Yahoo Sports has, for 16 years and counting, been a powerhouse in the online fantasy sports world, averaging a staggering 98 million visitors per month. Today, it unveiled a a new, cash-powered version of fantasy sports that the company's leadership hopes will take advantage of that massive audience to compete with established players like DraftKings and FanDuel, and take this form of online sports gambling mainstream.
Of course, Yahoo and its competitors aren't calling Yahoo Daily Fantasy gambling. "Fantasy is a game of skill," Yahoo's Vice President of Publisher Products, Ken Fuchs, told reporters at the press conference announcing the product. "These are contest entry fees because it depends on your ability to select a team and win." That reasoning means this is legal, at least in 45 states. (Yahoo Daily Fantasy will not be available in the remaining five states: Iowa, Arizona, Louisiana, Montana, and Washington.)
Instead of lasting a season, each contest will last for one day. Competitors pick a roster, and the team of drafted players that perform better on that given day determine the winner. It's like cramming an entire season of fantasy sports into a single day's slate of regular season games, with money built right into the online system.
Competitors pay an adjustable entry fee (or none at all), then pick their teams and compete in either Yahoo-generated brackets or through challenges sent to friends. Payouts are based on buy-in amount and can be doled out to either just the winner, or everyone in the top 50% of a contest. All winnings will be released to a the victors' PayPal account within 48 hours of competition's end, and Yahoo takes a roughly 10% cut.
It's easy to see why Yahoo wanted to get into the short-term sports betting space: It's quickly resolved, mobile-first, and high stakes. "How do we make it more competitive?" Fuchs said by way of explaining why Yahoo is launching the Daily Fantasy. "That's what sports are all about." Not to mention the fact that industry suggest that daily fantasy entrance fees could gross between $14 to $20 billion per year by 2020.