AlexEspositoCapstonePaper (1)

Fantasy Meets Reality 1
Fantasy Meets Reality: The Lucrative World of Fantasy Football
Alexander Esposito
Rutgers University
Author’s Note
Alexander Esposito, Journalism and Media Studies
School of Communication & Information, Rutgers University
The author may be contacted at afe20@scarletmail.rutgers.edu
Abstract

What was once a far-fetched idea, the revenue of fantasy football has outgrown that of
the National Football League’s. Fantasy football not only benefits the NFL and its affiliated
media networks, but other actors as well. Daily fantasy companies such as DraftKings &
FanDuel have a great amount of vested interest in the game, standing to profit as much as anyone
else from the game’s growth. Fantasy football’s impact on the bottom lines of companies are
definitely seen as positive, but can the same be said for the casual fantasy player? The game of
daily fantasy, which offers lucrative prizes daily and weekly, are often dominated by ‘shark’
players who hold various technological and economic advantages over the competition. While
there is a question of whether it is a game of chance or strategy, one thing is certain - there are
astronomical amounts of money at stake. This paper will analyze the scope of fantasy’s
incredible economic rise, the rise of how ‘shark’ players are able to dominate the game, and
whether or not daily fantasy sports are a game of skill or chance.
Fantasy Meets Reality: The Lucrative World of the Fantasy Sports Industry
Fantasy sports have been around long before the inception of smartphones, social media
and the like. From the 1960’s through 1980’s, players frequently met in person, logged their

rosters on pen and paper, and had statistics compiled through newspapers and sent out in weekly
newsletters or voice messages. The game's earlier incarnations would be seen as obsolete today;
long gone are the days of the Greater Oakland Professional Pigskin Prognosticators League
(GOPPPL), seen as the launching point of fantasy sports (Perry, 2013). Things have certainly
changed since that inaugural league was born, thanks in large part to the boom of the Internet.
According to the Fantasy Sports Trade Association, last year there were over 57 million players
in the United States and Canada, with fantasy football players making up 70% of that total
(FSTA, 2015). In regards to how the game of fantasy football actually works, the goal is similar
to the real game of football: to accumulate as many touchdowns as possible, with yards gained,
catches, and various other statistics all playing a role in scoring. By keeping score of real-life
NFL players they have drafted and traded for, fantasy players can play in season-long leagues
with their friends and colleagues, or participate in daily or weekly contests, the latter of which
produces the greatest amount of winnings.
From the fantasy players themselves, to the teams, media networks, and fantasy
companies distributing statistical information, everybody wants a proverbial piece of the pie.
Fantasy companies, most notably DraftKings & FanDuel, are considered to be the top dogs of
the industry. They have provided a major impetus to a fantasy industry, as of 2015, worth over
$18 billion dollars, according to the Sports Management Degree Hub. The burgeoning game of
fantasy football has offered the NFL, many of its teams, and other corporate media entities new
ways to increase revenues. Look no further than the in-stadium LED signage sponsorship deal
between DraftKings and the NFL’s New England Patriots, illustrating an example of a symbiotic
business relationship made possible by fantasy football (Heitner, 2014). This is just one of the
ways these companies are able to raise funds; this past summer, both companies had valuations

estimated to be over $1 billion each (Van Natta, 2016). How have they become such a force
within the fantasy sports market? Perhaps it is because people have taken such a liking, if not an
addiction to fantasy sports, despite treading a fine line between game of skill and gambling
(Frank, 2015). On the notion of whether it is a game of skill or chance, there are various legal
implications regarding daily fantasy sports (Edelman, 2016). For every fantasy football prize
story one may read about in the news, there are always a much greater number of losers.
Motivations for participating vary from player to player; a constant, it seems, is the
pursuit of money (Dwyer & Kim, 2011). While the average fantasy football player may see
themselves in control of their destiny when it comes to the million dollar jackpot, make no
mistake: the house almost always wins. So is it by luck, or just the way the game is designed?
This has been the subject of much legal controversy; one of the paper’s research questions
addresses this in further detail.
An important aspect to fantasy football is the potential conflicts of interest which fans
may encounter. The ‘divided loyalties’ of fantasy football involvement and fan loyalty to
different NFL teams must also be taken into consideration (Dwyer, 2011). If you are a fan of the
New York Jets and avid player of fantasy football, there would be an almost unavoidable
division among loyalties. For example, it would be extremely difficult to root against the Jets’
archrival, the Patriots, when their superstar quarterback Tom Brady happens to be the leader of
your fantasy team. For a casual football fan, there may be no incentive to watch games other than
the team you support, but for fantasy players, wanting to see their players in action has been
instrumental in breaking away from that narrative. the motivation to watch the NFL players that
help their fantasy team win could now serve as an additional motivation, or even for some the
primary motivation, that can create an instrumental media use to watch NFL games (Fortunato,

2011). There is little doubt that television networks would have any qualms about that
development.
As a relatively new sport within the realm of online gaming, scholarly research on the
field of fantasy sports is understandably limited. Even more recent is the “daily fantasy” game,
which has seen tremendous growth only in the past several years. The gist of the daily game is
similar to traditional season-long leagues, in that your fantasy team benefits from the real-life,
on-field performance of the players you draft to your lineup. The key difference, however, is the
fixed budget of imaginary money the player must divide amongst the positions; in order to create
the optimal lineup, there are great amounts of strategy and forecast analysis that go into it. A star
quarterback, like the aforementioned Tom Brady of the Patriots, would cost a lot more than the
struggling Colin Kaepernick of the San Francisco 49ers, so choosing Brady would leave a
contestant with less money to spend on other players for their team (Economist, 2015).
With that said, there are a select few have been able to ‘master’ the game; using
technological and economic advantages, sports analytics savants are able to dominate the
contests, earning themselves hefty paydays. Much like the game of poker, anyone has a chance
to win, but it is the ‘sharks’ which really stand out from the rest of the crowd.
Research Questions
In assessing some of the dominant narratives surrounding fantasy football, as well as the
fantasy sports industry as a whole, the following research questions have been posed.
Q1: What are the underlying factors associated with the fantasy football industry’s
meteoric rise?
Q2: How are ‘shark’ fantasy players able to dominate the competition?
Q3: Are daily fantasy sports a game of skill or chance?

Methodology
Though the research questions are not directly correlated to one another, each question
encompasses research elements which are vital to gaining a better understanding of how the
fantasy football industry operates in various contexts. The following are methods of how the
research was conducted, and the subsequent information obtained: analysis from experts in the
fields of journalism, economics, and law; legal rulings related to both gambling and fantasy
sports; and lastly, a case study analyzing the backgrounds of three professional fantasy players.
On the question of what are the underlying factors associated with the fantasy football
industry’s rise, resources will be consulted in the form of reputable news articles, as well as an
infographic from a sports analytics firm, which contains a series of both demographic and
financial figures.
In determining how daily fantasy sports professionals, colloquially known as ‘sharks’,
dominate their competition, a case study of Saahil Sud, Mark Guindi, and Tommy Gelati has
been conducted. These men have all made a living for themselves playing daily fantasy sports.
The case study will look at their educational backgrounds, supplementary or prior professions in
relation to fantasy sports play, strategies employed which enable them dominate the competition,
and last but not least, how much money they earn as a result.
The last question seeks to answer whether or not daily fantasy sports are a game of
chance or skill. To answer this question, a series of legal rulings will be consulted. Pertaining to
online gambling is The Unlawful Internet Gambling and Enforcement Act of 2006; pertaining to
the legality of pinball is the “ testimony” of expert witness Roger Sharpe in a 1976 New York
City Council hearing; and lastly, this year’s legal ruling on daily fantasy’s legality in New York,
which pertains to the regulation of fantasy sports.

Results
There are many reasons as to why the fantasy football industry has seen such astounding
growth, and the demographics of fantasy players are a big reason why. 80% of fantasy players
are men; 89% of players are Caucasian; 78% of players have a college degree or more; and 66%
of them have full-time employment (Sports Management Degree Hub, 2015). Further research
indicates that the average age of fantasy players is 34, with an average annual income of just
over $92,000 (Sports Management Degree Hub, 2015). This has aided in what has become one
of the fastest-growing segments of the sports world in recent history (Frank, 2015). Research
provided by Ipsos found that Americans spend an estimated $800 million annually on all fantasy
sports media products, which analysts believe to be one of the biggest marketing agents for the
sport (Green, 2012).
In 2015, entry fees for the websites’ contests in all sports exceeded over $2 billion, and
$150 million in revenue for 2015; that number is expected to more than triple by 2020 (Sports
Management Degree Hub, 2015). In a confidential pitch memo to investors, the DraftKings
Board of Directors projected upwards of $15 billion to $20 billion in industry-wide entry fees for
2017 (Van Natta, 2016).
As of 2015, DraftKings raised approximately $426 in venture capital funding, while
FanDuel was able to garner $363 million in venture capital (Sports Management Degree Hub,
2015). Some of these investors include key players in the sports and media world, including all
four major sports leagues (NFL, NBA, MLB, NHL), as well as media giants Fox Sports, Turner
Sports, NBC Sports Ventures, and Comcast Sports Ventures (Sports Management Degree Hub,
2015).

Saahil Sud, better known by his username maxdalury, is a now 28-year-old male living in
Boston, Massachusetts. He is former marketing analyst with a degree in math and economics
from Amherst College (Woodward, 2015). He eschews the idea of luck or gut instinct in favor of
cold, hard data (Woodward, 2015). Specifically, he fires up a custom-designed, analytics-based
software program that is able to crunch vast amounts of data. (Woodward, 2015). He uses his
system to determine the optimal lineups, and to submit hundreds of rosters at a time. On one
night in May 2015, he entered 888 baseball lineups on DraftKings at a cost of $27 per roster; he
won an astounding $221,000 in one night (Woodward, 2015). Though his main strategy is based
off of mathematics, Sud also believes in organizing multiple rosters around a core of high-
potential athletes. According to Sud himself, he made over $3.5 million dollars in 2015
(Woodward, 2015).
Mark Guindi is a now 26-year-old male living in Brooklyn, New York. A college dropout
who works in his family’s wholesale supply company during the week, on the weekend he
dominates the fantasy football field, which is now his main source of income (Lewak, 2014). He
also writes for the website Fantasy Insiders, and also makes appearances on fantasy sports shows
online (Lewak, 2014). On a Sunday in October of 2014, he put up a $25 entry fee for FanDuel’s
NFL Sunday Million contest and was among the top finishers; he earned himself a $12,000 prize
(Lewak, 2014). Though his strategy was not disclosed, Giundi says “I can definitely do this full
time”; he earned over $50,000 playing daily fantasy football in 2014 (Lewak, 2014).
Tommy Gelati, known in the fantasy football community as Tommy G, is a now 37-year-
old male living in East Rutherford, New Jersey. He is a full-time stock trader, which makes him
about $400,000 a year, and formerly a paid writer for the website Scout Fantasy (Lewak, 2014).
Although he did not disclose his strategy, he said he likes to hunker down on weekends

conducting his fantasy research. According to Gelati, “fantasy is the new day trading...instead of
day-trading companies, you’re day-trading athletes”; he estimates that in the past two years, he
has made over $500,000 from playing daily fantasy sports (Lewak, 2014).
The broader game of fantasy sports has been around since the 1960s, but has only seen its
legality challenged in recent years. However, one of the earliest legal challenges pertaining to
games of chance and skill occurred in a 1976 New York City Council hearing, which determined
whether or not to overturn the city’s 34-year ban on pinball. Roger Sharpe, the star witness for
the Music and Amusement Association (MAA), argued why the ban should be overturned. He
stated that it was a game that tested your patience, hand eye coordination, and reflexes; quite
simply, a game of skill, not chance (Blitz, 2013). He then proceeded to play a game of pinball in
the courtroom to prove his point, declaring that if he could make the ball go through the middle
lane on his next turn, then he would have proven that pinball is a game of skill (Blitz, 2013).
Upon contact with the ‘flipper’, the ball zoomed up and down, through the middle lane, just as
Sharpe predicted; thus proving that there was indeed skill to the game of pinball (Blitz, 2013).
A more conventional legal ruling in regards to the legality of fantasy sports was set in
2006, with the passing of the The Unlawful Internet Gambling and Enforcement Act (UIGEA).
The UIGEA, an act of federal legislation intended to regulate online gambling, included carve-
out language which allowed for online fantasy sports games to fall under the scope of the
UIGEA. Nonetheless, according to the language (found on p.143 of Edelman, 2016), in order for
fantasy sports to meet the criteria as a legal business, it had to meet the following criteria:
(1) All prizes and awards offered to winning participants are established and made known to the
participants in advance of the game or contest and their value is not determined by the number of
participants or the amount of any fees paid by those participants.

Fantasy Meets Reality
10
(2) All winning outcomes reflect the relative knowledge and skill of the participants and are
determined predominantly by accumulated statistical results of the performance of individuals (athletes in
the case of sports events) in multiple real-world sporting or other events.
(3) No winning outcome is based—(aa) on the score, point spread, or any performance or
performances of any single real-world team or any combination of such teams; or (bb) solely on any
single performance of an individual athlete in any single real-world sporting or other event.
In late 2015, the state of New York declared daily fantasy sports websites in violation of
state gambling laws, and ordered them to cease and desist; on the other hand, the companies
claim their games are legal because they are based on skill (Rott, 2015). In August 2016, the
state ruled in favor of the companies, describing them as games of skill - thus putting the end to
the legal argument, for now (Schrotenboer, 2016). Despite winning that battle in court, both
companies still face litigation from New York Attorney General Eric Schneiderman over charges
of false advertising, and could also be open to other legal challenges under federal law
(Schrotenboer, 2016).
Discussion
To say that money is the primary catalyst for the rise of the fantasy football industry
would be an understatement. Before conducting research, I knew that would be the case, but
even so, the sheer numbers behind it all are incredible. “Money drives daily fantasy play,” says
Paul Charchian, president of the Fantasy Sports Trade Association. “People want to win money
— but they can also play for fun.” (Lewak, 2014). However, another huge reason for the
industry’s rapid growth was because of its popularity among what is wealthiest target market in
America - wealthy, middle-aged and college-educated males. The sub-markets that have
emerged from fantasy football are interesting as well; as noted in the Results section, Americans
spend an estimated $800 million annually on all fantasy sports media products (Green, 2012).
My hypothesis of whose money was invested was also learned through the Results. Both the

11
quantity and quality of investors with a stake in the industry was notable. All four of the major
sports leagues, as well as many of the country’s largest media entities put forth sizable sums of
many in the fantasy sports industry. The companies DraftKings & FanDuel are the titans of
business when it comes to the daily fantasy industry; I learned that the industry’s player entry
fees are expected to surpass $15 billion by next year (Van Natta, 2016). Overall, both the size
and scope of the investment in not just the fantasy football industry, but the fantasy sports
industry as a whole, is nothing short of astonishing.
The ‘sharks’ of fantasy are the rarest breed of fantasy player, and for good reason. Many
of the so-called professionals have earned envious sums of money playing a simulation game. As
Tommy Gelati, one of the players put it, “There’s 100 percent truth that fantasy is the new day
trading” (Lewak, 2014). Similar to day trading, not everyone has the background as well as the
mind to compete in what is now a highly lucrative profession. Other than the lottery, in what
field would you be able to enter a contest for $25 and come out with $12,000? There is no doubt
that using software tools is a controversial practice, with many questioning whether or not they
give high-powered players an unfair edge (Woodward, 2015). Though the methods of players
like Saahil Sud certainly raise eyebrows, the fact of the matter is simply that they are proficient
in using their skills. Of course, it helps to have incredible technology and a heavy bankroll, but
that is besides the point. If fantasy sports were a game of chance and not skill, would there not be
a much greater variance in the winners, rather than an upper echelon of fantasy players who
consistently finish at the top?
It is hard to argue with the findings in the three legal rulings discussed in the Results
section; even though the fantasy sports carve-out language within the UIGEA draws an
extremely thin line, I do believe that daily fantasy sports are a game of skill. The main point of

12
contention which makes it so is that “all winning outcomes reflect the relative knowledge and
skill of the participants”, (UIGEA, 2006). Despite the law only applying to season-long fantasy
leagues at the time of its inception, the concept remains the same: victory, and thus prize money,
is determined by your knowledge and skill. As for the testimony of Roger Sharpe, his pinball
wizardry did not exactly have far-reaching implications for the fantasy sports industry, but he
went a long way in proving that the game of pinball was one of skill, and not chance. We have
yet to see such a litmus test in the field of fantasy sports, but precedent for the industry has been
set; within the past year, though, daily fantasy companies have, quite literally, gotten their day in
court. The legality of daily fantasy sports continues to be challenged in a number of states, but
the ruling in New York should set a standard for the industry going forward.
The biggest limitation of my research was that it was difficult to hone the focus of the
paper on exclusively fantasy football; much of the information I obtained encompasses the
fantasy sports industry as a whole. What was made clear is that the whole is greater than the sum
of its parts. Since daily fantasy sports are a hot topic in both the public sphere and the courtroom
these days, there are rarely any shortages in the industry’s ebb and flow. On November 18th of
this year, DraftKings & FanDuel agreed to a merger, set to take effect sometime in 2017 (Drape,
2016). Though this is unquestionably a groundbreaking development for the industry, not much
information has been released on the logistics of the merger, and therefore was unable to be a
part of my research. Another limitation is that there has not been much legal precedent set,
regarding to the regulation of daily fantasy sports. Since the term “daily fantasy sports” had not
yet entered the foray back in 2006, when the UIGEA became law, it is not entirely certain
whether the UIGEA “fantasy sports carve-out” protects anything beyond the traditional, full
season versions of fantasy sports (Edelman, 2016). Seeing as daily fantasy sports have been in

13
the limelight only for the past few years, I would expect further legal battles to ensue as a result.
As for my case study, I was not able to obtain as much information as I would have liked on the
daily fantasy professionals. The only resources I was able to consult were news publications like
the Boston Globe and the New York Post, and they weren’t able to answer all the questions for
my case study. Lastly, I would have liked to obtain more financial numbers on the daily fantasy
companies, but since they are private companies, I was unable to find much besides what was
already public information.
If possible, I would personally interview fantasy professionals, like Saahil Sud, to gain
more insight into the inner workings of their ‘business’. Of course, they would be careful not to
divulge their inside tips and tricks to winning, but a more comprehensive view of their strategy
works would be helpful in understanding their success. I would also follow up with the other
professionals, because the most recent news article about them came from 2014, so there are
probably more details to be learned. Another point of discussion would be the insider trading
scandal uncovered in the world of daily fantasy sports. On October 5th, 2016, the New York
Times reported that Ethan Haskell, a DraftKings employee, had won $350,000 in a FanDuel
NFL contest by finishing second overall out of 229,883 entrants. The Times story alleged that
Haskell used inside information -- the percentage of ownership of various players by contestants
that was unavailable to the public -- to help win on the site of his company's rival (Van Natta,
2016). Overall, the fantasy football industry, the juggernaut of the entire fantasy sports industry,
should only continue its growth; and as such, will require further research to analyze its
seemingly never-ending climb.

14
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