College football is hot in exploding daily fantasy sports market
Tuesday, August 4, 2015
What could make an Ohio State fan happier than an Ezekiel Elliott touchdown? Only an Elliott TD scored for that fan's daily fantasy team, of course.
August 4, 2015
On the final play of the 2014 BCS Championship Game, Auburn, down 34-31 to Florida State, attempted a desperate series of laterals. The ultimately futile play had no impact on the outcome. Watching from a bar in Berkeley, Calif., though, Hunter Harrison and his friends went nuts.
Harrison, 32, was not a fan of either team (he’s an Arkansas native). But when Tigers star Tre Mason gained 30 yards on the last of four laterals, Harrison knew he’d just locked up a first-place finish — and an accompanying $20,000 prize — among 1,000-plus entrants in FanDuel’s “King of the Campus” fantasy tournament.
“I started the night in 60th place,” said the San Francisco-based research analyst, who also had FSU’s Rashad Greene and Nick O’Leary on his fantasy roster that night. “We’re watching these plays, and it’s constant ‘refresh, refresh, refresh’ on my phone. Suddenly, it’s, ‘Oh man, I’m in second place.’ I needed one-and-a-half more points [and Mason got them].”
Daily fantasy sports, in which players can build a completely new lineup every week — or, in the case of a sport like baseball, every day — have skyrocketed from virtual obscurity to a multi-billion dollar industry seemingly overnight. According to a study cited by The New York Times, daily games will garner an estimated $2.6 billion in entry fees this year and grow to $14.4 billion by 2020. FanDuel’s prize payouts soared from just $10.4 million in 2011 to $560 million last year and should surpass $1 billion this year. Startups FanDuel and DraftKings currently dominate the market, but just last month Yahoo Sports launched its first daily contests.
Interestingly, both DraftKings and FanDuel offer numerous college football contests during the season. Though not nearly as popular as NFL, NBA or Major League Baseball games, both sites report college football was among their fastest-growing products last season.
Should that ascension continue over the next several years, fantasy college football might finally become a mainstream endeavor — which could in turn spike interest in the sport as a whole. On the flip side, a product that’s widely viewed as legalized gambling — and in fact remains illegal in five states — could prove problematic for the schools themselves, with an average fan suddenly holding a financial stake in the performances of individual college athletes.
Either way, the movement is already well underway.
An estimated 57 million people in the U.S. and Canada play fantasy sports, with fantasy football by far the most popular variety. For a multitude of reasons, though, the traditional model of friends forming a league and holding a draft before the season — though wildly popular for the NFL — has never taken off with college sports. from including college football among its offerings. (Disclaimer: FOX Sports recently became one of DraftKings' investors.)
“It was one of the first sports we ever added on DraftKings,” said company co-founder and chief revenue officer Matt Kalish. “There’s millions and millions of college football fans in the U.S. You see SEC stadiums packed with 90,000 fans every Saturday, Michigan Stadium 100,000 every week. We would not be doing our job if we didn’t provide an experience for those fans.”
“Daily fantasy in general attracts a younger audience of millennials, which has a natural overlap with college fans,” FanDuel co-founder and chief product officer Tom Griffiths added through a company spokesperson. “They prefer the shorter-form games with lower commitment, so as we grew, we saw strong demand from our existing audience for college sports, and we responded to that.”
The most obvious appeal of daily fantasy games is their lucrative cash prizes. In a given week, the sites offer hundreds of different contests, with entry fees ranging from as low as 25 cents to as high as $50 or $100. As with gambling, the more you put down, the higher the potential payout, from a couple of bucks to five or six figures. Players can test themselves against fields of thousands in hopes of a big payday or challenge someone one-on-one for double their entry.
But for fantasy players, daily games also help minimize a few hindrances unique to college sports.
One of the biggest perceived deterrents traditionally is college football’s inherent roster turnover. Whereas NFL fantasy owners can count on Peyton Manning or Drew Brees year after year, in college, someone like Johnny Manziel can go from anonymous redshirt freshman to Heisman winner in the span of four months. Daily players, unlike traditional players, aren’t beholden to preseason draft picks.
“For the more casual player, daily fantasy makes much more sense than a season-long,” said Harrison. “You don’t have to play every week.”
Whereas traditional fantasy players draft against each other, daily players build their team around a mythical salary cap (on DraftKings, it’s $50,000). In a traditional league, once Marcus Mariota goes off the board, no one else can take him. In daily fantasy, theoretically every entrant could have taken the former Oregon quarterback — but as one of the highest-priced players in the game, he would have eaten up a large chunk of their salary cap.
TOP 10 COLLEGE FANTASY SCORERS, 2014 DRAFTKINGS.COM
|1. WISCONSIN RB MELVIN GORDON
|2. Oregon QB Marcus Mariota
|3. Ohio State QB J.T. Barrett
|4. Boise State RB Jay Ajayi
|5. Ohio State RB Ezekiel Elliott
|6. Kansas State WR/KR Tyler Lockett
|7. Alabama WR Amari Cooper
|8. TCU QB Trevone Boykin
|9. UCLA QB Brett Hundley
|10. East Carolina QB Shane Carden
The most successful players are able to identify lower-priced “value” picks. Among DraftKings’ 10 highest-scoring players last year, only Mariota and Boise State running back Jay Ajayi were also among the 10 most frequently picked. UCLA receiver Jordan Payton (954 yards, seven touchdowns) appeared on more lineups than Alabama star Amari Cooper (1,727 yards, 16 TDs), presumably because he took up less cap space.
Kevin Mount, 41, a rabid fantasy college player, got hooked on the daily games when he realized his knowledge of small-school and lesser-known players gave him an advantage over much of the field. Last season he honed in early on Utah running back Devontae Booker after reading about the unheralded juco transfer in local practice reports. Booker began the season as a cheaply priced player but wound up running for 1,512 yards and 10 touchdowns.
“Even a couple weeks after he started getting carries, he was still low-priced,” said Mount. “A guy like that, you get on and ride him until his price gets too high.”
In an average week, Mount, a production manager in Easton, Pa., spends more than $1,000 and enters roughly 250 contest entries (which includes multiple lineups per contest) on FanDuel and DraftKings. The Nebraska fan says he made $24,000 in profits last season playing college football contests, whereas in other sports he largely breaks even.
“College, even though it’s growing, it’s still a niche market,” he said. “People either don’t know where to get the information or don’t want to dig that deep. That’s what ran the well dry for me on NFL — everyone has the same information, and if you can read, anyone can put together a good lineup. [With college], if you have the knowledge and you know where to get the information, you can have a distinct advantage.”
That’s particularly true given that college fans are more likely than pro fans to let their allegiances get in the way of logic. In a 9,000-player field with a $1 entry fee, there’s sure to be no shortage of, say, Tennessee fans who load up their lineup with Vols players just for fun.
Proponents say fantasy college football is more fun than the NFL game simply because the top college players put up gaudier stats. Fantasy football is primarily offense driven, with typical lineups consisting of a quarterback (two on DraftKings), two running backs, two or three receivers and a tight end.
“The scoring is so much higher [in college],” said Todd DeVries, who runs the fantasy advice sitecollegefootballgeek.com. “[Former Wisconsin star] Melvin Gordon is rushing for 200 yards and four TDs. In the NFL, you’re hoping LeSean McCoy can cobble together 90 yards and one TD.”
TOP 10 MOST PICKED COLLEGE PLAYERS, 2014 DRAFTKINGS.COM
|1. UCLA WR JORDAN PAYTON
|2. Oregon QB Marcus Mariota
|3. Arizona WR Cayleb Jones
|4. Pittsburgh RB James Conner
|5. Boise State RB Jay Ajayi
|6. Michigan State WR Tony Lippett
|7. Oregon RB Royce Freeman
|8. Auburn RB Cameron Artis-Payne
|9. Georgia RB Nick Chubb
|10. Florida State TE Nick O’Leary
Further tantalizing college fans, there are contests throughout the week, from the Tuesday night MAC games to Thursday and Friday night games. A fantasy player could enter a contest specific to the early Saturday games, and then, depending on how he does, double down on one for the night games.
All of which sounds an awful lot like ... gambling. And therein lies a potential problem unique to fantasy college sports.
In 2006, Congress, responding to the rise of online poker and sports betting sites, passed a bill called the Unlawful Internet Gambling Act, which essentially banned U.S.-based gambling sites. However, the law specifically exempted fantasy sports, defining them as games of skill. It’s no coincidence that daily fantasy sites sprang up shortly thereafter.
Further exemplifying the distinction, the major pro leagues, which have spent years lobbying against attempts to legalize sports gambling, have openly embraced daily fantasy sites. They do so with good reason. FanDuel boasts that its users consume 40 percent more sports content — including watching games — than they did before they begin playing.
Major League Baseball purchased a small equity stake in DraftKings in 2013 and has an exclusive sponsorship deal. The NBA has a similar arrangement with FanDuel. Both also have deals with individual teams that include signage in stadiums and arenas.
The NCAA, however, takes a different view. Not only do its bylaws prohibit gambling by coaches, athletes and staff members, but its list of illicit “wagering activities” includes “pools or fantasy leagues in which an entry fee is required and there is an opportunity to win a prize.” The rule was adopted in 2007, before either FanDuel or DraftKings existed, but clearly applies to them.
The NCAA declined comment for this story.
Dave Roberts, USC’s vice president for athletics compliance, said his staff meets with Trojans athletes several times a year to remind them what constitutes gambling.
“Part of that is educating our [athletes] on prohibition of fantasy leagues,” said Roberts. “Now that that’s migrated into these one-day, one-week type situations, we’ll certainly educate them on those. I don’t think it will be difficult, because ultimately it’s a fantasy league.”
PROFILE OF A DAILY FANTASY SPORTS PLAYER
|SOURCES: EILERS RESEARCH AND FANTASY SPORTS TRADE ASSOCIATION
|98 percent are male
|91.6 percent are white
|64.2 percent are 35 or younger
|93.4 percent also play season-long fantasy sports
|Spent an average $257 on entry fees over the past 12 months
But it’s a fantasy league they see relentlessly advertised on television and one that includes their own names. The opportunity to earn cash from their own on-field performances could prove tempting.
Given the situation, it’s hard to imagine schools or conferences will be forming sponsorship agreements with fantasy companies as the pro leagues have.
“Everything’s on the table, but we haven’t focused on that in the past,” said DraftKings’ Kalish.
Major League Baseball also prohibits its players from participating in daily games despite its stake in DraftKings.
Many gambling experts believe daily fantasy is absolutely akin to sports betting and that Congress should reexamine its 2006 exemption. Lawmakers had no idea at the time they were paving the way for an entirely new product. The states of Arizona, Washington, Montana, Louisiana and Iowa have their own laws that prohibit playing fantasy sports for money.
Daily fantasy players themselves take exception to the idea that their hobby constitutes gambling for the very reason spelled out by Congress — they win with skill, not luck. They point to the fact that the best players win consistently.
“I don’t consider this to be gambling any more than something like day trading,” said Harrison, who pays about $500 in entry fees a week during the season.
Harrison at one point quit his job at a tech company with plans to join the select but budding ranks of so-called daily fantasy “pros.” But he quickly realized that watching sports becomes a lot more stressful when it’s your sole vocation.
Western Kentucky Brandon Doughty's eight TD passes against Marshall last year were an example of how fantasy college football can be a little more unpredictable than the NFL brand.
“I just love college football, and if I’m getting to make a little money because of the time I spend researching and watching it, that’s great for me,” he said. “[College football] works so well for fantasy. Like Western Kentucky-Marshall last year [a 67-66 WKU win] — the fantasy numbers in that game were absurd. It’s a lot of fun for someone that wants to mess around with it.”
DeVries, 42, has been playing in a college fantasy league with friends since the late ’90s, manually entering players’ stats into Excel spreadsheets for most of that time.
“We were like an obscure indie band,” said the Mechanicsburg, Pa., native. “The guys that did it in the early 2000s were diehards.”
After being laid off from his job as a software consultant in 2008, DeVries created collegefootballgeek.com, offering expert draft tips and player news for fellow fantasy players. It grew a steady following over the next several years.
About midway through the 2013 season, though, the site suddenly started getting requests for daily-centric advice. Less than two years later, daily players represent the site’s core market.
“In 2013, it was probably 80-20 traditional [leagues],” DeVries said. “Last year it became 60-40 daily [players], and a year from now it will probably be 70-30 or 80-20.”
DraftKings’ Kalish said that while college football is not as popular on his site as the NFL, NBA and Major League Baseball, it’s grown at roughly the same rate as the NFL. “Last year we were up 10 times in both,” he said. “College football is pulling its weight.”
Similarly, FanDuel’s Griffiths said through a company spokesperson that “college sports have seen the highest growth rates [on the site] in the latest complete seasons,” with college football increasing 5.91 times from 2013 to 2014.
Given that daily fantasy players watch more games than others, schools and conferences may soon have to decide whether to start embracing those sites. If participation keeps growing as rapidly as projected, there will be reason for fans in Pennsylvania to watch a 10:30 p.m. Arizona State game or for SEC fans to start following the MAC.
“College football fans love any way to engage more in their passion, and FanDuel helps them make their game days more exciting,” said Griffiths. “... There is enormous potential for daily fantasy and college sports.”
It’s no indie band anymore.
Article Source: http://www.foxsports.com/college-football/story/daily-fantasy-sports-college-football-growing-business-080415