Evidence of Consolidation in the Fantasy Sports Industry

The fantasy sports industry is moving to a maturing stage. The large growth numbers seen just a few years ago are gone. The current recession/depression has done its share of impact but also needs to be acknowledged is the fact that the large fantasy sports sites are taking over the lion's share of the industry.

Sports leagues and sites like CBS Sports, Yahoo and ESPN are becoming the top-tier/dominant players. See the previous post on the fantasy sports business. The site FantasySportsBusiness.com has a recent post regarding consolidation in another area - reporting. As the winners of the game sites are becoming clear, so also the winners of the content/news regarding fantasy sports.

The net of the story is that the freelance writers who were the more of the "pioneers" are being moved out when the big boys realized there was something here that had interest (and viewers/clicks/etc), and not just a bunch of loser geeks talking to themselves (like this blogger!).

Quoting from the article, "There are no plans for Sporting News to retain our freelance fantasy writers, sadly. I hope other sites strongly consider taking a look at these guys’ work."

This doesn't mean that fantasy sports is failing or becoming stale. Far from it. However, the early days are over and the teenage/adult years are upon us. The large operations, whether providing, games, news, analysis, decision support, will be the main drivers of the fantasy sports industry moving forward unless new entrants can provide some innovative spark that the big players can't match. That will likely have to be something that contains some kind of intellectual property as opposed to just content and opinion, which the big players can emulate.

Are there new kind of fantasy innovations on the horizon? Perhaps, but I won't say more at this time. Stay tuned.

Australian Gambling Snapshot

Casino Journal magazine in its November edition published a synopsis of the Australia Productivity Commission's "Report on Gambling." This organization focuses on problem gambling, so the findings are used to help this agency and the Australian government to help ameliorate the harm. From my perspective, the findings just highlight just what a big gambling environment exists in Australia.

"The report found that 70 percent of Australians participate in some form of gambling. In 2008-09, total expenditure (losses) reached just over A$19 billion, an average of $1,500 per adult who gambled." [1] Seventy percent of a tier 1 economy that gamble? Awesome! Gamble enough such that per adult revenue to gaming purveyors is A$1,500 per year? Bonus! Australia is a great gaming market. I don't mean to make light of problem gambling and the devastation that accrues to the individual and their families. These numbers regarding how many gamble and how much is striking.

The report mentioned a few trends which are of note. The first is that real spending per gaming device player has risen over the years. In one jurisdiction, the rise in a ten-year period was over A$1,000 per player. Next, Australian casinos are facing competition for high-value customers due to increased Asian casino competitors. This isn't necessarily news as Las Vegas is likely facing the same threat from Macao and now Singapore properties. The final trends mentioned were that sports wagering has been growing and so has online gambling. With regard to online gambling, the estimate is that online gambling win in 2008-09 was in the A$800 million range. Compared to overall gaming win of A$19 billion, that is only about 4 percent, but the potential for online gambling to grow is there.

Overall, Australia is a strong and thriving gambling market.

Citations:

[1] Rutherford, J., et. al. (Editors) (2010, November), The Problem With Australia, Casino Journal, 10.

References:

Rutherford, J., et. al. (Editors) (2010, November), The Problem With Australia, Casino Journal, 10.

Conventional Wisdom Now Figuring Out Las Vegas Needs To Do Something

The Las Vegas Sun had a recent article discussing how Las Vegas had to "reinvent the wheel" in order to adapt to the current economic and demographic reality. Here's the key quote from Bill Eadington of the University of Nevada, Reno:

“Newness, which has long driven Las Vegas growth, will not be part of the immediate future,” said Bill Eadington, director of UNR’s Institute for the Study of Gambling and Commercial Gaming. “Las Vegas may become yesterday’s news unless it can figure out a new way to reinvent itself.”

Let's take a peek at a few of the issues facing Las Vegas:

1. Beaucoup hotel rooms built during the boom added to a large existing base
2. Economic recession/depression (depending on if you have a job or not)
3. Competition for US casino patrons from tribal and other casinos closer to home
4. Competition for Asian casino patrons from newer, closer venues in Macau and Singapore
5. Vegas prices aren't all that inexpensive anymore like the old days

Other than that, what's the problem, right? We won't even mention the competition from online gambling.

With regard to the number of hotel rooms, I found this document on the Las Vegas Convention and Visitors Authority website. In Las Vegas, the current estimated number of hotel rooms is 150,732. That is a LOT of rooms. How many? Here's how many... If the hotel rooms in Las Vegas were its own city, it would be the 158th largest city in the United States, just ahead of Alexandria, Virginia (based on 2009 Census data). As another reference point, there are 276 cities in the United States with populations over 100,000. This is just assuming one person per room. Assuming 1.5 people per room, Las Vegas hotel rooms would be the 87th largest city in the US, just ahead of Lubbock, Texas. Assuming that a hotel needs 70% occupancy to break even, Las Vegas needs on average over 105,500 of those rooms to be filled every night. That is a tall order.

I've posted quite a bit on Nevada, the impact of the economic downturn and increased competition. For those interested, you can read the most recent of the related posts, here, here, here and here.

The article discusses in very general terms what Las Vegas needs to do. The aforementioned Las Vegas Convention and Visitors Authority conducted a survey. The findings? Customers want transparency, value and variety. Forgive me for being obtuse but what the heck does that mean? Quoting again from the Sun article, "research indicated Las Vegas should focus its scarce marketing dollars on people who need an excuse to travel here and those interested in the city who don’t know much about it and need more details to be persuaded..." Who doesn't know about what Las Vegas is about? Go ask people at random, "what's Las Vegas all about?" You really think they'll say, "gee, I don't know anything about Las Vegas?"

Las Vegas needs to get back to fundamentals. What is Las Vegas' nickname? Yep, Sin City. The three B's - Booze (lots of it and low or no cost), Babes (see link to post below) and Bucks (good games, low takeout/don't nickel and dime your gambling patrons). That's what Las Vegas needs to get back to in order to survive, in my opinion. Unlike the experts, I give you concrete and thought out recommendations! I posted about this type of approach with regard to how the Reno and Lake Tahoe markets could combat increased competition from tribal casinos in Northern California. It may be time Las Vegas considers something similar.

Fantasy Sports Maturing as Lawyers Now Involved

I suppose a sign of the maturity of any industry is the appearance of lawyers. In this case, the appearance fills a unique need - the disputes that can arise in fantasy sports leagues. Until now, if a trade appeared unfair, players added/dropped possibly outside alloted time windows, collusion by league participants, etc., the disputes had to be handled by the league commissioner, who more likely than not was also a league participant and in some cases was one of the parties to the dispute.

Now there is a venue for impartial hearing of these disputes - SportsJudge.com. For a fee of $15 per dispute or $100 for a season package (since when were lawyers this cheap), you can get your dispute heard. Not happy that your rival traded for Michael Vick for a case of beer, pizza and a date with his sister right before he played you in a crucial game and your commissioner is a wimp? Take them to fantasy court!

The concept is so new and interesting, even the magazine of the American Bar Association did an article on the site. The article can be found here. With fantasy sports having potential to deal with very large prize monies (see previous post on high-stakes prizes in fantasy sports), the potential for disputes to arise that have very large economic consequences. Right now, this is an informal forum, but the time may come where a high-stakes fantasy dispute ends up in a real court.