Key points:

• Daily Fantasy Sports (DFS) merges sports betting excitement with fantasy sports strategy, offering shorter and intense gameplay.

• Originating around 2007, DFS gained momentum with major platforms like FanDuel and DraftKings, becoming mainstream through marketing and sports league partnerships.

• DFS involves creating short-term fantasy teams for quick contests with potential cash prizes based on real athlete performances.

• It caters to various sports and formats, distinguishing itself from traditional sports betting by focusing on individual athlete performance and competing against other players.

• The U.S. legalization of sports betting post the overturning of PASPA in 2018 has led to widespread acceptance, but some states still prohibit or regulate DFS for consumer protection.

• Like other gambling forms, DFS has addiction potential, emphasizing the need for responsible engagement through setting limits.

Daily fantasy sports (DFS) is a form of online fantasy sports gambling that has grown in popularity in recent years. It blends the thrill of sports betting with the skill-based strategy of traditional fantasy sports. 

DFS has revolutionized how fans interact with sports, providing a shorter, more intense alternative to season-long fantasy sports leagues. It has evolved into a multi-faceted industry, featuring various sports and contest formats, appealing to sports enthusiasts and gamblers alike.

History of Daily Fantasy Sports

Daily fantasy sports introduced a new and exciting format to the world of fantasy sports. Unlike traditional season-long leagues, DFS offered players the opportunity to create fantasy teams for shorter periods, even just for a single game day.

The roots of DFS can be traced back to June 2007 with the launch of Fantasy Sports Live, one of the first platforms dedicated to this new style of fantasy gaming. Shortly after, in November 2008, NBC entered the DFS arena with their site, SnapDraft. Another major player, FanDuel, was founded in 2009, originating as a spin-off from a Scottish prediction market company. This was followed by the founding of DraftKings in 2012, which quickly became another key player in the DFS market.

These early platforms were instrumental in popularizing DFS. They offered an accessible and engaging way to participate in fantasy sports, attracting both traditional fantasy players and new enthusiasts. The easy-to-use interfaces and the excitement of short-term gameplay were significant factors in their appeal.

Mainstream Popularity of DFS

Due to increased marketing efforts and strategic partnerships with major sports leagues, daily fantasy sports have become increasingly popular. These initiatives significantly boosted public awareness and acceptance of DFS as a legitimate and exciting form of sports engagement.

Top DFS platforms, such as FanDuel and DraftKings, have capitalized on this momentum. They now boast millions of active users and handle billions of dollars in entry fees annually. 

How DFS Works

DFS gambling involves participants creating lineups of real athletes from various sports leagues. The performance of these athletes in real games determines the fantasy points earned by each lineup. 

Unlike traditional fantasy sports leagues that span an entire season, DFS contests are much shorter, typically lasting just a single day or a week. This shorter format adds an element of immediacy and excitement, as players can see the results of their decisions more quickly and frequently.

Participants in DFS compete against other users in various types of contests. These contests can range from head-to-head matchups to large tournaments with thousands of players. The primary objective is to accumulate the highest number of fantasy points based on the real-life performances of the athletes in one's lineup. 

The allure of DFS is the potential for competitors to win cash prizes based on contest results. The results of each contest determine the distribution of prizes, with top-performing lineups winning a share of the prize pool. The size of these prizes can vary, from small amounts in casual games to substantial sums in high-stakes tournaments. 

Types of Games in DFS

There are several types of games across various sports in DFS that cater to almost every type of sports enthusiast. The most popular sports in DFS include the NFL, NBA , MLB, NHL, PGA, and NASCAR.

DFS also provides different contest formats, depending on an individual’s preferences and skill levels. Some popular formats include:

• 50/50s: In these contests, the top half of the field wins cash prizes. This format is popular among players looking for a higher chance of winning smaller payouts.

• Head-to-Heads: These are direct competitions between two players, where the winner takes the entire prize. 

• Large Tournaments: These contests involve a large number of players with the prize pool distributed among the top finishers. Often featuring significant prizes, they attract players looking for a big win.

Users can participate in contests with big prizes, appealing to those who seek the thrill of high stakes. At the same time, there are plenty of low-risk options with small stakes, perfect for beginners or those who prefer to play more conservatively. 

Key Differences Between DFS and Traditional Sports Betting

While both daily fantasy sports and traditional sports betting involve predicting outcomes related to sports events, there are several differences between these two forms of gaming, including:

• Basis of Contests: In DFS, contests are based on the performance of individual athletes rather than the outcome of real games. Participants create fantasy teams, and their success depends on how well each selected player performs in actual sports events. This contrasts with traditional sports betting, where wagers are typically placed on the outcome of a game, such as which team will win, by how much, or other game-specific outcomes.

• Skill vs. Chance: Advocates of DFS argue that it is a game of skill rather than chance. This is because success in DFS relies heavily on a participant's knowledge of the sport, including player performance, game statistics, and other strategic elements. In contrast, traditional sports betting is often viewed as more reliant on chance, as it involves predicting unpredictable game outcomes.

• Competing Against Others vs. The House: In DFS, users compete against other players in a pool, not against a bookmaker or the house. The skill level of the other players in the contest significantly influences one's chances of winning. In traditional sports betting, the bet is generally against the house or a bookmaker, with odds set by the bookmaker that reflect the perceived likelihood of various outcomes.

Legalization of Sports Betting in the U.S.

Sports betting in the United States underwent a significant transformation with the overturning of the Professional and Amateur Sports Protection Act (PASPA) in 2018. PASPA, a federal law enacted in 1992, had effectively banned sports betting nationwide, with limited exceptions. However, the Supreme Court's decision to overturn PASPA opened the door for individual states to legalize sports betting within their jurisdictions.

Since this landmark decision, there has been a rapid wave of legalization across the country. More than 30 states have now legalized sports betting in some form, whether it be in-person at sportsbooks, online, or both. 

States That Prohibit Daily Fantasy Sports

Despite the widespread popularity and legal acceptance of daily fantasy sports in many parts of the United States, there remains a minority of states where DFS is explicitly banned, classified under illegal gambling laws. As of now, the states that prohibit DFS include Arizona, Hawaii, Idaho, Louisiana, Montana, and Nevada. Each of these states has specific laws or interpretations of existing gambling laws that classify DFS as a form of gambling, which is either restricted or banned. 

In addition to these states, there are others that allow DFS but impose strict regulations on its operation. These regulations include licensing requirements, taxation, and rules around how contests are structured and operated. The aim of these regulations is to ensure consumer protection and fair play.

DFS Gambling and Addiction 

Like other forms of gambling, DFS does have the potential to be addictive. It’s important that individuals approach daily fantasy sports with self-awareness and responsibility. Setting limits on participation, such as restricting the amount of time or money spent on DFS, can help maintain control and responsible engagement. 

References: 

Murphy vs. National Collegiate Athletic Assn. | Supreme Court of the United States 

How FanDuel and DraftKings Work | Investopedia

Current U.S. state-by-state legislation | Fantasy Sports & Gaming Association