Fantasy Sports Market Metrics

The Fantasy Sports Trade Association 2010 Winter Business Conference was held this week in Las Vegas. A recap of industry statistics was printed as part of the conference attendee booklet. Here are a few snippets to highlight the large size of the fantasy sports industry. The bulk of the fantasy sports industry is in the US and Canada, with the concept slowly gaining traction in the rest of the world.

Fantasy sports participants

USA - 27.1 million (age 12 and above)
Canada - 2.8 million (age 12 and above)

Economic impact

$800 million impact within the fantasy sports industry
$3 billion impact across the sports industry

Fantasy sports participation by sport - USA

Football - 22.2 million
Baseball - 12.5 million
Racing - 9.6 million
Golf - 8.4 million
Hockey - 8.1 million
Basketball - 5.4 million

Fantasy sports participation by sport - Canada

Hockey - 1.87 million (are you really surprised?)
Football - 672 thousand
Baseball - 476 thousand
Golf - 420 thousand
Racing - 350 thousand
Basketball - 196 thousand

Due to the current economic situation, the growth in the industry has flattened but overall there hasn't been a decline, which is actually good news. "Flat is the new up..."

Sources:

FSTA Market Study, Ipsos, July 2009
FSTA Consumer Behavior Study, University of Mississippi, July 2008

Delaware Challenges To Supreme Court

As expected, Delaware is going to appeal the current restrictions on their sports betting offerings to the US Supreme Court. Delaware had hoped to offer single-game bets similar to what Nevada offers. The NFL sought an injunction under the federal PASPA law, which was granted that limited Delaware only to the kind of sports betting options that were offered when Delaware operated a sports betting operation back in the 1970s.

When Delaware operated a sports lottery, they offered 3-game parlays of NFL games. This sports betting offering only was in effect for one season, but that offering allowed Delaware grandfather status along with Nevada, Montana and Oregon. However, the 3-game parlay offering for the NFL is a fairly large disappointment considering the effort to reinstitute sports betting in the state. If the Supreme Court takes the case and rules in Delaware's favor, Delaware would be the only state other than Nevada to be able to offer a full range of sports betting. Given the large population base within a few hours' drive, sports betting could be quite lucrative.

Although Delaware likely has a states' rights argument, the odds are low that the Supreme Court will even hear the case as the Court only takes around 1-2% of the cases submitted to them for potential review.

The Sussex Countian newspaper article is located here.

Are Indian Casino Bonds Worthless?

Professor I. Nelson Rose penned a very interesting article for the December issue of Casino Enterprise Management magazine. The article was titled, "Indian Casino Bonds - A House of Cards?" The current economy is showing that casino gaming is not recession-proof and also showing that even tribal casinos aren't recession-proof. This brings up the point of the article that inquires about what happens if a tribal casino goes kaput?

Tribes are sovereign nations and the US Supreme Court has stated that tribes can not be sued without their consent. So what happens when a tribal casino that is financed with loans or bonds is unable to service that debt. What options do the creditors have? It is quite possible that there may be little they can do other than moral suasion.

With a Las Vegas casino in this circumstance, creditors could force the casino into bankruptcy court, where potentially the creditors operate the casino until final disposition of the case. That can't happen with tribal casinos as the Indian Gaming Regulatory Act mandates that a tribal casino must be owned by a tribe. Therefore creditors likely can't take over a debtor tribal casino in default.

This potential situation came to light when it was announced that the Foxwoods casino was in danger of defaulting on its multi-billion dollar loans. If, for the sake of argument, such loans to tribes were basically impossible to enforce by seizing the casino property (the object of the investment), the there is a whole lot of money lent to tribes that there may be a very difficult time collecting. Along with that, there may be quite a few lenders sweating out this economy hoping that they don't have to write down billions in loans and bonds.