Daily Fantasy Sports (DFS) has taken the US by storm. Regarding its intensity and pace, the rise of the DFS industry has gone unparalleled. How exactly were they able to manage this? Although both technology and an innovative business model have driven the industry, it is not the primary factor.
The Legality of Fantasy Sports
DFS was mostly born from a legal loophole in the UIGEA enacted in 2006. This law banned most forms of online gambling but created specific cutouts for fantasy sports because of its basis in the skill and knowledge of participants. Read the in-depth explanation on the legality of DFS on PlayingLegal.com.
An Industry That Skyrocketed
Fantasy Sports has been around for more than 50 years. However, for decades, it was just a niche hobby that friend groups and small clubs participated in. This all changed with the creation of DFS, which pushed the entire fantasy sports industry to new territory. 16 percent of US adults were playing some form or another of fantasy sports in 2014. This number ballooned to 22 percent one year later with the rising popularity of DFS. This 6 percent increase accounts for 15 million new players.
The Two DFS Titans
The two titans of DFS—FanDuel and DraftKings--can be largely attributed to this incredible growth. These two companies relied on huge cash prizes and major advertising to push their growth curve tremendously, with annual growth past 41 percent in 2015.
The Big Picture
Daily fantasy sports allows people to experience their favorite sport in a new way. In fact, it is fostering a change in how fans interact with sports. Of course, betting on sports games is nothing new, and fans have always cared about which team wins a game. However, with DFS, there’s more money than ever before put on the line.
Financial Changes to the Sports Industry
DFS is also causing significant economic changes to the sports industry. In fact, the DFS industry has more revenue than any sports league in the nation. With daily fantasy sports companies spending millions of dollars on leagues, advertising, and networks, there is substantial financial interest in keeping the industry legal and steadily growing.
The Legal Turmoil
This financial success does not mean that lawmakers across the country are not trying their hardest to change the legality of DFS. Currently, the industry is in a state of high tension with lawmakers, fans, and leagues. That being said, no matter which way you look at it, with the unprecedented rise of DFS, US sports will never be the same.