Yahoo is hoping its new Daily Fantasy sports betting line can help fuel revenues for the technological conglomerate that has seen its advertising dollars become rather stagnant over the last 12 months.
While other forms of online gambling in America continues to struggle, particularly poker, the rise of fantasy sports has endured, and executives believe it’s time to capitalize through a more profitable structure.
“For nearly two decades, Yahoo Sports has entertained fans around the world,” Simon Khalaf, SVP of product and engineering said. “Today, we’re taking the game to the next level and giving you what you’ve always wanted, the chance to be a cash winner every single day with the new Yahoo Sports Daily Fantasy.”
Wait, Isn’t That Illegal?
A quick search of current online sports betting laws in America shows the practice is only legal in Nevada, Montana, Oregon, and Delaware, so how is Yahoo allowing its users to place bets on the outcomes of sporting events through the Internet?
Although sports betting is illegal except for in the aforementioned states, for-fee online fantasy sports is legal in all but Iowa, Arizona, Washington, Louisiana, and ironically, Montana.
The bets being wagered on the Daily Fantasy service won’t be straight up bets.
Instead, Yahoo will take a 10 percent cut of all entry fees, meaning the platform isn’t online sports betting but instead a fantasy sports game that comes with an associated cost and potential real-money prizes.
It’s a nice loophole in current federal law for Yahoo, and one that has been long taken advantage of by DraftKings and FanDuel. “The growing popularity of Daily Fantasy games is a fantastic opportunity for us to bolster our leadership by providing our millions of existing fantasy users as well new fans out there with a unique take on this game genre,” Khalaf concluded.
High Rollers Welcomed
When it comes to fantasy sports, the general perception is that it’s a timewaster among friends that gives additional importance to more games for fans, but in reality high rollers are also participating.
Yahoo will permit users to deposit $600 daily using credit cards and PayPal accounts, meaning a dedicated player can have a bankroll of $18,000 in the first month.
And at sites like FanDuel and DraftKings, the market’s two current leaders, players can request higher daily limits.
According to the Fantasy Sports Trade Association (FTSA), Yahoo isn’t at a disadvantage of entering real-money fantasy sports behind two established brands, as the industry is still young and growing rapidly.
Annual spending is up nearly 500 percent over the last years, and more than 15 million new fantasy sports players joined the industry in 2014, with now some 56 million in the US and Canada playing regularly.
“Fantasy is as strong as ever,” Ken Fuchs, Yahoo’s VP said. “The rise of daily is early, but real.”
Yahoo becoming the first major technology company to enter the market wasn’t well received by some, primarily FanDuel who said its site was simply cloned.
“When we heard that Yahoo was joining the daily fantasy space we expected something new and exciting that could affect the industry,” CEO Nigel Eccles told the Wall Street Journal. “They’ve spent the last six months cloning FanDuel’s product, pixel for pixel, is totally flattering, but also slightly disappointing.”