And Now Tom Brady’s On Board the Single-Day Fantasy Sports Bandwagon

ESPN fantasy football page with a potential draftee during draft day. Mark Lorenz for the Boston Globe
ESPN fantasy football page with a potential draftee during draft day. Mark Lorenz for the Boston Globe –The Boston Globe

Score another big win for the burgeoning business of single-day fantasy sports.

The Boston Globe reported this week that Tom Brady (heard of him?) will star in a commercial for DailyMVP, which allows users to play modified versions of traditional fantasy sports.

Brady’s endorsement deal is just the latest move indicating the growth of the star-studded, deep-pocketed, and somewhat controversial growth of the industry-within-an-industry that is single-day fantasy games.

If you live in the United States, can spell “Sunday,’’ and have a pulse, you probably know how fantasy sports work. Without getting too into the nuts and bolts, here are the basics: Users create ‘teams’ online, which are populated with players they select from actual sporting events. Those players then go out and play games in real life, and fantasy teams get points based on the performance of those players. The fantasy sports industry generates billions of dollars in activity each year, according to the Fantasy Sports Trade Association, with more than 40 million players this year.

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Traditionally, in the fantasy games that have long populated the Internet, users would manage a fantasy team over the course of a given sports season. A fantasy football player, for example, chooses National Football League players to their squad in late August, and manages his or her roster throughout the NFL season—complete with the ability to change players as needed here and there. At the end of the year, each league crowns a champion.

Single-day games differ in that the user chooses players for one day’s slate of games, and that’s that. The slate is wiped clean, and the user can try again the next day, the next week, the next month—whenever they want, really—with an entirely new slate of players.

DailyMVP, Brady’s new dig, is among a few such games that have seen their popularity skyrocket in the past few years. It’s competitors have received quite a bit more publicity. Among them are Boston-based DraftKings, which itself acquired competitors StarStreet and DraftStreet over the summer. In keeping with Boston sports tradition, its chief competitor is based in New York, and is called FanDuel.

DraftKings and FanDuel, in just the last couple of months, have announced funding rounds of $41 million and $70 million, respectively. Yeah, that’s a lot of cash.

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It’s certainly being put to use. FanDuel and DraftKings have all been spending quite a bit to spead the message, on TV, on the radio, on podcasts, online, in sports magazines—everywhere. They have even advertised on traditional fantasy sports websites like Yahoo! and CBS.com, suggesting a distinction between single-day and season-long fantasy games.

Meanwhile, high-profile spokespeople are stacking up. Brady joins NBA star Steve Nash as a spokesperson for DailyMVP. DraftKings recently unveiled an official partnership with the Patriots, and Pats defensive tackle Vince Wilfork did his part this summer to get the local company some play, presumably for a price. Wilfork is a among dozens of pro athletes blasting out their support.

 

The companies are raising a lot of money, and they’re spending a lot of money. It looks like they’re also making quite a bit, as well. DraftKings hasn’t talked revenue, but FanDuel is projecting about $50 million this year, up from $14 million last year. FanDuel reportedly has more than 500,000 paying users, and DraftKings reportedly has more than 1 million overall users.

Theories as to the big attraction of these games aren’t too difficult to come up with. For starters, they don’t require a full-season commitment from users, who can just play one game at a time. Should their traditional fantasy team find itself at the bottom of the standings by midseason, single-day games provide an outlet to start over.

But then there’s the pitch FanDuel and DraftKings make most regularly: users can win a lot of cash, as the services pay out hundreds of millions of dollars over the course of the season, and millions each week.

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The winner of FanDuel’s biggest contest this week, for instance, will take home $500,000, and FanDuel’s Football World Championship competition in December will pay a top prize of $2 million. (A Bostonian will be competing in that contest.) FanDuel also projects to award about $1 billion (with a B!) in total payments in 2015, according to HBO’s Real Sports.

The promise of a big payout each week is a principle reason these sorts of games have caught on in popularity, with more than 28 percent of users saying they join single-day games that offer the highest payout, according to the Fantasy Sports Trade Association. Worth noting: 48 percent of users say that trust in the site offering a single-day game is the most important part—which may speak to why DraftKings and FanDuel have risen to such prominence as representatives of these sports, and why a smaller fish like DailyMVP is seeking high-profile spokespeople.

Revenue for these sites comes from its users, who put money into the games in hopes of cashing out, depending on the single-game performance of the players they choose to their teams.

That sounds a lot like gambling, a charge critics have taken up against single-day format games.

Cash payouts for fantasy sports have been legal in the U.S. since 2006 by way of a federal law that made gambling through the Internet illegal. Fantasy sports were excepted from the law, provided they follow certain conditions that just about every fantasy game does, because they were classified as games of skill rather than games of chance. (State laws can be more prohibitive, but few states have exercised that authority.)

Those ‘skills,’ in traditional fantasy games, would amount to a user’s ability to navigate a prolonged sports season, recognizing which players may start playing well or poorly, convincing other users in their league to trade players, and otherwise managing to keep their roster strong throughout the season based on their knowledge of sports. In single-day games, however, the skillset is limited to projecting how players will fare in a one set of games. There’s still sports knowledge required, but the process is much more subject to chance. Some might even say luck.

The gambling issue comes into greater focus depending on the game in question. DailyMVP, for example, offers a game called QBSnap, in which every NFL quarterback is given a performance projection for the week. Users are tasked with selecting three quarterbacks they think will most exceed that projection. In that example, the game is getting really close to prop betting.

While this concern is the common criticism of single-day games, the opposition appears to be softening. Last year, a U.S. court in Illinois threw out a lawsuit in Illinois that called FanDuel illegal gambling. The dismissed lawsuit did not answer that question, but as of this September, there were no other suits in the U.S. on similar grounds, according to attorney David Klein.

Meanwhile, a recent Atlantic article ran down the about-face from the sporting world. Major League Baseball was once hard and fast against these games, outright calling them a form of gambling. The league is now a partner of DraftKings.

National Basketball League commissioner Adam Silver recently took it a step further and said the league expects sports gambling to expand across the country, and that when it does, the league will “participate in that.’’ He expanded on that point this week. UFC is also out in support of expanded sports gambling.

That conversation is happening in the context of a country that is opening itself up to gambling, more and more. Casinos are popping up in more and more places and, pending a ballot question vote next week, are even coming to Massachusetts. Specifically to sports betting, New Jersey is trying its darndest to legalize it.

New Jersey’s effort is tied up in the legal system as it faces a challenge from U.S. sports leagues, showing there is still plenty of hesitance to go all-in on sports betting. But even if one were to deem single-day fantasy sports as gambling, gambling is becoming an increasingly accepted part of American life. As have fantasy sports over the last 20 years, and as have single-day games over the last few.

And anyway, if Tom Brady’s involved, how bad can it be? (Oh, wait.)

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