NEW YORK (MainStreet) – Fantasy football leagues are still growing, but they're just part of what's becoming a multibillion-dollar sports industry.
Fantasy sports services revenue is expected to grow 7.3% annually to $2 billion within the next five years, according to market research firm IBISWorld. Advertising and sponsorships on fantasy sports websites are one of the largest drivers of industry revenue, though IBISWorld suggests that increased sports viewership and participation may also help fantasy sports grow.
The Fantasy Sports Trade Association estimates 41 million people in North America play some kind of fantasy sports. That includes 14% of people 12 years or older in the United States, which is about half of the television audience of 111 million that watched the Super Bowl in February. Among those players, 69% cite fantasy football is their favorite of all fantasy sports. That said, there's a whole lot of room for growth within fantasy sports' demographics.
The FSTA notes that 80% of all fantasy sports players are male, almost 90% are white and more than half are unmarried. The average age of a fantasy sports player is 34, with more than 78% holding a bachelor's degree or better. They've spent 9.5 years playing fantasy sports and 8.7 hours a week updating rosters and checking stats. When they're not doing that, almost 18 hours of their week are dedicated to watching sports.
Unfortunately for companies including Yahoo!, ESPN and CBS that run weekly leagues, only 46.9% of fantasy players pay any sort of league fee. When they do, though, that adds up to an average of roughly $111 dollars a year on league-related costs. Even those who avoid fees for a season-long league will spend an average $20 in information materials including fantasy sports magazines and $15 on one-on-one daily matchups.
That in itself is creating a corner of the fantasy sports market with huge earning potential. With daily sites taking in 10% of each fan-to-fan bet on such minutiae as touchdowns and yardage thrown, daily sites are bringing some big companies into the game. Comcast Ventures sank $11 million into daily fantasy site FanDuel last year. That site is expecting to draw an industry-high 500,000 players during the NFL season alone and is on track to make $400 million in payouts this year, thanks to a loophole in the 2006 anti-gambling act aimed at online poker. Daily sites began exploiting that fantasy sports loophole — lobbied for by the major sports leagues — in 2009 and expanded just after the NFL player lockout in 2011.
The No. 2 daily site in the U.S., Boston-based DraftKings, acquired rival site StarStreet in August and raised $41 million in venture capital funding immediately thereafter. That put them ahead of even USA Today Sports Media Group's site FantasyScore.com and Sports Illustrated's FanNation site, where wagers can run from the hundreds to more than five figures.
IBISWorld sees potential for growth not only in the existing football-fed market, but in other sports that make up a smaller portion of fantasy participation. Auto racing makes up 12.3% of the fantasy market, but attracts roughly 8 million viewers per race on Fox, 5 million on TNT and 3 million on ESPN each season — well more than the just-over 4 million it draws in fantasy leagues. With World Cup soccer broadcasts drawing bigger audiences in the U.S. than just about any sport shy of football, IBISWorld says fantasy soccer is another area ripe for expansion in North America.
Though fantasy sports players are a minority across just about every demographic, women are perhaps the industry's greatest hope for future growth. While 19% of males in the U.S. play fantasy sports, only 8% of women do the same. With those making more than $50,000 a year (16% of all fantasy players) participating at a greater clip than those earning less (10%), that's a lot of money to leave on the table.
— Written by Jason Notte for MainStreet
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