Newspaper article International New York Times

Yahoo Moves into Fantasy Sports Betting ; Internet Firm to Enter a Market That Generates $2.6 Billion Annually

Newspaper article International New York Times

Yahoo Moves into Fantasy Sports Betting ; Internet Firm to Enter a Market That Generates $2.6 Billion Annually

Article excerpt

The Internet company says it will host daily and one-week fantasy games, joining a market estimated to generate $2.6 billion in revenue this year.

Even as legalized gambling has spread across the United States to include lotteries, casinos and just about every imaginable type of slot machine, the notion of betting on sports has remained, outside of Las Vegas, largely in the shadows.

But on Wednesday, Yahoo took the boldest step yet to bring what amounts to legalized betting on sports to the mainstream. The company, which has been broadening its range of sports content, said it would host daily and one-week fantasy sports games played for money, starting with Major League Baseball and expanding to other professional sports as their seasons begin.

As any viewer of ESPN would know, the fantasy sports industry has been growing rapidly, with ubiquitous ads proclaiming that hundreds of thousands of dollars can be won on sites like DraftKings and FanDuel. But none of those companies, all start-ups, have the vast reach of Yahoo and the ability to entice tens of millions of young men -- a coveted audience -- to bet on the performance of their favorite players.

Yahoo's move further legitimizes a pastime that closely resembles gambling, particularly with the daily fantasy games. Players can bet against a single opponent or within a small group, and the quick results can simulate the adrenaline rush and financial stakes of traditional sports betting.

Fantasy sports operate under an exemption to the Unlawful Internet Gambling Enforcement Act of 2006, which outlawed online poker and sports betting. Lobbyists from the National Football League, as well as from other professional leagues, successfully pushed to have fantasy sports deemed a "game of skill." Most states permit the games, but the betting is illegal in five: Arizona, Iowa, Louisiana, Montana and Washington.

Ken Fuchs, Yahoo's vice president for publisher products, said that fantasy sports were different from gambling because they relied on the skills of the player.

"We stay very close to the laws," Mr. Fuchs said. "We certainly encourage people to play responsibly."

Playing fantasy sports is one of the most popular pastimes for Internet users, with an estimated 57 million people in the United States and Canada participating this year, according to research conducted by Ipsos for the Fantasy Sports Trade Association.

Fans assemble rosters of real football, baseball or basketball players to create dream sports teams, then earn points based on how well those players perform in real games. Participants tend to be avid, spending an average of $465 a year on contest fees and materials, according to the Ipsos research.

The N.F.L., National Basketball Association and Major League Baseball -- traditionally ferocious opponents of betting on their sports -- were the first to embrace gambling on fantasy sports, aware that the passion for it is crucial to their bottom lines. ESPN, CBS and Yahoo, among others, have since built season-long fantasy sports into a major business by hosting leagues, with contests that stretch out over months.

Different flavors of fantasy sports have sprouted up, with daily fantasy sports growing rapidly over the last two years, fueled partly by the instant gratification they provide players who can win money daily. Entry fees for contests range from 25 cents to $1,000, and total prize pools range from $54 to $100,000, with some tournaments offering pots of $1 million or more.

Eilers Research, which studies the industry, estimates that daily games will generate around $2.6 billion in entry fees this year and grow 41 percent annually, reaching $14. …

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