Judging by the advertisements on sports talk radio here in the Twin Cities, fantasy sports betting sites like FanDuel.com are printing money. One ad emphasizes how the site pays out $2,000,000,000
per day (10/10/2015 edit: per year) to betters. If it’s paying out $2bil per day year, imagine the revenue per day…
The most read story on the New York Times right now suggests why the industry might be so profitable: the companies create the market.
The recent emergence of the industry required companies to tap into the existing pool of fantasy sports betters for employees. There simply was not an existing talent pool outside the betting world that had existed for several decades in a highly-fragmented, pre-internet world.
Many of these employees set the prices of players and the algorithms for scoring. In short, they make the market.
It appears some employees used their insider access to win big bets on rival sites.
The statements were released after an employee at DraftKings, one of the two major companies, admitted last week to inadvertently releasing data before the start of the third week of N.F.L. games. The employee, a midlevel content manager, won $350,000 at a rival site, FanDuel, that same week.
What does this mean for the industry? It might be time to call in government regulation to give the industry a better public image.
Mr. Grove, of legalsportsreport.com, said this may be a watershed moment for a sector that has resisted regulation but now may need it to prove its legitimacy.