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Are fantasy sports websites taking a gamble with their marketing?23 January 2013
By Chris Sieroty
The question pertains to a new and profitable trend of daily betting sites such as Cantor Fantasy, Fan Duel, Fan Ball and Draft Day that process millions of dollars in transactions between players who organize and bet on new lineups.
"We support daily game companies," Paul Charchian, president of the Minneapolis-based FSTA, told about 200 conference attendees Tuesday at The Mirage. "By far, daily games are the fastest-growing part of our business. Don't [mess] it up."
Charchian said he was concerned that some daily sites are marketing themselves like offshore sports books did before the federal crackdown in 2006. He urged them to be "much more conscious about creating consumer confusion."
On FanDuel.com, the site sells as "the new fast and easy way to play fantasy sports." The site also says players can "play and win real cash in the same day," while touting "$50 million in cash payouts" last year.
Charchian said, "Sooner or later that confusion will affect all of us."
Currently, it's legal to bet on fantasy sports. The Unlawful Internet Gambling and Enforcement Act of 2006, which regulated online gambling, carved out a niche for fantasy or simulated sports games.
The law says the games must have an outcome that reflects the relative knowledge of the participants, but not chance. In other words, fantasy sports are considered games of skill.
"No fantasy league or website has ever been shut down due to a gambling indictment," Charchian said. "Please be very conscious about how you present yourself. If you don't want to do it for yourself, do it for the industry."
Charchian said he feared some daily fantasy sites might attract unwanted regulations.
Today, fantasy sports participation is close to 36 million people ages 12 and older in the United States and Canada. The fantasy sports industry generates $1.44 billion annually in entry fees and prizes, and more than $1.63 billion in direct spending, including website-hosting fees and subscriptions to magazines and websites catering to fantasy players.
It's a business that is also seeing its users move to smartphone and tablet apps, impacting its traditional online advertising revenue.
"There is a huge shift to mobile consumption," Andrew Hoffman, director mobile marketing at Mobest, told industry executives, website developers and others during a panel discussion on advertising's shift to mobile.
Hoffman cautioned that so far advertising budgets haven't grown with the increase; companies expect their "money has to work smarter."
The conference addressing all aspects to fantasy sports was held Monday and Tuesday at The Mirage. Panels discussed how companies can provide the best online or mobile user experience, and how fantasy sports makes sporting events more fun to watch.
"The mobile spend will increase," said Lyndon Campbell, vice president sports at Nielsen. "Digital spending [will be] up 5 percent this year. A lot of ad dollars are moving into the space."
Overall, 56 percent of Americans own a smartphone, according to Nielsen research. In terms of sports, 70 percent of Major League Soccer fans have a smartphone, followed by the NBA at 68 percent and the NHL with 63 percent.
"Sports is not that well penetrated in terms of apps," said Stephen Master, senior vice president sports at Nielsen. "One in four uses sports apps . . . fairly underdeveloped compared to other areas."
Master said most people are still using their smartphone to connect to the Internet to check scores and stats using ESPN or Yahoo! Sports. He said there was an opportunity for a company to break through the clutter and capture the fantasy sports market.
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