Fantasy Sports, Real Cash
6/6/10 - Philadelphia Inquirer - View Source
By Bill Ordine
They may call it fantasy sports, but the money is real enough.
And it's getting more real every day.
In fact, that's the point: That there is money to be made (and lost) on fantasy sports every day is literally a game-changing development in a hobby that teeters on obsession for many sports fans.
For most of the last 15 years as fantasy sports has grown into an $800 million powerhouse (not including entry fees), the emphasis has been on season-long leagues. Often, any prize money up for grabs is distributed after a sports season concludes.
However, a 2006 federal law, the Unlawful Internet Gambling Enforcement Act - which has at least impeded many types of online wagering, such as poker - has been interpreted to include exemptions for state lotteries, horse racing, and (ta da!) fantasy sports.
Given that apparent legal green light, a number of fantasy sports websites have sprouted, offering daily prizes in contests where Internet users draft dream teams mainly from baseball, football, basketball, and hockey. Some of those sites are FanDuel, SnapDraft, and Sports Fantasy Live.
How much can you win? In a single game, a player can win pocket change or as much a few hundred bucks or, in rare instances, several thousand dollars. Over the course of a month, some of the most rabid players are grossing more than $10,000.
(A note here: While Internet users in Pennsylvania, New Jersey, and Delaware can participate in all aspects of daily fantasy sports money games, residents of a handful of states, including Maryland, cannot. Read each website's rules carefully, including policies regarding the age of participants).
"Daily games is the fastest growing domestic area in sports fantasy, with new products coming out on what seems like almost a weekly basis," said Paul Charchian, president of the Fantasy Sports Trade Association, which represents about 110 companies in the industry.
Despite the daily version's growth spurt, that segment of fantasy sports remains tiny, perhaps just 1 percent of the market, Charchian estimates.
Website operators explain that the concept is still new and that companies trying to build market share are faced with the challenge of rolling out a new fantasy concept.
To overcome that, one of the major daily fantasy sports companies, FanDuel, has partnered with Philly.com to piggyback on the news organization's Web traffic in a region that is gaga over sports. Philly.com is under the same corporate umbrella as The Inquirer and Daily News. Similarly, SnapDraft has partnered with NBC.
So how does daily fantasy sports work? Like most games of skill, the fundamentals are simple, and the nuances are endlessly complex.
To get started, an Internet user deposits money into an account using an online payment system, such as PayPal. Some credit cards work, too.
Once the money is in your account with the daily fantasy sports website, you pick a game to play. Rules vary by website, but your game can be a heads-up match against just one other online user or you can choose to be in a bigger game (or "league") with five or 10 or 25 or even 1,000 people. The amount of money you commit can be as little as $1 or as much as a couple of hundred bucks. Potential payouts are proportional to the amount of money you commit and the number of opponents you're up against.
You pick your team using one of several draft methods (there are way too many variations to explain here). And then you watch and wait. Scoring systems vary by website. For instance, on FanDuel, Roy Halladay's perfect game was worth an enormous 27 points. If your team scores the most points, you win the money, minus a fee taken by the website.
Some sites, such as FanDuel, allow you to play for free, and you can do that just for fun or to get a feel for the thing before committing cash.
So how much can you make at this daily sports fantasy business?
Well, one online player, known as kaiseroll13, topped the FanDuel leader board in May with $17,785. Of course, that's just the gross; unclear is how much money kaiseroll13 put up to win that impressive amount. In April, k-roll took down an additional $17,507. On Fantasy Sports Live, k-roll is also a beast, having won nearly 7,500 games in about three years. (The website doesn't give a money total for those wins.)
But apart from the nearly singular example of kaiseroll13, most daily fantasy sports practitioners seem to range from purely recreational to serious hobbyist. So far, fantasy sports have not approached the enormous sums of money transacted in traditional online sports wagering or even player-against-player contests, such as poker.
I talked to operators of FanDuel, SnapDraft and Fantasy Sports Live, and while each has the same basic premise, they all have differences.
From purely a payout perspective, FSL seems to have one of the lowest holds (as low as about 6 percent on the bigger-ticket games); FanDuel keeps a flat 10 percent; and SnapDraft has the highest hold, in the 15 to 20 percent range.
If you're looking for information that will make you a better fantasy player, SnapDraft is a component of the larger Fanball fantasy sports empire, with mountains of information. And if you want to hook up with personal friends to compete, FanDuel facilitates that kind of action, although SnapDraft has a new website launch scheduled for this week and plans to get into the custom-games business itself.
Potential players can decide what works best for them.
Whether daily sports fantasy takes off as online poker did remains to be seen. Perhaps, fantasy sports enthusiasts really aren't in the hobby to make money, and they'll stick mainly with their season-long leagues.
On the other hand, if daily games take off, some fantasy sports players may someday make as much money as the athletes on their dream teams.