Daily Fantasy Sports: A Billion-Dollar Industry with Legal Hurdles

DraftKings and FanDuel are the two biggest names when it comes to US Daily Fantasy Sports – a subset of fantasy sports games where players can make money based on the performance of the sports players in their chosen teams.

The two aforementioned companies have around 95% of the US market and are both valued at more than $1 billion, such is the popularity and money which gets thrown into these games. In fact, DraftKings were even funded by Major League Baseball back in April 2013 by way of an undisclosed fee. This was the first-ever deal between a professional USA sports organization to invest in daily fantasy sports.

Since then, DraftKings signed a multi-year sponsorship deal with the National Hockey League in 2014 – giving them exposure to a perfect target audience of fantasy sports players. The National Basketball Association then signed a four-year sponsorship deal with FanDuel later that year.

Players continue to sign up with these daily fantasy sports company and as the revenue has continued to rise; DraftKings now have sponsorship deals with exactly half of the 32 NFL teams. New England Patriots owner Robert Kraft has even invested in the Boston-based DraftKings. This means the two companies that own more than 95% of the US daily fantasy sports market combined now have sponsorship deals with the four most popular sports organizations in the USA.

To say that daily fantasy sports have hit the mainstream would be an understatement. The aggressive marketing campaigns, peoples love for fantasy sports and the easy access through mobile devices have been perfect for these companies to expand their fanbase substantially over the past few years. One can only predict it is going to get bigger and bigger over the next few years too.

However, it hasn’t all been plain sailing for these two companies as they have faced increased legal scrutiny. Between DraftKings and FanDuel they have had law suits over alleged false advertising, employee fraud, racketeering and negligence – it’s seemingly a constant battle against the law for these companies. Playing Legal have further information on news, legislation and law suits around daily fantasy sports.

On top of their run-ins with the law, states such as California that don’t legalise gambling reduce the market size for these companies. With the Rams moving to Los Angeles this season, California now has 4 NFL teams, 5 MLB teams, 4 NBA teams, 3 NHL teams and 2 MLS teams – all of whom its local fans cannot play daily fantasy sports for money.

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