for the week. DraftKings and FanDuel are getting out of the ad business<\/a><\/span>\u2014at least the business of buying advertising<\/a><\/span>.
\nMeanwhile, substantial legal uncertainty still surrounds daily fantasy sports. Only twelve states<\/a><\/span> have affirmed the legality of daily fantasy sports. Five <\/a><\/span>states have \u201chistorically banned\u201d fantasy sports, but of those only Montana does not appear to be currently considering a softening of its laws as applied to fantasy sports. Ten<\/a><\/span> states have recently taken steps to affirm the illegality of daily fantasy sports in their jurisdictions, or to pass legislation making the practice illegal. However, the overall trend appears to be moving in favor of legalization as legal hurdles have dropped <\/a><\/span>across the country in the last year\u2014from New York to Indiana to Mississippi. So, while DraftKings and FanDuel appear to be winning the battle for legal status, why are they still hurting?
\nUltimately, the daily fantasy sports industry is in decline because the current business model isn\u2019t viable. Legal battles aren\u2019t cheap\u2014especially when you have to fight fifty of them (FBI investigations into predatory tactics of employees of FanDuel and DraftKings aside<\/a><\/span>). Add on the fact that DraftKings and FanDuel spent a whopping $174 and $123<\/a><\/span>, respectively, in marketing per new user acquired<\/em> in 2015, and it\u2019s not surprising these companies are floundering. Despite the negative press generated by the FBI investigation in October of 2015, the problem may still persist<\/a><\/span> after a DraftKings contractor won a $1 million prize on\u2026DraftKings over the weekend. Because most of money won in daily fantasy sports<\/a><\/span> is confined to a tiny percentage of users<\/a><\/span>, the average person might simply be getting frustrated with failure.<\/p>\n

Unless the industry is able to win back a substantial portion of users in a way that is more cost-effective, and the average Joe is able to find occasional-if-not-consistent success playing, it\u2019s hard to imagine how the daily fantasy sports industry won\u2019t fold soon.<\/p><\/blockquote>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

At the beginning of last year\u2019s NFL season, it seemed like you couldn\u2019t watch football for ten minutes without finding yourself bombarded with advertising for the two largest daily fantasy sports websites operating in the United States, FanDuel and DraftKings. This aggressive advertising campaign triggered a high profile look at the relatively new world of …<\/a><\/p>\n","protected":false},"author":1,"featured_media":4610,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/4609"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=4609"}],"version-history":[{"count":1,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/4609\/revisions"}],"predecessor-version":[{"id":7183,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/4609\/revisions\/7183"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media\/4610"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=4609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=4609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=4609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}