This is an excerpt from Applied Sport Management Skills 3rd Edition epub With Web Study Guide by Robert N. Lussier & David C. Kimball.
DraftKings, FanDuel, and Legalized Gambling
Fantasy sports used to be called rotisserie baseball. In the 1980s, it was called roto for short. Fans play for entertainment, escape, competition, social interaction, and gambling.
What is really involved in building a fantasy team? The fantasy business has been growing rapidly, and fantasy sports have become popular with sport fans. Two main competitors have emerged: FanDuel and DraftKings. Both organizations have betting opportunities from a single game up to the entire season.
A league first needs to be formed. Many leagues use yahoo.com or espn.com as a platform for managing their teams. Owners need to be found to select players. In the early stages of selecting teams, owners do not usually know everybody who is selecting a team. Still, a date is selected and agreed upon by all owners.
Next, a commissioner, or leader, is selected to start the league on one of the sites. The owner of each team then drafts his team in a rotating sequence. Owners often have a sum of fantasy dollars to spend on their team. It takes great skill to build a team that performs to a high standard, is not injury prone, hits for home run power yet also for a high batting average, and so on.
But, how does an owner form a team? Does he pick players who work well together? Does he pick players on his favorite professional teams? Does he pick a few high-salaried players and fill in with a few extra players on the bench? Does he make trades with other owners in the league who he thinks are similar to him? What looks like an unorganized group of players is actually a well-orchestrated selection of players who work together like a team.
Owners look for a competitive advantage to find out how one player is statistically better than another player. The owners originally used traditional statistics such as home runs, batting average, and stolen bases. But the big data offered by sports such as baseball and football make it much more exciting to find new data to gain insights. Programs like Excel made it easier to make more sophisticated decisions using equations to calculate new statistics.
WAR is a recent term only added to baseball jargon in 2008. WAR stands for Wins Above Replacement. Although the calculation has six steps, it is easy to understand that a superstar player such as Mike Trout of the Los Angeles Angels is worth 8 to 10 more wins per year than an average player. Thus, Mike Trout has a WAR of 8-10, which means he helps his team to about 8 to 10 more wins than if he didn't play on the team.130
After selecting all their initial players, owners are beginning to know all the other owners in the league. They establish some normal behavior. For instance, all changes in a lineup have to be completed before game time. Injured players can be replaced from the pool of players who are not currently selected. One of the reasons fantasy baseball is addictive is that owners can add, delete, and trade players for most of the season. Owners like to have rules, since this helps to keep the league on track.
At the end of the regular season, the fantasy season also ends. A playoff takes place, and one team is crowned champion. In reality, the team of owners is disbanded until the new season begins next year.
However, the future of FanDuel, DraftKings, and fantasy sports might be quite different after a recent Supreme Court decision. In May 2018, the U.S. Supreme Court ruled to legalize sports betting in states. The Supreme Court struck down the 1992 federal law that prohibited most states from having sports betting. So, for the first time, states will be able to offer legalized gambling on professional sports such as the NFL, NBA, NHL, and MLB. Led by New Jersey, states are already preparing to authorize certain venues to offer sports betting.131 Although it can take some time for states to process the venues where legal sports betting will take place and when, it is most likely going to be offered in states with existing casinos. DraftKings has already begun the process of working with casinos in Massachusetts. In Massachusetts, that includes MGM, Wynn Resorts, and Penn National Gaming.132