(Newswire.net — September 23, 2015) –Daily fantasy sports may sound like a fun hobby or game for young boys, but it’s actually a billion dollar industry that’s quickly risen to prominence in a culture that has long loved the thrill of gambling. In addition to the legality of the industry, many are left asking, “How did daily fantasy sports gain so much popularity in a relatively short period of time?”
What are Daily Fantasy Sports?
Quick plays, instant gratification, and the potential to win millions – these are the things that make daily fantasy sports (DFS) so popular. To those already familiar with traditional fantasy sports, DFS is an easy transition. Instead of season-long leagues, DFS quite literally offers “daily” and “weekly” leagues.
For those totally unfamiliar with fantasy sports, Drew Harwell provides a concise and informative definition. “The traditional fantasy match demands a season-long commitment, and players often bow out early if their chances go bust,” he writes. “But with the daily model, a player can draft a team in the morning, stay glued to his or her phone in the afternoon, and suffer the result (or pocket the reward) by day’s end, in time for the next match.”
Want to relate DFS to something more familiar? “If season-long fantasy is a long-term investment, daily fantasy is a slot machine,” Harwell cleverly states. That’s the major selling point. Whereas traditional fantasy requires an upfront investment with the potential for a future payout in four to six months, DFS requires a very small upfront deposit with the potential for a payout within hours. In a world where instant gratification is the standard, it’s easy to see why DFS is excelling.
The Legal Loophole
How is DFS legal? That’s a question many ask. After all, isn’t it gambling – which is illegal in most parts of the country? Well, yes and no.
DFS operates under a sort of legal loophole that doesn’t appear to be closing any time soon. This loophole was carved out by a piece of 2006 legislation that essentially banned internet gambling. The law claims that games of “skill” that are played for a predetermined amount of prize money are legal, while games of “chance” are not. For some reason, poker is deemed to be a game of luck, while fantasy sports are a game of skill.
Luck vs. Skill
While it may seem strange to outsiders, DFS certainly is a game of skill. Players rely on handicapping services for insider information, carefully crafted algorithmic spreadsheets for predictions, and financial strategy to choose which games have the potential to be more profitable.
Is there a degree of luck to DFS? Absolutely. However, there are players who consistently win night-in and night-out. That means it can’t be all luck. After all, you don’t see people play and win the lottery on a daily basis. Peter Jennings, a former investment banker for Charles Schwab left his job to play DFS full-time. His 2014 takeaway was somewhere between $4-5 million.
While Jennings is certainly the exception to the rule, there are thousands of other players who make healthy sums of money from DFS. Hundreds of thousands more are losing money. It’s an easy game to play, but a challenging one to master.
The Future of Daily Fantasy Sports
What will the future of DFS hold? Well, as long as the legal loophole doesn’t close, the future is incredibly bright. DraftKings and FanDuel – the two industry leaders – spent more than $150 million on advertising this past quarter. That alone should tell you just how much growth is happening right now. The only question is whether or not more competitors will rise up and steal some of the market share.