How does fantasy sports industry make money?

FIFA 2018 season is just about to begin and this is undoubtedly one of the most celebrated times of the year for sports freaks. Balancing the madness of not missing out a single second of any match, fantasy football leagues have gathered enough popularity as well. As much as participants see fantasy sports league as a chance to actually be a part of the sport and stand a chance to win prizes in return, the organizers see it as a chance to make huge profits.

Just as $11 billion flow toward football, around $1.5 billion revenue is generated through fantasy football which is set to grow manifolds in the coming time. National Football League’s annual revenue in America is $13 billion which is expected to grow to $25 billion by 2027 following the hike in popularity of fantasy leagues.

The Union of European Football Association (UEFA) has built up its worth to nearly $638 million through its fantasy sport offering called Ufantasy. DraftKings and FanDuel are renowned big players of the industry and they’ve managed to raise as much as $300 million each from the investors alone.

The figures are huge but real and it’s only because fantasy sports has something for the players as well as the organizers that it has continued to gain popularity. Here’s how some of the big names have made money from the game-

Fees for participation

DraftKings and FanDuel, two of the most powerful heads in the industry, organize contests with a chance to win NFL sized payouts and charge a participation fee for the same. They take a cut in these cash-prize contests and that is how they earn most of their revenues. FanDuel takes nearly 10% cut and spends the rest for funding the prizes.

Engaging the participants

Most popular fantasy football leagues include participants continuing with the first draft of NFL players for the entire season. However, big players like DraftKings and FanDuel offer and allow their users to take up different contests weekly. This increases the overall fee collection from the league and also entwines the participants not for just one contest but for the entire season.

Other revenue sources

Advertising, sold tournament sponsorships, co-produced videos are another trending ways of making money through fantasy sports. CBS, Yahoo, Disney earn a huge amount of their earning through advertising. Online advertising is used for traffic diversion which ultimately increases the economic value of the contest. If the advertising on page is a success, the overall ad revenue of the page increases as well. Different companies have their own particular mastercard. For example, Yahoo does most of the revenue generation through Yahoo! Plus and advertisement on their content, CBS does it through their good commissioner tool sets, ESPN through advertisements placed on their content. ESPN is renowned and highly visited for conveying statistics and other updates on leagues.

Free leagues

The basic idea of making fantasy sports greatly profitable is that the participant group should be tempted to register and stay engaged. Some companies try to tempt the people into paying for extra services by offering free leagues. So even those who are willing to try out fantasy sports leagues but hesitate to register take this as a great first chance. A free league definitely invites huge masses and then there needs to be further strategies to retain as many participants as possible for the paid contests.

Business scope for draft parties

FanDuel, CBS, ESPN, Yahoo etc. are not the only beneficiaries from the rapidly growing fantasy sports industry. There are other industries as well who are indirectly benefited from fantasy sports. Findings state that an average adult football freak spends almost $556 every year including entry fee, prizes, league materials such as boards while picking the players for building the team etc. The Fantasy Sports Trading Association researches and keeps a quantitative record of various other sub-heads that significantly involve money circulation throughout the fantasy sport leagues.

Fantasy football is undoubtedly a giant money game. According to Forbes, the industry’s worth in tangible and intangible activities ranges between as much as $40 billion to $70 billion per year including actual expenditures and ad revenues.

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