Born out of the rotisserie baseball leagues of the 1980s, daily fantasy sports (DFS) has grown into a billion-dollar industry with tens of millions of players.
DFS contests started running around 2007 but have since evolved into the most popular way to take part in the new real-money fantasy sports gaming world.
The Internet and the immediate availability of sports data have taken Fantasy Sports from something enjoyed by a few dedicated fans scouring through box scores in newspapers to an activity anyone with even a passing interest in sports and a mobile phone can get in on.
Short answer: Yes (mostly). The debate still rages in some states as to whether DFS constitutes “gambling” but DFS sites are currently accessible for play in over 40 US states.
Some states, where DFS is considered gambling, require operators to obtain a gaming license. Some of these states tax DFS operators and charge licensing fees. Others do not.
Other states’ positions on whether DFS is gambling has never been made clear, which allows DFS operators to do business by merely ignoring it. A very small group of states have made it expressly illegal.
However, DFS is officially legal and regulated in almost two dozen states. Plus, the number of states legalizing and regulating the activity is growing. More on this below.
One thing is sure in most of the states where DFS operators are active: DraftKings and FanDuel are dominating.
These two have quickly grown into the biggest DFS sites in the country. Both are in close to 80% of states with DFS activity and together, they hold more than 90% of market share.
DraftKings is the world’s largest daily fantasy sports operator and available to residents in most US states.
The software, accessible through a web browser-based client and iOS and Android mobile apps, is considered the most responsive and flexible in the industry.
Game formats include everything from massive contests with guaranteed prize pools to qualifiers for these contests and head-to-head contests pitting two players against one another for all the marbles.
DraftKings also features 50/50 tournaments where half of the field gets paid, multipliers paying a smaller percentage and leagues players can either join or start.
Name the sport, and DraftKings likely offers DFS contests surrounding it. DraftKings’ sports include:
Being the most prominent fantasy sports operator in the country is only helping DraftKings grow even bigger. It offers the most extensive variety of sports, and the large player pool allows it to provide the biggest guaranteed prize pools around.
That attracts even more traffic, which helps DraftKings dominate the US DFS market.
If DraftKings is the No. 1 DFS site, FanDuel is 1A. (There is a constant DraftKings vs. FanDuel competition happening in the DFS realm.) In fact, FanDuel is big enough to claim paying out more than $1 billion in prizes annually.
To keep up with DraftKings, FanDuel has made an effort to improve the user experience over the years. The software is considered clean and functional, and it is available through a browser-based client and iOS and Android mobile apps.
It is also considered innovative as FanDuel is continuously adding new game formats.
Of course, the industry-standard guaranteed prize pool tournaments are there. Plus, FanDuel offers head-to-head matches, 50/50s, multipliers and various other contests.
The reputation as an innovator comes out of the many new features released in recent years. FanDuel practically invented single-game contests, beginner contests and things like experienced player indicators.
FanDuel has also instituted contest-entry limits that help new and amateur players. Plus, features including advanced entry, late-swap, third-party software blockers and simpler versions of core games keep FanDuel ahead of the curve.
FanDuel covers its bases offering contests for the following sports:
FanDuel has some of the biggest guaranteed prize pools in DFS. Add in the high volume for cash games, and it remains one of the only realistic alternatives to DraftKings. Plus, FanDuel’s commitment to innovation should keep it one.
Monkey Knife Fight (MKF) has positioned itself as more than just your average DFS site. MKF is more like betting over/under props than traditional DFS contests offering points to competing teams based on player performance.
With Monkey Knife Fight, players guess the over/under on a player’s stat line. It’s about as simple as it sounds, and payouts are based on probability.
Sports available include golf, baseball, hockey and basketball.
Along with the typical over/under bets, game formats on Monkey Knife Fight include Rapid Fire, which are like head-to-head player matchups, and Stat Shootout, which works almost like a parlay bet.
Sports betting has some considerable similarities based on prop structure, but the differences lie in the presentation and the fact that MKF operates a fantasy sports game of skill.
Ease of use is the thing here, and Monkey Knife Fight has become a player in the DFS sphere by offering just that.
PrizePicks is quite similar to Monkey Knife Fight except you’re picking over/unders on fantasy points rather than stat lines. It’s basically a combination of prop betting and DFS using DFS stats.
PrizePicks ask players to choose either two, three or four players, and the over/under on their projected fantasy score to enter contests. Contests include Power Plays, where all picks must be correct to win, and Flex Plays that allow one incorrect pick
Payouts are up to 10x the entry fee, depending on the number of picks. PrizePicks offers contests on a wide variety of sports, including:
Daily fantasy sports is similar to traditional fantasy sports, where players build teams of athletes then use the athletes’ real on-field stats to compete against one another over the course of a season.
DFS contests accelerate the process and pit player-created teams against one another over short-term periods—including a single day—rather than an entire season.
DFS is still like season-long fantasy sports in many ways, though. You put together lineups like a GM, make decisions, do research, try to outscore your opponents and win the money. The time frame involved is just drastically different.
DFS is for the modern sports fan who thrives on immediate — or at least accelerated — gratification. A DFS contest might involve just a small slate of games or even just a single game itself.
Either way, it’s the fastest and most fun way to improve your sports watching experience to the next level.
The most popular DFS format involves salary cap-based contests. Participants build a lineup while staying under a pre-set amount of money in player salary.
Fictional salaries are assigned to athletes based on performance with the consistently most productive players at the high end.
Once a lineup is built, participants accrue points based on the actual real-world performance of the athletes they selected. Scoring systems vary, but there’s a level of standardization across most categories at DFS sites.
Salary cap-based DFS contests follow several different specific formats. Some of the most common include:
DraftKings and FanDuel offer large guaranteed prize pool contests for just about every major sport. However, none are bigger than the ones they run for the NFL.
Here’s a look at the biggest weekly NFL contests at DraftKings and FanDuel:
This one has a $7 million prize pool, and the winner walks away with $1.2 million of that. Entry is just $20. It’s capped at 400,700 entries, and the top 83,000 get paid.
Of course, the size of the field and multiple entries from pro-DFS players make this a title that’s hard to capture.
This contest is FanDuel’s answer to the DraftKings Millionaire Maker, and the $6 million prize pool makes it a solid one. The winner gets a cool $1 million, and although it cost $25 to get, total entries are capped at 275,862.
The top 55,300 get paid, but again, that list is often full of lineups from pros who enter multiple times.
FanDuel’s Sunday NFL Rush offers up a guaranteed prize pool of $2 million for just a $5 entry fee. First prize is a respectable $150,000, but it takes a lot to get there, as the contest caps out at a whopping 459,770 entries thanks to the cheap buy-in. The top 90,800 players get paid.
DraftKings’ answer to the FanDuel Sunday NFL Rush is its $3 Weekly Play Action Contest, and it’s a massive one. The total prize pool is $1.5 million, with $100,000 for first.
The entry cap is a whopping 575,000 making this the biggest DFS contest out there. An incredible 122,290 lineups get paid.
Both DraftKings and FanDuel offer new players a welcome bonus that consists of $20 free when they make their first deposit. Plus, both run a variety of regular freeroll contests and promotions that give away millions. Particularly at the start of the NFL season.
A new type of simplified DFS play has emerged over the past few years. Several sites now offer what is essentially prop betting, allowing you to bet on the statistical or DFS performance of an athlete.
DFS salary cap play on sites like DraftKings and FanDuel involves building lineups under a salary cap, then using the statistical performance of the athletes in your lineup to compete against others. In contrast, sites like Monkey Knife Fight and PrizePicks have you select player performance-based over/unders.
DFS contests started running in the US in 2007.The budding industry claimed the activity was a skill and not gambling. As a result, lawmakers around the country paid little attention to it.
Then its popularity exploded. In 2015, DraftKings and FanDuel advertising was suddenly all over TV sports broadcasts. DFS later became a victim of its success as lawmakers were almost forced to take a closer look.
New York’s then-Attorney General Eric Schneiderman deemed DFS contests illegal under existing law in November 2015. Over the next three years, the industry was forced to lobby various state governments to stay viable.
By the end of 2018, DFS was legalized and regulated in 20 states. These states are:
You can now add Iowa and Alabama to that list as well. Both have legalized daily fantasy sports, but operators have yet to start serving these jurisdictions.
DFS is only expressly illegal in three states: Arizona, Montana and Washington state. However, DFS operators consider de facto Hawaii, Idaho and Nevada no-fly zones as well.
This as a result of the attorney general in each expressing a negative opinion regarding DFS.
Any state not listed above is in a DFS gray area. That means there is no specific law on the books regarding DFS contests. Operators either choose or choose not to offer contests to potential patrons in these states.
More states are likely to join the existing 20 with laws on the books in 2020.
The spread of legal sports betting across the US may create an even more natural path to DFS legalization. Some states will choose to include DFS as part of an omnibus “gaming” package designed to produce several new sources of tax revenue.
In April 2013, Major League Baseball invested in DraftKings. It became the first professional sports organization to invest in DFS. Soon after, DraftKings and FanDuel began to pursue advertising and endorsement deals with various sports franchises and pro sports leagues.
DraftKings inked deals with seven National Hockey League franchises in 2014. Then it signed a multi-year sponsorship deal with the NHL in November.
The NBA acquired an equity stake in FanDuel that same month and inked a four-year sponsorship deal with the DFS operator.
In April 2015, the National Football League gave teams the right to sign multi-year team sponsorship deals with DFS operators. It wasn’t long before FanDuel reached deals with 16 NFL teams. New England Patriots owner Robert Kraft also invested in DraftKings around the same time.
A DFS marketing blitz in 2015 saw DraftKings enter a three-year $250 million sponsorship deal with ESPN. Plus, another $250 million advertising deal with Fox Sports, giving Fox a $150 million equity stake in DraftKings.
DraftKings and FanDuel started heavily advertising during sports broadcasts, and in particular, NFL games. However, these efforts and the deals were scaled back when the legality of DFS came into question in 2016.
In the meantime, DraftKings is now the “Official Daily Fantasy Game” of MLB, the NHL and the NFL. FanDuel is the NBA’s official daily fantasy partner.
The primary differences between DFS and traditional, season-long fantasy sports are:
While there are some high-stakes, season-long contests out there, they don’t compare to the billion-dollar industry DFS has become. In fact, DraftKings and FanDuel run sizeable guaranteed prize pool contests every week that have helped put DFS into a financial league of its own.
The biggest cash payouts happen during the NFL season. But MLB, NBA and NHL contests also feature five- and six-figure prize pools.
There is also a significant difference in the number of players involved in season-long fantasy leagues compared to DFS contests.
Guaranteed prize pool DFS contests attract from 100–100,000 participants every week. In the meantime, most season-long fantasy leagues have just 10-15 teams.
However, DFS sites have also begun to get in the “leagues” business and now feature several public contests and private leagues with lower contestant numbers as well.
These contests were born out of the idea that DFS lacked the social camaraderie inherent in season-long formats. Now, the top DFS sites offer the best of both worlds.
From a player’s perspective, DFS doesn’t require the same time commitment as season-long fantasy. There’s a flexibility to DFS, allowing you to get in and out of the game whenever you choose.
However, critics are correct in saying the social aspect of the original game is missing. Some season-long fantasy leagues have been running with the same participants for years and offer a combination of a sports fan and social experience unmatched in the world of DFS.
Overall, however, the money and number of people involved have helped DFS grow leaps and bounds above the traditional fantasy format. It appears that growth will continue for years to come.
Given that all team or individual sports have player statistics associated with them, they’re all candidates for DFS contests. The biggest revenue generators for DFS are far from surprising — they read like a “who’s who” of the most popular sports in terms of viewership and attendance:
But they have plenty of company. Although not all sports outside of the “big four” above are offered on each site, the following have DFS contests based on them on at least one current DFS operator:
Winning a DFS contest is a major accomplishment. Sometimes you are competing against hundreds of thousands of lineups.
That’s not to say winning a DFS contest is an impossible task; it’s just a difficult one. And at the lower levels it’ll happen more often than you think.
If you want to play DFS, and play it well, here are five tips that may help:
1. Enter multiple lineups
Using a single lineup means you’ve got just one chance to win. Firing multiple lineups into the same contest requires a bit more bankroll and a little more time, but it can pay off. With multiple lineups, you can withstand a poor performance and retain a shot at big money.
2. Stick to low stakes
You’ve got to put in some research time and real work into creating your lineups. Then, stick to lower-stake contests that are often filled with players who don’t. You’ll find yourself winning more and more often as a result.
3. Be a contrarian
It’s not enough to simply understand who the best athletes available in any given contest are. Once you’ve identified the studs, you’ve also got to find ways to make sure your lineups aren’t the same as everyone else’s. Find a way to bring a contrarian attitude toward lineup building and success will follow.
4. Build in the 50/50s
These 50/50 contests offer a great low-risk way to build a bankroll playing DFS. No matter how your lineups perform, you will still only double your money. However, do enough of that, and you’ll have plenty of cash to spread around in guaranteed prize pool contests where you can take a shot at a big score.
5. Do your homework
Fantasy sports is so prevalent today, and there is a ton of fantasy information put on the internet every single day. Don’t follow any of it religiously. However, doing your homework and finding out what the rest of the world thinks before going into a DFS contest can give you an edge.
The DFS do’s may vary, but the don’ts are relatively clear. Here are three things not to do when playing DFS:
1. Ignore the News. Injury reports are a DFS player’s best friend and should never be ignored.
2. Follow the Crowd. You need to know what the public is thinking, then find a way to go against the grain. Everyone is talking about yesterday’s heroes. You want to find today’s or tomorrow’s.
3. Take on the Pros. Your vast knowledge of sports and your ego might make you think it’s time to take on the pros. Don’t bother. They’re putting more time into DFS than you do almost anything. Swallow your pride and select your opponents more carefully.
The simplified DFS play at Monkey Knife Fight and PrizePicks is as close to sports betting as DFS has ever come. You are essentially choosing over/unders on props you might also be able to bet on at a legal US sportsbook.
However, there has always been a fine line between DFS and sports betting, with many suggesting DFS is just a different way to bet on sports.
The big difference is that DFS does not allow for single-game wagering. Instead, players are essentially betting on the statistical performance of individual athletes. The ability to put together lineups filled with the top-performing athletes over a short period of time under a salary cap is considered a skill. Therefore, DFS proponents say it is not gambling.
You may be able to bet on an athlete’s statistical performance through props at a sportsbook in a similar way you bet on it through a DFS contest. However, betting on things like one team to win a game over another remain the exclusive territory of legal sportsbooks. That marks the most significant difference between DFS and sports betting.
These days, sports betting seems to be the center of legislative attention in many states. However, DFS regulation efforts are still very much alive. Ideally, the industry would like to achieve legal status in all 50 states at some point. That still appears to be quite the uphill climb.
There will likely be daily fantasy sports legislation introduced in nearly all of the states in which it is yet to be legalized during the 2020 legislative sessions. As has been the case for the past several years, a handful of states are likely to join the existing ones with laws on the books by year’s end.
The current year should also serve as an interesting litmus test for what effect legalized sports betting may have on the ease of passing DFS legislation.
It’s possible that the increasingly reduced stigma surrounding sports betting – an activity with which DFS was often conflated in past years – will create an easier path to DFS legalization. And, in some states, the two activities could certainly be included as part of an omnibus “gaming” package designed to produce several new sources of tax revenue for a jurisdiction.
Reports show that DFS generated approximately $3.2 billion in entry fees and $335 million in revenue during the 2017-18 fiscal year, for example..
There are undeniably some similarities between DFS and sports betting, not the least of which is the fact they are both “graded” based on the outcome of sporting events.
However, while sports betting payouts can often be centered on team-based results, DFS success is based on individual player statistics. Even then, there are certainly exceptions. For example, proposition bets are often based on whether a player surpasses a certain statistical milestone.
The debate of whether DFS is ultimately just a form of sports-based gambling akin to traditional sports betting is one that will never be settled in the eyes of some. In states where DFS has already been expressly legalized, the activity has been established as officially distinct from sports betting.
In some jurisdictions where it’s yet to achieve legal status, though, the very question of whether the two are sufficiently different has been a major obstacle toward the advancement of legislation.
DFS has become immensely popular, with tens of millions of people playing regularly in multiple sports. The busiest contests revolve around the NFL and draw hundreds of thousands of entries every week.
Various outlets produce DFS rankings that rank the top daily fantasy players in most sports. These rankings can be used as a guide when putting together a lineup.
You can optimize your DFS lineups using any number of Lineup Optimizers available on the market. These tools use projections and salary cap data to make sure you’re putting out an optimal lineup.
Like anything, building a career in DFS takes time and hard work. The top earners do an immense amount of research in selecting lineups and have a bankroll that allows them to fire multiple lineups in most contests. It’s also essential to find a way to grind out a living playing DFS as a career, rather than just chasing big wins in high variance guaranteed prize pool contests.
The best way to build a DFS lineup is to do your homework. Read rankings, study matchups and determine which players will be the most popular picks in a contest. Then, find a way to go against the grain a little in building a unique lineup. Winning requires a combination of projecting the top performers and finding hidden gems.
There are undeniably some similarities between DFS and sports betting, which is considered a form of gambling.
The big difference is that sports betting payouts usually center around team-based results, and DFS is based on individual player statistics. The debate rages on as to whether DFS is ultimately just a form of sports-based gambling like traditional sports betting. The DFS community likes to think of it as a game of skill as setting winning lineups certainly requires it.
Yes. For more on this topic, see this series on DFS and filing taxes.