News Column

Fantasy Sports Is Becoming Bigger And Bigger Business

January 26, 2014

Dan Massey

Warren Buffett was in the news this week, which is not necessarily surprising, until you realize that his name consistently arose in sports sections across the country. The billionaire Sage of Omaha, through his company Berkshire Hathaway , is insuring a contest run by Quicken Loans, which will grant one billion dollars to anyone who can project a perfect NCAA Men's Division I Basketball Tournament bracket come March. The chances of anyone winning the prize, either in 20 installments of $40 million or in a lump-sum payment of $500 million , are infinitesimally small. Given that a potential winner would need to have more luck than knowledge (for instance, what right-thinking basketball fan would have tabbed No. 15 seed Florida Gulf Coast to win two games in the 2013 tournament?), Buffett's billion is probably safe. Statisticians have calculated the odds of getting a bracket correct at between 128 billion and nine quintillion to one, essentially a lottery of lotteries. A winner, though, would make bracket contests a billion-dollar industry. Fantasy sports, which legally do not include bracket pools, are already over the billion-dollar mark in the U.S. alone, according to data provided by global market data research firm IBISWorld. A summary of their findings, as well as a link to the original report, can be found on the Fantasy Sports Trade Association website ( www.ftsa.org ). In 2013, a grand total of over $1.2 billion was spent in America on fantasy sports. This number is predicted to climb at an average rate of 7.6 percent per year for the next five years, topping out at approximately $1.8 billion in 2018. According to the data, 33.6 million people played fantasy sports in America in 2013, more than 10 percent of the nation's populace. The continued growth is due, in part, to the popularity of the games, but also to the continuing ease of playing. Most fantasy sports providers have apps for smart phones, which themselves are becoming more commonplace. Not surprisingly, the sport that accounted for the largest portion of the industry in 2013 was football, which comprised more than one-third of the total fantasy pie. Baseball was next at 18.7 percent, meaning that half of the industry is from sports other than the two most popular for fantasy players. Fantasy auto racing was a staggering 12.1 percent of the industry, ranking third. The report also concluded that an average American fantasy owner spends almost nine hours a week working on his or her team. What does all this mean for fantasy owners? Generally, the market data is good news for participants in fantasy sports, regardless of the level of seriousness with which one plays. Those that cannot get enough reporting on fantasy football, baseball, etc. will continue to gain access to more and more information. New websites will provide valuable analysis. For example, only a few years ago, it was practically impossible to find rankings of how many fantasy points a particular NFL team surrendered to opposing wide receivers. A committed fantasy owner would have to calculate this data by hand. Now, nearly every site has a ranking of which teams perform well against certain positions. One the other hand, gaining access to information may begin to cost more money to fantasy owners. Whether it is the fee of phone applications or the price of pay-for-content websites, data providers can make money off fantasy owners yearning for valuable, up-to-date material. For years, the best golf database I could find was a website called Golf Observer . After years of providing free data, the owner of the site, Sal Johnson , created the site GolfStats.com , which requires a subscription to view. Fantasy golf, which is a fringe sport in the industry as a whole, is still popular enough that Johnson can draw sufficient traffic to make the endeavor worthwhile. The growth in the industry is also evident in the advent and popularity of one-day or one-week fantasy leagues, such as FanDuel and DraftKings. Owners not willing to pay attention for an entire season, or those that have fallen hopelessly behind in their leagues, can put money into an account with one of these sites and compete against other players all over the country. The reward for winning, like in many leagues, is weekly or daily monetary prizes. Those awards, as the industry continues to grow, are apt to swell. Who knows? Maybe even a Nebraska billionaire will become involved.


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Source: Intelligencer Journal (Lancaster, PA)


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