DAILY DREAM SPORTS
Daily fantasy sports, which are variations on typical season-long fantasy sports competitions, have been around since 2007. Since the legalization of sports betting in the United States two years ago, many individuals have only recently heard of and learned about daily fantasy sports (DFS). What exactly is DFS, and why should you care?
DFS and sports betting websites: Fact sheets and welcome extras
• DraftKings coupon code
• FanDuel coupon code
What exactly are daily fantasy sports (DFS)?
In essence, daily fantasy sports is a simple notion. It’s modeled on the season-long fantasy tournaments that tens of millions of people participate in every year, particularly during football and the NFL season. In season-long fantasy, you and a group of other people select player rosters. You accumulate points based on the statistics of those picked players over the course of a season. The guy who drafts the team with the best statistics is the winner.
DFS, in its simplest form, is similar to previous season-long games, but it is condensed to a single day or week. Instead of drafting a team for the full season, you select a squad of players for a single day, or in the case of NFL DFS games, a single week.
Season-long fantasy, which is frequently played among friends or coworkers (or sometimes against strangers on some free and paid-entry fantasy sites), is typically limited to a small group of a dozen or so people. However, with DFS, you may be competing against hundreds or thousands of other people.
Another significant distinction between season-long and DFS is the amount of money at stake. While season-long is frequently a social game with small sums of money at stake, DFS players can compete for thousands, if not millions, of dollars.
The DFS sector is now controlled by two companies, DraftKings and FanDuel, who control more than 90% of the market. While FanDuel was a pioneer in the DFS field and the clear industry leader until early 2015, DraftKings has now eclipsed it for the top slot.
Beyond that, almost everyone else is vying for a smaller chunk of the DFS pie, with Yahoo Daily Fantasy and FantasyDraft vying for third place, and smaller sites such as Draft, Draftboard, and Boom Fantasy offering DFS variants.
DFS Varieties
The most common type of DFS is that offered by DraftKings and FanDuel, with versions supplied by other operators.
Users choose a sport and a contest to enter in the dominating version of DFS. Then they choose a team of players based on a “salary cap” imposed by the website. (Each player is given a fictitious dollar value, and users must assemble a roster of players who fall inside the salary cap.)
Once a user has chosen a team, all that remains is to wait for the real games to begin and see how your squad compares to the opposition. If your team performs well, you will receive a monetary prize.
Contests can vary greatly in terms of how much it costs to enter (free or 25 cents up to $10,000) and how they are structured. Here are several examples:
• Guaranteed prize pools (GPPs): Players pay a set entry fee to compete for a piece of a preset prize pool; GPPs run whether or not they fill up.
• “Cash games”: Players can join an existing league or establish their own, with the best-performing fantasy teams winning prizes. These are less robust than GPPs and are not guaranteed to function.
• Head-to-Head: A competition in which two participants compete against each other; the winner earns the full prize fund.
• 50/50: The top half of the field almost doubles their investment, while the bottom half receives nothing.
There are a number of different DFS variants that deviate from the DraftKings/FanDuel model, but they all have one thing in common: they are all based on player data. In some versions, players are chosen without a “salary” linked to them; there are house-banked versions in which you try to anticipate how well a certain player or players will perform; and there is even in-game fantasy, in which scoring and decisions are made in real time.
Fantasy sports parlay and prediction
Aside from the salary-cap approach, a new class of fantasy products focuses on projecting individual player performance rather than selecting an entire roster.
Sports available in daily fantasy
The following are the most popular North American team sports for DFS:
• Football (NFL), Basketball (NBA), Baseball (MLB), and Hockey (NHL)
Many other sports are available on FanDuel, DraftKings, and other sites, including
• College football
• College basketball
• Golf
• NASCAR
• Soccer
• Mixed martial arts
• Electronic sports (like League of Legends)
And some websites provide even more sports than that.
Some states have passed laws prohibiting amateur and/or college, high school, and youth sports competitions.
While daily fantasy football has traditionally reigned supreme in DFS, daily fantasy basketball has grown significantly in recent years.
Fantasy basketball is similar to fantasy football. You create a fantasy roster by selecting players from actual NBA clubs (s). The players are then awarded fantasy points based on their performance (based on scoring, assists, steals, blocks, etc.)
Because contests are held every night throughout the season, DraftKings and FanDuel will most likely award bigger prizes than they do for NFL contests.
Is it legal to play daily fantasy sports?
The legality of daily fantasy sports is currently the most contentious subject in the United States. Answering the issue “Is DFS legal?” is complex, because it largely depends on the state in question.
DFS is considered a gambling product in most jurisdictions across the world and requires a gaming license to operate. The legality of DFS in the United States is sometimes questionable.
First, some context: Following the adoption of the Unlawful Internet Gambling Enforcement Act of 2006, a new industry arose. This federal regulation addresses payment processing for online gambling, however it includes an exception for fantasy sports.
However, many people, including the UIGEA’s author, feel the statute was never designed for DFS. This is in addition to the notion that, in this case, state law trumps federal law in defining what is and is not gambling.
A number of state attorneys general have stated that DFS is illegal gambling under state law, which has caused problems in a number of states, including Illinois and Texas, to mention a few. And those states with bad AG views are in addition to a number of other jurisdictions where some legal experts believe DFS is operating in a gray area.
All of this has resulted in a perplexing scenario regarding where you may really play DFS, as well as a slew of legislation attempting to clarify the legality of DFS. A number of states passed DFS legislation from 2016 to the present.
States where DFS is and is not permitted
The question of which states permit DFS is also difficult to answer. At the highest level, DFS has always been considered illegal in four states:
• Iowa
• Washington
• Montana
Because of negative attorney general decisions in specific states, most sites do not operate in Alabama, Idaho, Hawaii, or Nevada.
The most popular daily fantasy sports services, such as DraftKings and FanDuel, are available in over 80% of states. Others, based on a more restrictive interpretation of state law, operate in far fewer states.
DFS is currently authorized and regulated in a number of states, including New York, Indiana, Virginia, Massachusetts, Colorado, Missouri, Tennessee, and Mississippi. To operate in such states, sites must pay a licensing fee (except for Mississippi). In 2015, Kansas also legalized DFS. In addition, Arizona will legalize DFS in 2021.
The states in which DFS sites operate are continually changing, however, you may get a sense of the current situation here: Where can you participate in daily fantasy sports?
DFS legislation is in the works
State legislatures around the United States began introducing proposals to legalize and regulate DFS at the end of 2015 and the beginning of 2016.
Some of them produced fruit, such as the statutes described above.
States are considering vastly varied methods to regulating the DFS sector, ranging from simple, “light” regulation to measures that would handle DFS similarly to the casino or online gambling industries.
Legislative activities in the states are continuously developing, but you may keep track of all active (and inactive) legislation here, as well as keep an eye on the present status of affairs in numerous states.
DraftKings-FanDuel merger DraftKings and FanDuel had planned to merge in 2017. The announcement was made in November 2016 by the two main DFS operators.
However, the merger was canceled in the summer of 2017. Because the transaction was being challenged under antitrust law by the US government.
Now, the two sites operate and accept users independently.
DFS frequently asked questions
Here are some other questions and answers about the DFS sector that were not addressed above:
What is the value of daily fantasy sports?
According to estimates, the DFS sector earned more than $3 billion in entry fees in 2016. These fees generated over $250 million in income, with DraftKings and FanDuel accounting for more than 90% of the total.
Is daily fantasy sports merely another type of sports betting?
Depending on who you ask. While some regard sports betting to be a game of skill, practically everyone considers it to be a type of gambling.
DFS is viewed as everything from a completely legal game of skill to a kind of gambling based only on player statistics. Most people regard it as a type of skill-based gambling on the surface.
DFS sites are often classified as not being US betting sites in the United States.
What are professional sports leagues’ thoughts on DFS?
Three of North America’s professional sports leagues have equity shares in a DFS site and have been supportive of the sector (and its regulation): • NBA (FanDuel) • MLB (DraftKings)
• NHL (DraftKings)
The NFL has no direct link with either site, although the majority of its franchises have agreements with one or both. The leagues’ and pro franchises’ relationships are mentioned here.
What are some other DFS operators besides DraftKings and FanDuel?
On the market, there are dozens of DFS providers. Yahoo, FantasyDraft, and Draft are some of the biggest ones. More information on some of the second-tier DFS operators can be found here.
Is it necessary to pay taxes on DFS winnings?
Yes. See this series on DFS and tax filing for more information.