5 Things You Need to Know about Daily Fantasy Sports

The sports betting sector has grown substantially in recent years, largely due to a 2018 decision by the Supreme Court to uphold a 2014 New Jersey law allowing casinos and racetracks to take bets. This opened the door for other states to follow suit — and many have.

As of February 2021, placing wagers on sports, whether online or in-person, is legal in 21 states, with several others considering legalization to remedy budget shortfalls. Similarly, in Canada, Prime Minister Justin Trudeau recently put forth legislation to legalize single-event sports betting. Worldwide, the sports betting sector is now worth more than $200 billion.

While the 2018 Supreme Court decision has been a big boost to the sports betting industry, a law signed in 2006 can be credited in part for the surge of interest in gambling on sporting events. This, in essence, created daily fantasy sports (DFS), which is strictly based online and legal in more than 40 states as well as Canada and many European countries.

Read on to learn more about DFS.

1. It began in 2007.

Signed into law on October 13, 2006, the Unlawful Internet Gambling Enforcement Act took aim at the online poker industry but featured explicit language that essentially legalized DFS. This is because fantasy sports (DFS in particular) rely upon individual player performance as opposed to single-game outcomes. DFS players choose sport-specific lineups for a single day and compile points based on the performance of players in their lineup.

Generally, the DFS player with the most points wins the prize pool, but there are several different variations of DFS games with varying payout structures. Guaranteed prize pools, in which individuals compete for a share of a specific prize pool, are the most common DFS games. Others include cash games, head-to-head, and 50/50.

2. It doesn’t rely on individual game outcomes.

DFS was legalized because it doesn’t disrupt the integrity of sport. Rather, it requires participants to be strategic about which players they select for their lineup, and outcomes are determined based on a point system that, for the most part, doesn’t concern the result of a game or the number of points scored in said game. With football, for instance, players are given points for statistics including catches, passing/rushing/receiving yards, and touchdowns. The NBA, MLB, and NHL are also popular for DFS. Players can also create lineups for college football, college basketball, golf, MMA, NASCAR, and even e-sports.

3. People have won up to $2 million in DFS.

Cash prizes have grown considerably in DFS to the point where it’s not uncommon for prizes exceeding $1 million to be awarded. Travis Spieth, known online as “TSpiedo,” was the first-ever one-day millionaire when he won the 2013 FanDuel FFFC contest on December 8, 2013. Spieth is now the CEO of Fantasy Picks and has hosted a fantasy football show on Sirius/XM.

James “BundaFever” Tran was also one of the first $1 million DFS winners. Speaking with RotoGrinders, Tran noted he used a mathematical projection approach with the lineup that ultimately won him the top prize.

Now, there are multiple $1 million competitions across various sports per year. Moreover, there are dedicated players who make a living off DFS. Mike McClure, for instance, is a DFS pro and predictive data engineer at SportsLine who has leveraged his proprietary prediction model to win nearly $2 million in DFS winnings.

4. There is a relative lack of market competition.

Despite it being around for more than a dozen years, the DFS industry is dominated by two major companies: DraftKings and FanDuel. Both of these companies have valuations over $1 billion and, as such, attract the majority of DFS players and offer the largest cash prizes. FanDuel, launched in 2009, was one of the earliest DFS sites, while DraftKings was created in 2012. Both companies have since raised millions of dollars in venture capital funding and have been battling for the market lead since 2013. At present, FanDuel holds a slight edge in the total number of players.

Fantasy Sports Live was one of the earliest DFS sites, followed by DraftStreet and Fantasy Aces. Some of the other sites include DraftOps, FantasyFeud, and Monkey Knife Fight, the latter of which is unique in that it offers prop bet/games. None of these come close to DraftKings and FanDuel in terms of market share or valuation, however.

5. DFS companies have partnered with leagues.

Not only is DFS legal in most states, but some of its major players have even engaged in corporate partnerships with some of the largest and most profitable sports organizations in the world. DraftKings entered a partnership with the NHL on November 10, 2014. Two days later, FanDuel signed a partnership agreement with the NBA. Today, DraftKings is the official DFS partner of the PGA TOUR, NASCAR, MLB, and NFL, while FanDuel became the official DFS partner for the NHL in December 2020.