Fantasy Sports: An Opportunity - and a Competitor

By William Shanklin 

CNN.com earlier this year posted an article titled “The Rise and Rise of Fantasy Sports,” in which it reported the activity is expanding at double-digit rates.

The Fantasy Sports Trade Association estimates 27.1 million adults in the United States currently participate in and will spend roughly $4 billion on virtual sports competitions in 2010. Prizes earned by game winners vary from less than $100 in cash or comparable value to $10,000 or more.

The Unlawful Internet Gambling Enforcement Act of 2006 made exceptions for horse racing, fantasy sports, state lotteries, and certain kinds of securities transactions. The magazine Editor & Publisher—in referring to a recent cash-reward sports fantasy contest run by the Philadelphia Inquirer web site Philly.com—remarked that the publication “has become the first newspaper to offer online sports betting in the United States.” All but six states permit their citizens to partake of fantasy sports for money and in-kind rewards.

Media portals such as CBSSports.com and Yahoo.com offer free fantasy sports games in football, basketball, baseball, and hockey. The demographic profile of fantasy sports players is highly desirable.

According to World Fantasy Games, a typical player is a college-educated 37-year-old male who is married with children and has a $94,000 annual household income. He manages six fantasy teams in various sports and, in doing so, is online at least three to four hours a week. Men compose about 90% of fantasy sports players.

Horse racing needs to pay close attention, given the magnitude and growth trajectory of the fantasy-sports market. This segment of sports entertainment represents an increasingly important competitor for the gaming dollar. 

TVG Fantasy Horseracing allows fans to enter, with no entry fee, a public league or to create a private league to manage a stable of horses, jockeys, and trainers. Similarly, the 2010 Road to the Roses Fantasy Game, sponsored by Churchill Downs, enabled players to select a stable of runners eligible to enter the Kentucky Derby Presented by Yum! Brands (gr. I) and its prep races. Rewards for earning the most points ranged from small stipends for weekly best performers up to a grand prize of $5,000 for the contest winner.

The abundant and precise statistics in horse racing make the sport conducive to online fantasy gaming. While an increased involvement in fantasy horse racing would not directly boost purses, it would indirectly do so if it succeeds in cultivating enough real-life bettors among well-educated men and some women in their 30s and 40s who have above-average incomes. Further, racetracks and ancillary wagering services might be able to profit from compelling fee-based games with real money returned to winners.

William Shanklin, a longtime contributor to The Blood-Horse, is the publisher of the Web site horseracingbusiness.com

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