As the fantasy sports industry has grown, some industry analysts expected to see consolidation in the largest players’ contest offerings.
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However, based on the recent announcements of Yahoo!, CBS, and ESPN, it seems that each of fantasy sports’ Big Three is moving in a different direction with their 2014 fantasy baseball offerings.
Yahoo!’s 2014 fantasy baseball contests seem to focus on building user volume through offering the best payout rates of the Big Three. Yahoo!’s 2014 fantasy baseball contests include games at four different price points: a $20 entry fee, $50 entry fee, $100 entry fee, and $250 entry fee. Each Yahoo! contest consists of 12 teams per league, and each pays prize money to the league’s top three finishers.
Yahoo contests pay between 87.5 and 91.6 percent of contest entry fees in prize money – a payout ratio generally on par with most daily, weekly and full-season fantasy baseball contests. Meanwhile, according to the Yahoo! Terms of Service, participants are eligible to play in U.S. 44 states (participants in Arizona, Iowa, Louisiana, Montana, Vermont and Washington are prohibited). Entry fees are collected through Pay Pal. Credit Cards are not accepted.
By contrast, the CBS fantasy baseball offerings have a somewhat higher price point and focus more on high numerical dollar awards for the first place finisher. CBS’s contests include leagues with a $29.99 entry fee, $99.99 entry fee, $249.99 entry fee, $499.99 entry fee, and $999.99 entry fee. Each CBS league consists of 10 teams and pays prize money to either the top one or two finishers.
CBS offers deep discounts to contestants that purchase multiple entries. However, presuming that each contestant purchases only a single entry, CBS’s payout range is far below many industry competitors, at 50.0% - 70.0%. According to the CBS Sports Terms of Service, participants may enter its contests from U.S. 45 states (participants in Arizona, Iowa, Louisiana, Montana, and Washington are prohibited). Entry fees are accepted from four credit card companies: Visa, MasterCard, American Express, and Discover. Pay Pal is not accepted.
Meanwhile, ESPN is operating pay-to-enter fantasy baseball contests in 2014 that offer gift cards to Best Buy and web store points to the winners. Entry into the ESPN prize contests begins at $24.95; however, much like CBS, ESPN offers discounts for the purchase of multiple entries.
ESPN lists the approximate retail value of the prizes for individual league winner at a nominal amount: $15. However, the contests also offers more valuable Best Buy gift certificates to the top overall winners from across all of its leagues. According to the ESPN terms of service, participants may enter its games in 43 states (participants in Arizona, Iowa, Louisiana, Montana, North Dakota, Tennessee, and Washington are prohibited). Entry fees are accepted from Pay Pal, as well as from the four major credit card companies.
The diverging strategies of each of the Big 3 fantasy sports host sites show each company’s difference in both business strategy and legal risk. Interestingly, at the moment Yahoo! is the only one of the Big 3 offering an ‘average return of investment’ comparable with the marketplace’s many smaller players.
Marc Edelman is an Associate Professor of Law at the City University of New York’s Baruch College, Zicklin School of Business, where he has published more than 25 law review articles on sports law matters, including “A Short Treatise on Fantasy Sports and the Law.” Nothing contained in this article should be construed as legal advice.
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