FanDuel is fantasy sports on steroids: bigger, stronger, faster. The New York City-based startup benches the familiar season-long league model embraced by millions of fantasy enthusiasts in favor of more lucrative daily and weekly competitions—a model perfectly attuned to the ADD-addled sensibilities of the Millennial generation.
Here’s how FanDuel works: Like with fantasy football, baseball and basketball games hosted by ESPN, Yahoo and other brands, players assemble virtual teams of real-world sports stars. Gamers accumulate points based on how the players fare, determined by statistical measures like touchdowns, field goals and passing yards.
In traditional fantasy leagues, contestants draft their teams before the pro season, maintaining the same core roster for months. But FanDuel games last just one day or one week; on any given day, entrants can build new lineups based on whose performance is peaking or plummeting. FanDuel also offers gamers the choice of joining an existing league or creating their own. From there, they select an entry fee (up to $5,000) and the number of games or teams they wish to play. If their roster generates more points than their rivals on that day or week, they win all the money in the pot, minus FanDuel’s average 9 percent cut.
Six years into its run, FanDuel is outdueling rivals like DraftKings and Draft, claiming an 80 percent market share of daily fantasy sports and boasting more than 1 million paid active users—numbers that in 2014 translated to $622 million in entry fees and cash payouts in excess of $564 million. FanDuel expects to pay out more than $1 billion this year, corresponding to roughly $100 million in revenue.
“When you ask players what they look for, they always say they want the biggest prize pool, the most opponent variety and the most game variety,” says FanDuel co-founder and CEO Nigel Eccles. “Because we’re the biggest, we can give them what they want.”
The Northern Ireland-born Eccles, along with his four co-founders, conceived FanDuel in 2009, capitalizing on language in the 2006 Unlawful Internet Gambling Enforcement Act that banned poker and sports-betting websites but exempted fantasy sports by declaring them games of skill, rather than games of chance.
At the time of FanDuel’s 2009 launch, an estimated 28 million adults played fantasy sports, according to the Fantasy Sports Trade Association. Fast-forward to 2015, and 41 million North Americans are playing. Gaming industry analyst Eilers Research expects fantasy players to spend $2.6 billion on entry fees this year, up from $971 million just a year ago.
Credit FanDuel for helping expand the gamer ranks. “About 60 percent of our users are under the age of 35,” Eccles says. “Most fantasy sports players average in their early to mid-40s.”
FanDuel is even driving attention to real-life sports. Football has long reigned supreme over fantasy gaming, but the NFL’s regular season spans just 17 weeks each autumn/winter. The FanDuel formula best complements Major League Baseball’s 162-game season and the NBA’s 82-game season, with games every day of the week. “When fantasy football season goes out in January, our players get engaged in the NBA,” Eccles says. “Before FanDuel, players were watching four basketball games a week. After FanDuel, it’s seven. They’re also watching games longer.”
The leagues are taking notice. This fall, FanDuel inked a multiyear deal with the NBA, introducing a one-day fantasy contest promoted via ABC, ESPN and TNT. The deal gives the NBA an undisclosed equity stake in FanDuel, which has raised $88 million in venture funding. “All the sports leagues are concerned about getting younger consumers, and when they look at us, they see something that can transform the live sports experience,” Eccles says. “It’s not about the playoffs or the Super Bowl. We’re driving people to watch the day-to-day, regular in-season games. We’re driving attention when fan interest is at its lowest.”
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