MercoPress. South Atlantic News Agency

Understanding the daily fantasy sports market and Its future potential

Photo: Unsplash

The daily fantasy sports (DFS) industry has experienced a meteoric rise in the last couple of decades, shaking off the dated traditions of the Dugout Derby and Pigskin Playoff to evolve into a serious, billion-dollar market.

The likes of baseball-themed DFS game, Dugout Derby, and NFL-based DFS game, Pigskin Playoff, both laid the foundations for what would become an innovative and immersive take on fantasy sports. These concepts allowed players to draft teams and take part in competitions held over a game week or game day, rather than a whole season. It was a format which was well-received by casual sports fans, evolving it into a fun and accessible pastime.

Enter Stage Left, FanDuel and DraftKings

Photo: Unsplash

With faster results and more frequent player engagement fast becoming the name of the game in DFS, the biggest game-changer for the industry came in 2009. Scotland-based FanDuel hit the market, revolutionizing the DFS sector with intuitive user experiences, data-led competitions with innovative draft concepts, and lucrative prize pools. Players could enter daily events across all manner of major league sports and contest for multiple instant payouts, putting their sporting know-how to the ultimate test.

Since then, FanDuel has established itself as the market leader for DFS, as well as other forms of iGaming. It recently opened a conventional online sportsbook to sit alongside its DFS platform, while FanDuel Casino is quickly establishing itself as one of the most innovative online casino operators in licensed markets such as Pennsylvania and New Jersey.

A few years later, FanDuel saw fresh competition emerge on the DFS scene, in the shape of DraftKings. Headquartered in Boston, Massachusetts, DraftKings was launched by a trio of budding entrepreneurs who previously worked for Vistaprint. Their initial proof-of-concept was a one-v-one baseball format, launched to coincide with the first game week of Major League Baseball (MLB) in 2012. 12 months later, MLB opted to pump money directly into DraftKings, as it saw immense potential in daily fantasy MLB events.

The Failed FanDuel-DraftKings Merger

Across 2013 alone, DraftKings managed to dish out upwards of $50 million in prize money to daily and weekly fantasy sports winners, across baseball, football, basketball, and hockey. More than a decade later, DraftKings is now a publicly listed company. FanDuel and DraftKings came within a whisker of merging in 2016, but the Federal Trade Commission pulled the plug the following year in fear of causing a monopoly in the DFS market.

It was a decision that’s probably going to work out for the best. Having FanDuel and DraftKings as competitors can only be good for innovation in the DFS industry. It’s an increasingly global market now too, with SkyQuest Technology valuing it at $21.4 billion in 2022 and estimating growth to $44.9 billion by 2030, achieving a compound annual growth rate (CAGR) of more than 10%.

The strength of this growth is underpinned by continued smartphone and tablet growth, enabling cross-platform access to DFS platforms. The legalization of conventional sports betting in new regions is also helping to raise awareness of the subsector.

Although traditional major league sports remain the bread and butter for DFS operators, the rise of Esports has also seen this become a big pull for the next generation of DFS players, with real-time data and social sharing functionality helping to build the next community of DFS enthusiasts.