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Research Outline

Prepared for Lucy D. | Delivered October 13, 2020

Fantasy Sports Revenue Generation

Goals

To find out how fantasy sports platforms make money. Specifically, to provide case studies of other fantasy platforms. Included in these case studies should be information about whether their focus is on the volume size of their combined transactions or on their audience. If there is any information about platforms that focus on 'individual sports' as opposed to 'team sports' those should be prioritized. DraftKings and FanDuel may be included if relevant.

Early Findings

Contests

  • DraftKings and FanDuel run contests that offer large prizes. There is a fee to participate in the contest. FanDuel specifically takes a 10% cut of these fees, while the rest goes to funding the prizes.
  • DraftKings and FanDuel run weekly contests rather than waiting until the end of the sports season.

Other Revenue Streams

  •  Advertising, tournament sponsorship, and co-produced videos serve as other revenue streams for fantasy sports platforms.

Free Leagues

  • Offering a free league to get users interested and then offering other paid leagues and engagements on top of it (upgrades) is another revenue model used by fantasy sports platforms.

Advertising

  • It has been estimated that FanDuel spends around $20 million on TV advertisements, which leads to an average customer-acquisition cost of $68. It is predicted that the company makes $100 from every customer each season.
  • Fantasy sports companies sell ad space on their websites.

League Entrance Fees

  • DraftKings and FanDuel generate revenue from player entrance fees.
  • DraftKings takes 10% of league buy-in fees, the rest goes to the winner prize pool.

Individual Sports Fantasy Platforms

  •  Golf: DraftKings, Yahoo Fantasy Golf, FanDuel, Golf Channel Fantasy Golf, PGA Tour Fantasy Golf, Pro Tour Fantasy Golf, and TDJ Golf are examples of fantasy sports platforms for golf.
  •  Tennis: FanDuel, DraftKings, PrizePicks, Fantasy Tennis League, WTA Fantasy Tennis.
  •  Auto Racing: Fantrax.