Fantasy Sports: Gaming or Gambling

The popularity of fantasy sports is increasing among the youth. Fantasy Sports are digital sports engagement platforms, based entirely on real-life sports matches. The users build virtual teams with proxies of real players participating in an upcoming match or match-day and compete on real-world statistical performances of these players, based on one complete officially sanctioned sports match. The better their players perform, the more points are added to the user’s account.  This allows the users to emulate the role of a coach or a manager of a team, with the power to drop, recruit, or trade a player of their choice. The teams are frozen, and the changes are locked before a match kicks off.

Fantasy sports are based on real-life sporting events, thus offering sports fans a meaningful engagement with their favorite sports. For some, it is a source of deeper engagement with the sports, beyond viewership, while for others, it is about the competition and strategy that it involves. Further, studies suggest that fantasy sports involvement complements traditional sports consumption amongst fantasy sports players. 

Ways in Which Fantasy Sport Businesses Generate Revenue

Fee of Participation

These businesses organize contests with a chance to win a payout and charge a participation fee for the same. They take a cut in these cash-prize contests and that is how they earn most of their revenues. 

Engaging the Participants

The fantasy sports leagues include participants with the first draft of players for the entire season. However, big players offer and allow their users to take up different contests weekly. This increases the overall fee collection from the league and also entangles the participants not for just one contest but for the entire season.

Other Revenue Sources

Advertising, sold tournament sponsorships, and co-produced videos are other ways used by these companies to generate revenue. Online advertising is used for traffic diversion ultimately increasing the economic value of the contest. If the advertising on the page is a success, the overall ad revenue of the page increases as well. 

Free Leagues

The major revenue is generated by tempting new users to register for the contests and retaining them. Some companies also try to do this by alluring the users to pay for extra services by offering free leagues. So even those who are willing to try out fantasy sports leagues but hesitate to register take this as a great first chance. A free league definitely invites huge masses who are retained and motivated for the paid contests using a couple of succeeding strategies. 

How celebrity endorsement is used to attract and retain participants?

The increasing popularity of the fantasy sport can be explained by the strategic selection of the brand ambassador. This would increase new enrollments and an increase in the current participant engagements contributing towards the revenues.

The ambassadors are chosen after taking into consideration the targeted age groups. For instance, many Indian cricket fans believe Sourav Ganguly was the best Indian Captain while others surrendered to M.S Dhoni’s captaincy. Also, Virat Kohli, the current captain of the team across all formats has an amazing youth fan following. 

Additionally, the brands deploy various promotional strategies to galvanize the fan base. The companies offer the lucky users of the fantasy sports app a chance to meet the face of the brand or get a chance to team up and create a dream team with the face of the brand. Since the fans are emotional and enthusiastic about the players such promotional deals come to pass and the fans lap up the opportunity like bees to honey. 

Further, to increase audience retention, the brands claim that the audiences’ favorite star is playing online with the fans, making fans spend more hours online which results in the fantasy sports business going bullish and earning more profit. 

Is fantasy sports a form of Sports Betting?

The primary difference between fantasy sports and sports betting is that the latter involves putting money down on specific outcomes, whereas, the former consists of picking a team of players and earning points based on their performance. 

Additionally, fantasy sports are considered games of skill since one is unlikely to win money if one doesn’t research, strategize, and plan. In sports betting, anyone can make a bet and win without any prior knowledge. 

There are similarities between fantasy sports and sports betting. For instance, they both aim to predict a sports contest outcome. Even if the route to victory is different, both activities can lead to wagering money on the result of a game. However, lawmakers do not view fantasy sports and sports betting as similar approaches. The Unlawful Internet Gambling Enforcement Act (UIGEA) explains that fantasy sports are games of skill backed by statistical analysis rather than luck.

Still, participating in fantasy sports can be problematic for people who struggle with sports betting addiction. While these games may seem like harmless fun, it is common for people who participate in fantasy sports to get addicted and undergo potential monetary losses.  

Risks associated with Fantasy Sports

Higher risk of gambling problems in teens and adults

Research has suggested that a number of public health problems are linked to fantasy sports and micro-betting. The frequent participation of high school students in fantasy sports potentially leads to a higher risk of gambling problems. A special control is recommended regarding the access of different websites on youth to protect them from any harm.  

Stringent legal policies are required to differentiate fantasy sports from gambling

Many emerging business models run a risk of being more chance-based than skill-based. If entry fees make up the prize pool, there is an increased risk that the fees are a bet or wager and that the offering is illegal gambling.

Addiction to fantasy sports can result in mental health problems

Studies have been conducted to study the relationship between fantasy sports and gambling. The findings suggest that daily fantasy sports players are characterized by high gambling frequency and problem severity and comorbid problems leading to suicidal ideations. A survey of nearly 2,000 fantasy soccer players published in the journal Human Behavior and Emerging Technologies in 2021 found that while most did not express mental 

health concerns about the game, those who spent the most time had significantly worse mental health scores than those who engaged less. 

Adverse effects on the finances of the participants

The ads of fantasy sports are broadcasted with a declaration of them bearing a financial risk. This risk varies from app to app. One is most likely to lose the entry fees of the tournament, thus many host platforms prefer lower entry fees with a motive to limit the losses for the participants. However, those addicted to the games can find new ways to put in high amounts such as participation in multiple tournaments and through multiple accounts.

Fantasy Sports Industry in India

The Federation of Indian Fantasy Sports (FIFS), previously known as the Indian Federation of Sports Gaming (IFSG), was formed in 2017 to safeguard consumer interest and create standard best practices for the fantasy sports format in the country. The FIFS is a self-regulatory body, which not only ensures policy compliance but also works with key industry stakeholders and policymakers to create a robust governance structure to support the sustained growth of the fantasy sports industry and increase user confidence.

The Indian fantasy sports market is primarily driven due to growth in digital infrastructure, rise in mobile internet subscribers, favorable demographics and rising disposable income, tech-savvy and aficionado sports following Indian millennials, and increased investor interest in fantasy sports. Also, the recent case laws legalizing fantasy sports have created a viable ecosystem for the industry to flourish and be more accessible and engaging for India’s sports fans. The key players of the Indian fantasy sport industry are Dream11, My11Circle, MyTeam11, Fan2Play, MPL Fantasy Cricket, Ballebaazi, 11 Wickets, Fanfight, Halaplay, and Khelchamps Fantasy Cricket. 

Dream11: A Case Study

The Board of Control for Cricket in India (BCCI) announced Dream11, a fantasy gaming platform, as Team India’s lead sponsor. Dream11 will be seen on Team India jerseys starting from the Test series against the West Indies, the team’s first assignment in the ICC World Test Championship 2023-25 cycle.

The new jerseys were first viewed at the inaugural event of the new international cricket stadium, Varanasi. Sachin Tendulkar along with Jay Shah, BCCI Secretary presented an Indian cricket team jersey to our honourable PM Mr. Narendra Modi, with NAMO inscribed on it. Some people are skeptical about the significance paid to the fantasy sports platform. To explain the decision on the legality of the Dream11 platform

should be discussed in light of the state high court decision on the legality of the platform and the Supreme Court’s stand on the same.

The key pointers from the Indian High Court’s judgment about Dream11, any challenges to which are also declined by the Supreme Court are: 

• The court acumens that the game involves considerable skill, judgment, and discretion and that success on Dream11 arises out of users’ exercise, superior knowledge, judgment, and attention.

• The Court also held that the sport follows the following format:

• Participants have to choose a team consisting of at least the same no. of players playing in a real-life sports team such as 5 in basketball, 7 in kabaddi, and 11 in cricket/football
• All contests are run for at least the duration of one full sports match
• No team changes are allowed by participants after the start of the sports match

On this basis, the Court adjudged that playing on Dream11 constitutes a ‘game of mere skill’, which makes the Dream11 game exempt from the provisions of the Public Gambling Act, 1867 (PGA).

• Finally, the Court held that the Dream11 is a legitimate business activity protected under Article 19(1) (g) of the Constitution of India.

Thus, it can be safely concluded that rendering the sponsorship rights to Dream11 is not synonymous with supporting sports betting. In fact, the company has risen to the pedestal by caliber and the sponsorship holds up to the legality norms of the country. 

Encapsulating, fantasy sports abiding by the legislation of a governing body or the nation should not be identified as sports betting as both have thin yet clear boundaries. Though both can result in potential monetary gains and losses, the outcomes of fantasy sports rely heavily on knowledge and skills. The pecuniary advertising strategies of the companies involving cash bonuses and coupons are merely an acquisition and retention ideation of the organization to capture an audience. It cannot be regarded as a trap provided that the organizations promote the platform with monetary and addiction risk declaration. 

Albeit, fantasy sports can lead to addiction, it is common with any other social media platform, thus vouching it against gambling. Also, since the organizations intend to limit losses by checking the participation fees of various contests the transcending losses for some users can be safely attributed to their personal choices and risk-taking capabilities. 

Moreover, taking into consideration the positive effects, fantasy sports have on traditional sports fan following and fan engagement, it can be surmised that the rendering of the sponsorship to Dream11 can potentially benefit the traditional cricket industry.