Despite Low Odds Of Winning Fantasy Sports Operators See Record Revenues


Despite Low Odds Of Winning Fantasy Sports Operators See Record Revenues

As a billion dollar a year industry, the phenomenon known as fantasy sports is constantly growing. Despite the fact that most players will lose their money over the course of the NFL football season, this year is expected to be an all-time record for the rapidly expanding industry.

While fantasy sports companies are seeing record amounts of revenue at the same time most of the players are losing their entry fees and small winnings, the formula doesn’t yet seem to deter the millions of hungry participants. Despite the seemingly impossible odds, new, beginner players continue to pour their time and money into the process. And, when those players eventually get frustrated and stop playing, there are more new players right behind.

And September is the biggest month for new fans and players to try the game, which combines the “skill” of analyzing statistics and trends with the genuine thrill experienced with traditional sports betting.

The two main services, FanDuel and and DraftKing, both made hundreds of millions of dollars in revenue last year and both have raised hundreds of millions in investment during this year’s offseason. Part of that investment has gone towards heavy ad campaigns, and it is very likely that you have seen at least one commercial on national television for one or both of the companies.

The success of fantasy sports depends on a continuous stream of new players paying entry fees along with the business of fantasy sports “sharks” - those who play the game professionally and can spend up to $140,000 daily to enter hundred or even thousands of games. Some of the biggest sharks spend up to 15 hours daily competing in fantasy sports. The returns are worth it. The “head shark,” Saahil Sud, won more than $2 million last year.

The companies readily acknowledge that sharks will win against the minnows. Chief executive of FanDuel, Nigel Eccles, states that, “We don’t make any apologies that it’s a game of skill, and you might go up against the best in the industry. Some of the people are really good.”

But new players will not continue to pay entry fees unless they feel there is at least a chance of winning money.

Interestingly, with the start of the NFL season, many novice players will win small amounts and then reinvest the money in baseball games. Another reason September is so important to the industry. DraftKings chief executive, Jason Robbins, points out that, “When people come and they see how simple and low commitment that first weekend of NFL is, they are very apt to try the baseball game.”

The top sharks utilize software and custom-built predictive models when drafting their teams. And while many fans called for an outright ban on this type of playing, the companies know that they have to keep their sharks happy as they are their top customers. Instead, the companies limit the number of daily entries by one player in certain games.

The bottom line is that the majority of players will either lose their money or eventually break even. However, both new and seasoned players love it. Eccles may put it best. “Whether they win or lose, the feedback is that they love the experience. By definition, the average player is going to lose money.”

Shark Justin van Zuiden has great advice for new players: “Be careful with your dollars and start small. No matter how much somebody knows about sports, if you put an established player up against a new player, that established player’s probably going to have a 75% chance of winning - at least.”

So enjoy, be careful and enjoy kickoff!!

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