The Big Business Behind Fantasy Sports

Fantasy sports groups may seem like a little more than a silly pastime for fraternity brothers, but the reality is that the growing popularity of sites that facilitate such games has become a booming business.

The fantasy sporting arena offers companies a new way to advertise, as well as creating a new revenue stream from fans who enter competitions or pay joining fees. The space has seen the emergence of several new startups and caught the attention of big name companies looking to get in on the action.

Daily Play

While traditional fantasy sports requires a user to follow their team throughout an entire season, many sites have added daily or weekly contests in order to draw in more interested users. Those who have less time, or perhaps less knowledge of the game, can still participate in short-term fantasy games. The games can cost anywhere from $0 to $5,000 to enter and have been gaining popularity among sports enthusiasts.

Major Players

Two of the biggest sites in the fantasy sports space are DraftKings and FanDuel. Yahoo! Inc. (NASDAQ: YHOO) also announced its own plans to offer pay-to-play fantasy sports games earlier this summer in an effort to boost revenue and compete with up-and-coming sites.

Related Link: Disney To Invest In Fantasy Sports Site DraftKings, Valuation Worth Almost $1 Billion

Boston-based DraftKings caught the attention of Walt Disney Co (NYSE: DIS) with its easy to use, per-game betting options; the media superpower invested $250 million in DraftKings' business back in April.

FanDuel has raised $363 million so far by appealing to big names like Google Capital and Time Warner Investments.

A Bright Future

Both sites are aiming to up the ante this year by increasing the amount of prize money that is paid out to users. FanDuel is planning to dole out over $2 billion worth of prizes this year, a big step up from the $564 million that was up for grabs last year. Both sites say they see growth in their future, especially with football season, a fantasy sports favorite, coming up.