If you have been watching any sports this fall, you undoubtedly have seen the advertisements sponsored by daily fantasy sports (DFS) platforms that represent they are paying out as much as $75 million per week to viewers that sign up and play daily fantasy sports. Based on the large payouts and the impressive levels of investment that DFS platforms have attracted, many have assumed that the long-term profitability of DFS platforms is inevitable. Meanwhile, the DFS platforms have resolutely maintained that daily fantasy is not gambling and therefore does not need to be regulated by any governmental authority. But are either of the two propositions assuredly true? SLK’s Kevin Braig takes a deep look at the DFS’s industry’s market structure and compares that structure to the traditional sports betting market structure in Nevada and finds that, while the sports betting market is economically efficient, the DFS market is inefficient. Because the DFS market is economically inefficient, Mr. Braig concludes that some form of market regulation is not only advisable, regulation is necessary if the DFS industry is to recreate the consumer friendly appeal of traditional, season-long fantasy sports, become profitable, and survive long-term.
For more information on this topic, contact Kevin P. Braig at 614.628.4433 or firstname.lastname@example.org.