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Daily Fantasy Sports Explained
Fantasy sports is a relatively new concept in relation to the long history of professional and amateur sports, but over the past half-decade it has become one of the fastest growing industries in both the United States and Canada.
A recent article by Forbes Magazine chronicles the growth of fantasy sports, and estimates that every year, 32 million Americans spend $15 billion playing yearly fantasy sports leagues. Growth in the industry has increased at a rate of about 10-12% annually, and there is little reason to suggest that it will slow any time soon.
The popularity of fantasy sports has spawned a lucrative side-industry in sport-related news and talk. There are hundreds of websites dedicated to fantasy sports, while radio and television shows based on fantasy events are a huge part of mainstream sports media.
Daily fantasy sports are a natural progression for those who play year-long fantasy leagues. Although the concept of daily fantasy sports has been in place for more than five years, it has only been over the last two years that the industry has taken off. Indeed, even taking into account the current rise, the market has barely scratched the surface of DFS’ potential.
What is DFS?
Daily Fantasy Sports (DFS) have similarities to year-long contests, but are very different in a number of respects.
Most of note is the frequency of DFS contests. The majority of leagues begin with the start of the day’s sporting events, and don’t end until the last game of the evening is over. From there, payouts are sent out by the site, and the whole process starts over a few hours later.
This is in stark contrast to the season-long leagues still favored by most fantasy sports players, where the pace of change can be glacial. In the faster-moving world of DFS, though, punters can draft a team every single day, and can constantly face different opponents in a wide range of contests and sports.
If you’re out of the play-off race with your season-long team, or you simply missed your draft, DFS offers the ability to get back into the action. Win or lose, there’s always an opportunity to start up another contest the next day.
What Sports Can I Bet On?
The number of sports covered by daily fantasy sites is increasing all the time. The most popular games among players are:
We’ve prepared a General Strategy guide to DFS, so you’ll find a lot of useful information to get you started regardless of which variation you intend to play.
What Are the Best Daily Fantasy Sports Sites?
There’s quite a lot of Daily Fantasy Sports sites, and below we have reviewed some of the biggest and the best that are out there at the moment.
Specifics and Costs
Those familiar with online poker will notice similarities between an online poker lobby and a DFS lobby. Players won’t be joining games and sitting down at the poker table, but instead they will be taken to a ‘draft lobby’ attached to individual leagues.
For the most part, game fees are similar to the rake costs or tournament fees for online poker tournaments. This is usually around 10% of the buy-in amount, but the percentage gets lower as the buy-in amount increases. Players can expect breaks in percentage as the buy-in amount hits $100 or more.
Bonuses and Rewards
Also like online poker, DFS sites offer a number of bonuses and VIP programs. The industry’s rise in popularity has been excellent for players, forcing sites to compete for market share against each other. This has resulted in a slew of better deals across the board for the DFS community.
Deposit bonuses are a constant across every DFS site. These typically take much longer to clear compared to online poker bonuses, but they can range from $50 all the way up to $600. Sites will also regularly offer reload bonuses for seasonal events, such as the start of NFL or NBA season.
VIP programs or similar loyalty schemes are also common. These consist mostly of tiered reward programs which offer incentives for high-volume play.
Salary Cap Leagues
These are by far the most common types of league offered. While many DFS sites offer “snake drafts” similar to the season-long drafting process, salary cap leagues are the lifeblood of the daily fantasy industry.
The format is simple. Sign up for a league, and draft your team from a fully-priced player pool. The overall wages mustn’t be permitted to exceed the “salary cap”. A player’s salary is relative to their recent performance and upcoming match-up. These salaries are determined by each site’s management, and are not shared with DFS punters until the leagues go live.
As I mentioned above, salaries are adjusted according to recent performance, but the change in pricing from week-to-week or day-to-day depends heavily on the sport and daily fantasy operator. Some sites are known for sharper prices on players, while others update them much less frequently.
Other League Types
Salary cap leagues are by far the most played league type, but there are plenty of other options as well. Snake drafts are available on most sites for at least NFL and NBA contests. These operate in the same way as season-long snake drafts. Participants will fill out their roster using the full list of available players. There is no salary cap in this type of league.
Sites have gotten pretty creative with their options, though, and the choices continue to expand. These include pick’em contests, where fantasy stars are pitted against each other, and a number of variations where players are selected from within multiple tiers.
While online gambling is not illegal, many US-based online poker players and sports bettors have been scared away from online gambling sites due to laws that criminalize foreign operators. From an individual legal standpoint, these sites are safe to use, but they lack the regulation and oversight that would be present were the industry legally managed in the US.
Luckily for daily fantasy fans, their legal landscape is rather different. When the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006, a special exemption was made for fantasy sports and horse racing. Daily fantasy sports, therefore, are legal and fully regulated within the United States. All of the major fantasy sites are based somewhere on US soil.
This means legal protection for customers in a safe regulated environment. The online e-wallet PayPal, along with major credit and debit cards, can be used to deposit and withdraw from DFS sites. Deposits are instant, and cashouts generally take just 24 hours to appear in PayPal accounts.
While DFS is legal on a federal basis, some individual states have laws outlawing real-money fantasy sports. As of 2014, these states are Arizona, Louisiana, Iowa, Montana, and Vermont. These statewide laws supersede federal laws, and DFS sites will not currently accept players from the above states.
For tax purposes, daily fantasy sports are not classed as gambling. However, as with gambling winnings, DFS profits are taxable income. Most sites will send tax forms at the end of the year if a player eclipses $400 or more in net profits. This number for automatic reporting can vary depending on the site.
The vast majority of daily fantasy sports are played by US and Canadian citizens, but the industry has gotten more popular worldwide. This is mostly down to the popularity of cricket, and India is particularly fertile (not to say lucrative) ground for fantasy cricket, with the game played there nearly every day during the season.
Growth and Future
Only in the last two years have daily fantasy sports begun to hit mainstream fantasy sites and sports media, but the growth has been substantial. There is easily a million dollars or more on the line every weekend in NFL contests, and tens of thousands of guaranteed money going off each night in MLB and NBA contests. Other sports, such as the NHL and college basketball and football, also have a loyal following of players across several sites.
Even with advertising on ESPN, and partnerships with fantasy news sites, DFS is still largely unknown to the tens of millions of year-long fantasy sports punters. However, player numbers are growing each year, as is the national exposure, and it can only be a matter of time before the year-long crowd become converts. With such spectacular potential for growth, the industry’s future looks very bright.
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