FANTASY SANDBOX

DraftKings scores the Minnesota Timberwolves




Commentary:  DraftKings contines to break the monopoly of its rival, FanDuel, with the companies first partnership with a NBA team. FanDuel had signed up a number of basketball teams as well as the league itself.

DraftKings scores the Houston Rockets


Commentary:  DraftKings secures their first NBA team with a marketing partnership. The deal helps the daily fantasy games provider to compete in the sport of basketball partnerships against rival, FanDuel that already has amassed a number of partnerships in the sport.

DraftKings scores the Boston Celtics




Commentary:  The daily fantasy game provider scores the first of many NBA partnership to be the exclusive daily game provider for the franchise. It is a nice partnership to secure the city of Boston as well as neighboring New England to advertise the growing daily fantasy sports site.

FanDuel scores the Cleveland Cavaliers




Commentary:  FanDuel continues to expand their NBA presence with the partnership with the Cleveland Cavaliers who happen to have the best basketball player on the planet, LeBron James. FanDuel previously formed a larger multi-year partnership with the NBA. This brings the NBA teams with partnerships with FanDuel to six that include the Nets, Bulls, Mavericks, Knicks and Magic.

New Bill Would Decriminalize Fantasy Sports in Washington






Commentary:   The lobbyist of the Fantasy Sports Trade Association are trying hard to remove the last states that have not explicitly allowed fantasy sports. The State of Washington is one of them.

The daily game site provider such as FanDuel and DraftKings are keen to see these restriction removed. Football is especially big in Seattle with the hometown Seahawks looking to repeat as Super Bowl champions.

I don't like the plus-minus stat in hockey and here's why.


My first season playing fantasy hockey has been a very educational adventure. Although I am familiar with the game of hockey, the transition to fantasy hockey has been probably the most difficult in all of the four major fantasy sports that include football, basketball, baseball, and hockey.

I already had to learn the relationship between the rewarding of penalty minutes in hockey. My latest lesson in hockey is the plus-minus ( +/-, plus/minus) rating for players.

The +/- rating seems like a useful stat. It calculates the over or under a player contributes to their team score. In hockey this is kept during during normal play or even strength play when teams score goals and the stat purposely leaves out power plays and penalty shots. A player with a +5 score means that while on the ice, there teams have scored 5 more goals than given up.

The stat is also used in basketball to gauge a players relative influence on the score for the team. It doesn't make sense in football because there are separate teams for defense and offense. It doesn't make sense in baseball when substitutions and batting order really skews the stat.

The stat though is not used in fantasy basketball as a standard category. But however in fantasy hockey it is. I think it is because there are so few stats to keep in fantasy hockey that they must resort to this stat. However my main beef with it is that it requires each fantasy player to be dependent on other teammates performance.

The beauty of fantasy sports was to take a player that was playing on a team and being able to isolate their performance for your fantasy team. So when Tony Romo throws 400 yards and 5 touchdowns, it doesn't matter that his Cowboys lost to the Broncos. It also doesn't matter that Tim Lincecum San Francisco Giants scored 3 runs when he throws a perfect game. The players performance is treated in isolation.

The only other stat that is like the +/- is points allowed team defense in fantasy football. However, that is scored for only one position while +/- is scored for every non goalie in hockey. The other similar relationship is the quarterback and wide receiver. One players performance is tied to the other players, however, there are enough difference in PPR and also yards and touchdown point total difference that provides some separation.

I suppose what is motivating me here is that I am last in my league in +/- at -15 while I write this post. Several days ago I was all the way down to -30. The top team in the league is at +47. How the heck am I going to make up a 70 margin here?

But I haven't given up. I am picking player that have good +/- on the waiver wire but again much of this measure is dependent also on how there teammates are doing and +/- can vary wildly from season to season. Also, I am going with a strategy with picking bundle players for a team. So Pittsburgh, Nashville and Calgary players are my target for trade and free agency. I don't like to bundle players as now my risk cannot be dispersed among different players.

The fantasy hockey season continues...

The disruptive innovation of daily fantasy sports

The fantasy sports industry is not a recent invention. Fantasy sports started way back in the 1950's with golf. It found legs when fantasy baseball and the rotisserie format established itself in the 1980s. Fantasy sports really started to hit the mainstream with a boom when the internet and football were combined to bring today's modern day juggernaut of fantasy football.

But there is a new kid on the block that is changing the rules of fantasy sports and that is daily fantasy that could disrupt the fantasy sports industry.

Wikipedia defines disruptive innovation as:
A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.
Replaced by Computers
Daily fantasy game providers have indeed started to carve out a new market. FanDuel is projecting to revenues of $50 million this year and is currently the official daily game of the NBA. Their rival, DraftKings, has recently raised $41 million in funding, and is currently the official daily game of the NHL and MLB. The industry has also seen the entry of some mainstream brands such as USA Today and Sports Illustrated.

Daily fantasy is very similar to traditional fantasy sports in many ways of game play. For example, winning and scoring for players in football is  similar. The touchdown is worth 6 points and rushing/receiving yards are worth 1 point for every 10 yards, with quarterback stats slightly throttled at 4 points per touchdown and 1 point every 25 yards. In order to win, fantasy owners pick the player combination that will score them the most points.

Daily fantasy and traditional fantasy differ though in the time format. Traditional fantasy usually lasts an entire season, while daily will last only a day, or a week in football. The short time period allows fantasy owners to restart their league and gives them little commitment. The short time period also has advantages for fantasy owners to filter out players with injuries or on cold streaks. The short time is also ideal for how daily fantasy generates revenues.

Replaced by Cell Phones
Daily fantasy monetizes differently than traditional fantasy. Traditional fantasy has been "free". Free means that the owners generally do not pay to play fantasy sports. The fantasy sports providers gets a return by either direct ad supported games like Yahoo, or they get a return by ads and viewership when fantasy owners watch games like ESPN. There are some leagues that will charge a fee for creation of leagues that are heavy customization.

Daily fantasy charges owner to play and then returns a percentage of that fee back to a winner. Typical daily fantasy game providers take 10% of this fee. The daily game providers are looking to drive more players and more turn over of games so that they can earn the 10% for each daily game played. These game providers tend to be more web technology driven and have low barriers to entry as there have are several companies that provide white label services to provide daily game providers and easier setup and lower maintenance cost.

There have been many technologies that have been replaced by disruptive innovation. The typewriter has been replaced by desktop PCs and tablets. Phone booths are now obsolete when everyone has a cell phone. The traditional 25 volume encyclopedias are a thing of the past with online information freely available at such sites like Wikipedia. Finally, another classic disruptive innovation was the Model T by Ford that was able to replace automobiles at the time with its efficiency and time to market.

Daily fantasy has the potential to do that however there are some hurdles it must overcome to be the predominant game format for fantasy. It must resolve the legality of the gambling issue with daily fantasy. Although federal law has exempt fantasy sports from gambling, the current incarnation of daily fantasy may not have been the original intent of the Unlawful Internet Gambling Act that provided the exemption of fantasy sports.

Replaced by Wikipedia
For daily fantasy to overtake traditional fantasy, there should be a signal that shows that game providers are encroaching on traditional fantasy turf. That could look like a daily fantasy game provider exceeding the number of players that Yahoo! or ESPN has, or perhaps they have exceeded the quarterly revenue of those two giants. When that time comes, there will also be changes in player consumption of content. Today, fantasy sport causes a jump in internet traffic at the beginning of football season. If daily fantasy continues seep into the mainstream that internet traffic will spread throughout the season.

Conclusion

Daily fantasy is definitively an industry to keep on eye on. Its recent growth numbers and splash in marketing that daily fantasy game providers are investing in with professional teams will make them very visible in the public. For daily fantasy to overtake mainstream fantasy there are "features" that it must showcase from traditional fantasy. Social networking and social interaction has been a key driver to keeping traditional fantasy player returning and engaged each and every season. It is easier to come back to a league when your family and friends have tradition in the season leagues. Also, fantasy sports offers owners a wish fulfillment in terms of managing their own team. This is highlighted in the years of management of a dynasty team. Traditional leagues also have drafts, trades and waiver wire  replication of real sports that make the fantasy sports fun to play.

FanDuel scores the Washington Redskins

Another day, another partnership announcement of a daily game provider and professional sports. FanDuel has announced that they have signed an agreement with the Washington Redskins for advertising rights at the home stadium of the Washington team, FedExField for the rest of the season.

This gives the leading daily game provider a NFL team in opposition of DraftKings whose singed the New England Patriots last month.

Earlier this week, FanDuel signed the National Basketball League to a multi-year deal to become the official daily game for the NBA.

Commentary

This deal is not a multi-year deal like the previous ones that FanDuel has signed. The other deals include one with the entire NBA. Would this deal for only the rest of the season signal that the foray of professional signing are finally abating?

FanDuel scores the National Basketball Association

FanDuel, the largest daily fantasy game provider, has announced a multi-year partnership with the NBA. The new partnership makes FanDuel the official one day fantasy game for the NBA and allow winners of the game to get NBA merchandising and  tickets.

The exclusive deal also allows the NBA to take an equity stake in FanDuel and continue the current partnerships that FanDuel has with the Brooklyn Nets, Chicago Bulls, Dallas Mavericks, New Your Knicks and Orlando Magic.

This comes on the heals of an announcement by rival DraftKings and their partnership agreement with the NHL.

Related: DraftKings scores the National Hockey League

Commentary

Although the equity terms were not disclosed, the fact that the NBA when that route is huge. The means the NBA is willing to bet on a daily game provider and is confident that the legal questions of daily fantasy can be addressed.  The deal effectively shuts out DraftKings from professional basketball as the deal is an exclusive deal.

DraftKings scores the National Hockey League

DraftKings, one of the fastest growing daily fantasy game provider, announced a multi-year partnership with the National Hockey League.

The deal will provide DraftKings the ability to advertise on NHL's website as well as their mobile experience and social networks such as Twitter and Facebook. The partnership provides users of DraftKings the ability to participate in the a number prizee events for such as the 2015 All Star Game, Winter Classic, and the NHL Awards.  Finally, DraftKings will be a sponsor of the NHL's daily video previews on their NHL media network as well as the their web and mobile apps.

Commentary

The land grab continues with DraftKings making the first partnership with the NHL. DraftKings had previously connected with the NFL and the New England Patriots.  This also comes on the news that rival FanDuel has announced a partnership with the Brooklyn Nets of the NBA. The only sport left that DraftKings does not have a deal with is the NBA. DraftKings is currently the official daily game of the MLB.

Fantasy Hockey rewards penalty minutes?

One of the reasons why the professional sport leagues have embraced fantasy sports is that it draws more fans into the sport. That is what happened when I started to play fantasy hockey this year. I've never really watched hockey and only followed it through the news when someone wins the Stanley Cup. The extent of my knowledge is that I know that Lord Stanley's Cup gets passed around and winners like to bath their newborn babies in it. So this year, I joined a random ESPN roto league with a friend who does follow hockey to try it out.

I did no research before the draft and I figure I would let the default ranking guide my way.  So I had the 5th overall pick and got F John Tavares  and picked up goalie  Casey Price  with my second pick.

After the draft, I started to research the game to see how I should setup my team and who to look for on the waiver. I was still determined to win this league and still expected to do well. To my surprise, I didn't quite understand the category called PIM. I asked my hockey friend in the league with me: "What is this stat?" Which he replied :"Penalty minutes." My original thought was they penalize players for receiving penalty minutes.  "Au contraire," my friend replied. You get points if they log penalty minutes.

I paused for a moment and had to think about that. When do sports award for penalties and why are we doing it in fantasy? Is it because there are not that many categories to track in hockey and they have to fill it in with time in the penalty box?  I've never played fantasy football that awarded points for penalty flags on players. In addition, basketball has no points for fouls in standard leagues. This seemed just foreign to me. So I pressed my friend further for why.  He replied that hockey is different and that there are "enforcers" whose roles is strictly to dish it out for the team. I suppose I get it.

However, is there still something wrong with the game when the sport itself is trying to promote penalties? It isn't as if the penalty minutes have no value. Teams that are punished are a man down against the other team. Practically every other stat in fantasy sport is based on something positive. For example, yards, touchdowns, field goals made, rebounds, home runs, hits and goals are counted as positive score. Things like fumbles, interceptions, errors, field goals missed and free throws missed are counted as negative.

This is going to be an interesting experience learning about hockey by coming into to from fantasy hockey.

FanDuel scores the Brooklyn Nets


In the arms race of daily fantasy sites to secure main stream professional sports team for advertising, FanDuel has announced a deal with the Brooklyn Nets.

The deal makes FanDuel an official team sponsor and allows advertising for the company at all Nets home games at the Barclays center in radio and television mediums. This was possible as the NBA has lifted its ban on teams to sell sponsorship to fantasy game sites such as FanDuel.

FanDuel's main rival DraftKings in October announced a partnership with another professional team, the New England Patriots, for a similar sponsorship deal.

Commentary

I don't think that the daily fantasy sites will be able to carve out all the major professional teams as their budget is still limited. FanDuel is tracking towards its best quarter ever, however the amount spent on marketing will be eating into their revenue. So the daily fantasy game providers are picking big market teams locations, such as Boston and New York. There is still rumors that Chicago will be the next market that the game providers will tackle. I am curious if the FanDuel and DraftKings will double up in a market or will they continue to play the land grab, finders keeper game.



DraftKings scores the New England Patriots

DraftKings has announced a partnership with the NFL team, the New England Patriots, on an advertising deal that will allow DraftKings to advertise in the stadium on LED signage where the Patriots play, Gillette stadium,  inclusion in the team's newsletter and DraftKings to featured in the Fantasy Tips of the Week on www.patriots.com

Around the web: I Lost $70K Playing Fantasy Football

With all the winners in fantasy sports, there has to be loser as someone has to pay the winners purse. Chrstine DiGangi from Credit.com details a players experience with fantasy football and how much he is down.

Link: I Lost $70K Playing Fantasy Football

NBC Sports partners with RotoGrinders


NBC Sports has announced a partnership with RotoGrinders, a leading content provider of daily sports, to provide NBC Sports with exclusive daily content in the form of articles and video and will cover a range of sports from football, baseball, basketball, and hockey.

FanDuel has best quarter ever and projects $50 million in revenue for year

FanDuel keeps rolling. In the recent close of Q3, the daily fantasy sports leader, announced that they closed out a record $8.89 million in revenue. That was based on additional records for collected entry fees at $109.7 million and paid out prizes at $100.8 million. Both represent that largest sums to date for the company.  In addition, the company disclosed that the number of Paid Actives, a measure of playing players, reached 519,310. That represents more than double the previous quarter of 192,942.

The company also announced they were increasing their projected revenue to $50 million, an adjustment of $10 million more. The company is also projected to reach $500 million in paid out prizes. Finally, the company estimates its market share at 70%, which would make it the daily fantasy sports leader.

Commentary

What is more impressive is that this was done in third quarter, which traditionally has been only the companies' second best quarter. The fourth quarter has tended to their best quarter as it includes the fantasy sports gorilla, football in their books. This year's Q3 results represented a 240% increase from last year.  If historical trends keep in line, FanDuel could be on track to post $243 million in collected fees and $222 million in payouts for Q4 with revenues at a 10% of payout amount of $22 million.
The paid actives would also be interesting to see with the latest market push from FanDuel. Although, the company also has not disclosed what their costs are and I would be very curious to see what their cost per player acquisition is.
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