Daily fantasy sports companies eye breakout NFL season

BOSTON - The daily fantasy sports industry is eyeing a breakout season as NFL games begin.

And its two dominant companies, DraftKings and FanDuel, are touting lucrative opening-week prizes to try to draw more customers as more competitors pop up.

Major tech and media companies, including Yahoo and CBS, are entering the fray, signaling a potential sea change in the still-evolving market.

The games involve picking teams of real-life athletes who score fantasy points based on what they accomplish on the field. Unlike season-long leagues, daily fantasy players win or lose immediately each week based on a single performance by each athlete they pick.

DraftKings CEO Jason Robins says he doesn't view the new rivals as a threat, so long as his three-year-old company, based in Boston, continues to succeed.

"Having a company like Yahoo or CBS join the industry helps if it makes games more mainstream and introduces new players," he says.

Major sports leagues and teams have signed marketing deals with daily fantasy sports companies. The Eagles, who open their regular season Monday night in Atlanta, have an agreement with FanDuel.

Flush with $575 million in combined new investor capital collected this summer, DraftKings and New York-based FanDuel have been in a marketing and promotional duel, each heavily promoting get-rich-quick competitions through slick ads ahead of the season.

DraftKings is offering $25 million in guaranteed prize money for opening week, including a $2 million top prize and a $1 million second prize as part of its marquee contest, the "$10 Million Guaranteed Millionaire Maker."

FanDuel, meanwhile, has guaranteed $12 million in prizes opening week, including a $1 million top prize for a "Sunday Million" contest that it will offer every week of the NFL season.

The hefty prizes, Robins says, show how far the daily fantasy genre has come in just a few short years.

"Right now, you're seeing an unbelievably explosive period of growth," Robins said. "No one can really predict where this is heading. It's exciting."

Daily fantasy companies make money by taking a slice - usually around 10 percent - from entry fees, which range from $1 for low stakes contests to thousands of dollars. FanDuel's "Sunday Million" competition costs $25 to enter, while a few head-to-head contests were available on the site this week for entries of $10,600 by each player (the winner netting $9,400 in profit).

Industry observers are also closely watching the entry of Amaya, a Montreal-area online gambling company that owns the popular PokerStars and Full Tilt Poker websites. Like Yahoo, experts say Amaya's daily fantasy offering, StarsDraft, will have an advantage because of a readily available pool of online poker customers.

The company is also the first licensed gambling enterprise to wade into daily fantasy sports, which has tried mightily to distance itself from the traditional gambling world and even the word gambling, based on legal definitions.

Daily fantasy sports are legal in every state except five - Arizona, Iowa, Louisiana, Montana and Washington - where they are either explicitly banned or the law is so unclear that companies generally stay away.

But traditional sports betting is legal only in four states - Nevada, Oregon, Delaware and Montana, according to the American Gaming Association.

"Regulation is a major issue, as [daily fantasy sports] appears to be on a collision course with the commercial casino industry," said Chris Grove, editor of the Las Vegas-based Legal Sports Report, which focuses on sports wagering.