It seems these days sports fans can't catch a game on TV or listen to sports talk radio without being hit with ads for daily fantasy sports (DFS). While fantasy sports have enjoyed a long run, with digital giants ESPN, Yahoo and CBS capturing the attention of sports-crazed gamers, a daily form of drafting players and tracking teams is exploding in popularity.
The fantasy sports world boasts 56.8 million active players in the U.S. and Canada, according to the Fantasy Sports Trade Association. Of those, roughly 20 percent are participating exclusively in DFS, up from 8 percent in 2013, with just two providers—6-year-old FanDuel and 3-year-old DraftKings—cornering the market.
It's not just fans' ability to build a new team on a daily basis that's the driver. The real key to DFS' success is legalized betting. Thanks to a series of technicalities, DFS players can win cash. One heavy hitter, Tommy Gelati, has won well over $100,000 playing DFS and even has parlayed his success into a hosting gig on SiriusXM's Fantasy Sports radio station.
"I play high volume—thousands [of dollars] a day," said Gelati. "I've been here from the beginning. I've seen it go from the biggest tournament being a $10,000 first-place prize to, well, now they have millions."
DFS companies are growing. FanDuel co-founder and CEO Nigel Eccles noted his company scored $57 million in revenue last year. "The growth has just been phenomenal," said Eccles, predicting that DFS will be a billion-dollar business in just five years.
DFS sites and their fans are not the only ones cashing in, though. FanDuel and DraftKings are investing millions of marketing dollars, presenting sports leagues, venues and media outlets with opportunities to generate new revenue. "As a relatively new company, advertising has been the best way to introduce DraftKings to new players," explained DraftKings CEO Jason Robins. "DFS could be among the top categories of advertising in sports over the next year."
Floyd Mayweather Jr. had a FanDuel logo on his shorts when he defeated Manny Pacquiao in May. A month later, American Pharoah was rocking DraftKings gear when he became the first horse to win the Triple Crown since 1978.
In 2013, DraftKings and Major League Baseball inked a multiyear partnership deal that allows DraftKings to offer co-branded MLB daily fantasy games, complete with market-specific ballpark experiences. The MLB even invested in DraftKings, purchasing a small stake in the company. "This partnership has increased awareness for DraftKings and has aligned our brand with one of the most premium brands in all of sports," said Robins. "Our relationship also enables us to offer our users exclusive, once-in-a-lifetime experiences, such as contests where you can win prizes like throwing out the first pitch at a real Major League Baseball game."
DraftKings has similar deals with the NHL and with Madison Square Garden, whose WNBA team, the New York Liberty, will sport DraftKings' logo on its uniform. In June, FanDuel deepened its exclusive 4-year deal with the NBA and its teams, adding nearly half the league's teams to its roster.
Meanwhile, CBS Sports, Yahoo Sports and ESPN are taking notice of the success of daily formats. CBS Sports has a media partnership with FanDuel, complete with a daily live video show featuring DFS content. The show runs weekdays from 6:00 p.m. to 7:00 p.m. ET and features FanDuel brand integration including graphics and exclusive promotional spots.
"We are continually innovating our fantasy offerings to serve our highly engaged audience," said Jeffrey Gerttula, svp and gm of CBS Sports Digital. "Interest in daily fantasy sports continues to rise and through our successful partnership with FanDuel, a leader in that space, we are able to deliver quality content, including daily live video programming, to the ever-growing audience of daily fantasy players."
DraftKings was recently named the official DFS offering across all ESPN platforms. ESPN has more than 12 million fantasy players, who will now experience seamless integration with the DraftKings' daily fantasy platform.
"As a longtime daily fantasy player, and someone who enjoys playing at both ESPN and DraftKings, I'm excited about this new relationship," said ESPN fantasy sports analyst Matthew Berry. "DFS has brought a lot of new players to the industry. It's brought a lot of attention and certainly infused it with new revenue. It's really exciting for me when you see all these advertisements."
Yahoo even got involved in the DFS space, launching its own product yesterday. The new Yahoo Sports Daily Fantasy allows players to win cash, just like DraftKings and FanDuel. Yahoo's version is available on the company's Fantasy app for iPhones or any other device through your browser. The product is live and ready to play, complete with a tutorial video explaining what exactly DFS actually entails.
It's easy to see why the traditional giants want to get involved with these startups-turned-industry heavyweights. DraftKings says its target demo is comprised of 18- to 49-year-old, college-educated, early adopter males who actively play fantasy sports games, are at the forefront of online gaming, sports, technology, music and trendy lifestyle events—and possess disposable income.
There seems no stopping the fantasy movement. If there's a major sporting event kicking off, DFS will aim to be there.
This story first appeared in the July 6 issue of Adweek magazine. Click here to subscribe.