We were at the Yahoo Fantasy Sports launch In San Francisco to get a live demo of Yahoo’s high-tech version of daily fantasy sports, which aims at competing in this market by making the experience better and faster for players.
At the moment, Yahoo Daily Fantasy players can load up to $600 per day into their Yahoo accounts via credit card/ATMs to start playing for money. After playing, any winning proceeds be paid in as little as 48 hours via PayPal. Yahoo’s business model is to charge fees (10%) for each entry, and Yahoo made it clear to us that there is no advertising at all for now, although it did not rule out some sort of sponsored items in the future – “if the experience is good”.
Players can pick between participating to existing Fantasy Games with various levels of entry fees, or create their own to play with their friends. The prizes can range from dozens of dollars up to hundreds of thousands, or even $1M+ dollars.
The potential is huge: with 57M players in the USA, and what Yahoo says is a huge growth in annual spending in this type of activity (from $5 to $250/year just in recent years), this could be a great business for Yahoo.
While it may seems like a “gambling” game to the uninitiated, fantasy sport is actually considered a game of “skills” in the eye of the law — at least in most U.S states. That said, Yahoo also said that it is monitoring players for possible compulsive gambling behavior.
This is also a business in which Yahoo could have an edge by leveraging its size and technology against competitors that may not be as big and sophisticated. Yahoo could even leverage the power of its advertising network, and sports portal where competitors have to spend huge amounts of money in advertising.
Yahoo’s Daily Fantasy app is pretty slick, but while iOS users get a native app, Android users will have to use a web-based version which won’t be as good. Yahoo didn’t rule out evening things out later, but didn’t put a timeline on it either. The app and mobile sites are now available.
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