The Very Real Problems of Fantasy Football

The Very Real Problems of Fantasy Football

My trust issues began in the summer before my junior year of high school. I played summer league basketball for my high school’s team and we were undefeated heading into the championship game against our crosstown rival.

Some of the players on the team didn’t take summer league as seriously as I did and we ended up losing the game in an upset. I was inconsolable after the game, vowing to never play in another “team sport” because I couldn’t stand being held accountable for the actions of others. I wasn’t blameless for the loss, but it was clear to me that I couldn’t handle dealing with others who didn’t care about winning as much as I did.

Fantasy football triggers similar feelings. I have trust issues and placing faith in the abilities of a second-string kicker in week 10 seems to amplify my anxiety of others controlling my fate.

In the hyper-competitive mind of Josh Siegel, I am a complete and utter fantasy football failure. I’ve played every season since 2009, usually having a winning record and making the championship game of these leagues for three years, yet I am unable to fulfill the goal of winning a championship that I set so many years ago.

The simplicity of fantasy football is what sells it so well. You simply draft a team full of offensive players that you believe will put up good statistics and select one defensive player who will crush opponents while also generating sacks, turnovers, and even some scoring of their own. Each week you face a new opponent from your league and the opponent who scores more points wins.

Fantasy football has changed a lot since its founding in 1962 by an Oakland area business man named Wilfred “Bill” Winkenbach. Back then, there were no television channels devoted to covering fantasy sports, computers to automatically track the stats of players, and certainly no venues dedicated to hosting live “draft parties”. Today, over 56 million people participate in fantasy football, making it the most popular fantasy sport by far.

This should come as no surprise: as sports entertainment gets bigger and bigger in America, we see spin-off industries creating an entirely new demand. This can even be said about entirely new leagues like UFC, or the Ultimate Fighting Championship, a relatively new sport founded in 1993. But despite its relative newness, it still grossed over $150 million back in 2014.

As far as spin-offs from traditional American sports go, fantasy football has become a staple to the point where it’s almost viewed as an extension of the sport itself. The NFL has even gone so far as to make a Twitter page dedicated to fantasy users and even has shows on its network that forecast ideal fantasy lineups for the upcoming week.

Because of the beautiful capitalist system we live in, there have been two companies that have vehemently tried to stake their claims as the premier fantasy football gambling sites. DraftKings and FanDuel have experienced tremendous growth since their emergence as the first major fantasy gambling websites. From 2013 to 2015, DraftKings’ revenue went from $3 million to $105 million and FanDuel’s jumped from $57 million in 2014 to $170 million the following year.

If you tune into channels like ESPN, Fox Sports, or similar sports networks, you’ll immediately notice the heavy amount of advertising from these two companies. They spent a combined $500 million in advertising, with $200 million of it going to television ads alone – a large sum of money considering their previously mentioned revenue numbers.

They have, however, captured a tremendous amount of their targeted market. Four million people participate in fantasy sports gambling, and they capture a healthy 90% of those people who spend an average of $47 per month playing in North America.  

But even with such a great share of the market, these two companies aren’t reaching desired profitability. In July, the Free Trade Commission (FTC) blocked a proposed merger between the two, reasoning that the consumer would lose out on innovation and favorable pricing if they merged. They decided not to appeal the ruling, as legal costs might have ranged from $12 million – $15 million.

FanDuel and DraftKings also met legal problems when dealing with defining online fantasy sports gambling. Fantasy sports gambling is technically defined as a game of chance, not skill, therefore classifying it as gambling. Technically, federal law prohibits online gambling but it doesn’t yet include any provisions on fantasy sports gambling. This has caused several states to investigate the matter, arguing that these leagues are in fact online gambling.

What does that mean for FanDuel and DraftKings? Larger lobbyist budgets and more distractions for two companies that are trying to find their footing in an untapped industry.

Legal troubles are never good for young companies that are not yet profitable, but it will be interesting to see where they head from here. If the market is too small to sustain the company, one would think the FTC would allow them to join forces if either company goes under. Ultimately, their fate lies in the hands of legislators and politicians, ultimately just another system struggling to find its footing.

 

Work Cited

DraftKings, FanDuel Lobby Congress amid Legal Challenges.” 2017. Accessed August 15. https://www.cnbc.com/2016/01/21/draftkings-fanduel-lobby-congress-amid-legal-challenges.html.

“FanDuel And DraftKings Are Dominating The Daily Fantasy Sports Market [Infographic].” 2017. Accessed August 15. https://www.forbes.com/sites/kevinanderton/2016/11/30/fanduel-and-draftkings-are-dominating-the-daily-fantasy-sports-market-infographic/#21ae819b7c4f.

“Fantasy Index.” 2017. Accessed August 15. https://www.fantasyindex.com/resources/the-birth-of-fantasy-football.

“In Abrupt Fashion, DraftKings, FanDuel Merger Is off.” 2017. Accessed August 15. http://www.espn.com/chalk/story/_/id/20002903/in-abrupt-fashion-draftkings-fanduel-merger-off.

“Report: UFC Profited $157 Million In 2015, Over Double Its 2014 Total And 5-6 Times More Than WWE.” 2017. Accessed August 15. https://www.forbes.com/sites/mattconnolly/2016/06/03/report-ufc-profited-157-million-in-2015-over-double-its-2014-total-and-5-6-times-more-than-wwe/#2183a81e591a.

“The Economics of Fantasy Football — or Why You Can’t Watch TV Anymore without Seeing an Ad for FanDuel | MinnPost.” 2017. Accessed August 15. https://www.minnpost.com/media/2015/10/economics-fantasy-football-or-why-you-cant-watch-tv-anymore-without-seeing-ad-fanduel.

“The Legal Difficulties of Fantasy Sports | HuffPost.” 2017. Accessed August 15. http://www.huffingtonpost.com/aj-agrawal/the-legal-difficulties-of_b_10524826.html.