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How did the internet help fantasy sports evolve?

This is an excerpt from Beyond the Scoreboard by Rick Horrow & Karla Swatek.

The Evolution of Fantasy Sports

It's no secret that the Internet is the playing field of choice for fantasy sports fans. While fantasy sports competitions have been around for more than a decade, the Web's evolving social media tools, treasure trove of real-time statistics, and networking capabilities let fans research and form teams and compete against other fantasy team owners and managers based on the statistics generated by individual players and teams more effectively than ever before.

Simply put, fantasy sports sites allow people to join competitions based on the performance of pro athletes and teams. Participants choose a fantasy team within a league and pick players for each game or match. Points are then awarded—or deducted—throughout the season based on chosen players' performances.

The growth of the internet has fueled the increase in fantasy sports participation and the rise of fantasy football in particular, which in turn has helped fuel NFL ratings. In 2010, the estimated 29 million Americans who participated in fantasy football leagues, according to Liberty Media, helped the NFL achieve unprecedented television ratings across all of its broadcast platforms. Online, an entire media industry devoted to fantasy football has exploded, seeking to satisfy the thirst for stats on the league's 1,700-odd players among fantasy team owners.

The majority of fantasy participants are young and about 85 percent male, 15 percent female. The average fantasy player spends three to four hours online per week and has played for 10 years. Fantasy gaming is addictive—the industry is currently valued at $4.48 billion annually, with the average fantasy sports player spending more than $467.60 annually to participate. A study by the Kellogg School of Management at Northwestern University revealed the three main reasons people play fantasy sports: (1) the competition, (2) love of the sport, and (3) prizes and rewards.

As in any technology sector, the fast-growing fantasy sports and social networking start-ups have been ripe acquisition targets, and the industry segment is fast consolidating. In 2007 alone, Yahoo! acquired the popular college sports site, Wikia purchased ArmchairGM, and Time Inc./Sports Illustrated snapped up FanNation, a move S.I. editor-in-chief Terry McDonell characterized as “almost tribal . . . will make everything in and about sports more interesting—including you.” Like almost all of the sports social networking sites, FanNation is highly sponsor friendly; Cadillac, Vonage, and Sprint were among early advertisers on the site.

Sports leagues have been doing whatever they can to protect what they consider copyrighted material from free exposure on fantasy gaming sites. On October 16, 2007, the U.S. Eighth Circuit ruled that the First Amendment protected the use of player names and statistics on fantasy baseball sites established by C.B.C. Distribution and Marketing, Inc. That company had brought a declaratory judgment action against MLB Advanced Media to permit the unlicensed use of names and statistics of Major League Baseball players in connection with fantasy baseball products available online.

The district court granted summary judgment in favor of C.B.C. In affirming the district court, the Eighth Circuit espoused the proposition that the use of information in the public domain is protected by the First Amendment. The court also countered arguments that the use of statistics wasn't speech at all. One particularly interesting argument by the Eighth Circuit related to the protection of economic interests under the right of publicity, stating that “Major League Baseball players are rewarded, and handsomely, too, for their participation in games and can earn additional large sums from endorsements and sponsorship arrangements.” Major League Baseball has appealed the ruling, and the case, years in the making now, may still go all the way to the Supreme Court.

Fantasy sports, of course, do have their detractors—naysayers claim that fantasy sports eat away at workplace productivity (40 percent of fantasy team management reportedly takes place at work) and that the focus on individual achievement is distorting the beauty and purpose of team sports. When asked by ESPN reporter Greg Garber his opinion on the rise of fantasy football, former Denver Broncos quarterback Jake “the Snake” Plummer replied, “I think it has ruined the game. There are no true fans anymore. . . . If I lost a game . . . no Denver fan was mad because I lost, but happy because I threw three TDs.”

Read more about Beyond the Scoreboard: An Insider's Guide to the Business of Sport by Rick Horrow and Karla Swatek.

More Excerpts From Beyond the Scoreboard