Will too Much Skill Kill Daily Fantasy Sports?
From fantasy football to fantasy baseball, there are millions upon millions of players who dream of hitting it big. While some are lucky enough to take home big time winnings, many continue to flounder, wondering if playing daily fantasy games is truly in their best interest.
Consider this: in 2014 alone, approximately 1.5 million Americans spent more than $1 billion in daily fantasy entry fees. As big as that number may be, it is expected to grow by leaps and bounds this year.
Here is the Problem
Despite the growth of daily fantasy sports, there is a big problem lurking. As noted by McKinsey & Company, there is the risk that daily fantasy professionals could soon wipe out recreational players.
To sustain long-term success, there must be a balance between luck and skill. For example, this holds true with poker.
With daily fantasy sports, skilled players, those with a system for winning big, have a huge advantage over the competition. Consider this statistics shared by McKinsey & Company:
“In the first half of the 2015 Major League Baseball (MLB) season, 91 percent of DFS player profits were won by just 1.3 percent of players (exhibit).”
If you are part of that 1.3 percent, all is good. If you aren’t, however, you may begin to wonder when it is time to hang it up. Over time, this could eat away at the number of active players, thus leading to a drop-off throughout the industry.
As a player, you strive to become part of the 1.3 percent. You hope to eventually reach a point when you are beating the competition on a regular basis, thus taking home the cake.
Daily fantasy sports companies, on the other hand, are faced with the responsibility of keeping all players happy. From those who are winning big to those who continue to lose, it is important that everybody stays on board. As you can imagine, this is not an easy task.
Do you believe the gap between skill and luck will eventually takes its toll on the industry as a whole?