DraftKings, one of the two biggest names in the daily fantasy sports industry alongside FanDuel, is making a move on the industry’s “spin-off” area of daily fantasy eSports. The “premiere” will happen alongside the upcoming League of Legends World Championship in October, which will be the company’s first dip into the universe of eSports betting.
— DraftKings (@DraftKings) September 19, 2015
Similar to the classic daily fantasy sports system, the players will draft a team of professional gamers and compete head to head or in a group against others online for real money. Players can compete in daily or weekly contests for free or participate in leagues with cash prizes.
One contest carries a $3 entry fee and boasts $25,000 in prizes. If you’re familiar with fantasy football and the like, then the overall process of participating in fantasy eSports should be familiar.
To help boost the new addition to its fantasy ranks, DraftKings has partnered up with a number of well-known eSports teams – compLexity Gaming, SK Gaming, CLOUD9, Counter Logic Gaming, Team SoloMid, and Mousesports. It’s similar to the way DraftKings has partnered with key figures in other professional sports.
There is a good reason to enter eSports. Market research company SuperData estimates that 134 million people around the world watch eSports and that the industry generates more than $600 million in annual revenue.
“eSports is one of the world’s most popular spectator sports, and we are excited to introduce League of Legends to our industry-leading fantasy platform as a way to bring fans worldwide closer to the game,” DraftKings co-founder Matt Kalish said in a prepared statement.
Sharing the pit with two established players
Even though the industry of eSports is only about a year old, there are a couple of players who have already established themselves, with the two most successful ones being AlphaDraft and Vulcun.
For now, DraftKings is only after League of Legends, but that does not mean it isn’t planning to add other games, such as Dota 2, Counter Strike: Go, and Call of Duty, which are the standard selection of the other two companies in the industry.
Still some things to consider
Thinking about the geographical split, eSports is most popular in Asia, which generates over 60 percent of the industry’s revenue. Right now, DraftKings only operates in the United States and Canada, which means that the bulk of eSports fans won’t be able to play.
“We certainly have global ambitions here and want to be operating in as many countries as possible and as quickly as possible,” Matt Kalish told Re/code. “The long game here is really tied in more with our international strategy.”
Another interesting aspect about the possible reason for DraftKings trying to broaden its business horizons is the current development of traditional sports.
A report by the Physical Activity Council from 2014 points out that youth participation in team sports is falling off drastically. From 2008 through 2012, the number of high school football players dropped by 5.4 percent from 3.26 million to 3.08 million. Soccer, baseball, and basketball all saw even larger dips of 7.1 percent, 7.2 percent, and 8.3 percent, respectively.
This means that even though DraftKings is making huge amounts of money today, it could see that revenue dwindle if fewer people are interested in pro sports.
The industry is about to get more competition
Another recent announcement shaking up the eSports industry is the news that the daily fantasy sports site FanDuel is entering the fantasy eSports market with the acquisition of AlphaDraft.
With this, the two big ones – DraftKings and FanDuel – will gain an additional area where they can compete against each other.