Another new entrant is entering the daily fantasy fray – Yahoo Sports. Yahoo’s Daily Fantasy has contests ranging in entry fee from free to $500, and there are a mind-numbing amount of different games each day.
Yahoo has one major advantage over established daily fantasy outlets FanDuel and Draft Kings – their monstrous user base. Yahoo has a built-in market of potential players to market to, and they won’t need to buy a ridiculous amount of advertising like both FanDuel and Draft Kings have over the last year. Their jump into the field also makes daily fantasy seem a bit more legitimate, as critics has lampooned daily fantasy in the past and likened it to gambling.
And just how much money could Yahoo end up making from their entry? We obviously don’t know the exact numbers yet, but check out this blurb from the New York Times.
Eilers Research, which studies the industry, estimates that daily games will generate around $2.6 billion in entry fees this year and grow 41 percent annually, reaching $14.4 billion in 2020. Like other companies in the industry, Yahoo will keep about 10 percent of the fees as revenue and distribute the rest as winnings.
If Yahoo got just a slice of that, its profits could mount quickly. Yahoo said tens of millions of people already play Yahoo Fantasy Sports, spending an average of 500 minutes a month at the site, and many of those people have been playing daily games elsewhere.
Earlier research indicated that daily fantasy players spend $465 a year on the games. So if Yahoo takes home around 10%, and even a small percentage of its traditional fantasy customers make the leap into daily fantasy…eight figures per year is a conservative estimate for Yahoo. No wonder they made the move into daily fantasy – they couldn’t afford not to.