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Fantasy Sports vs.Sports Betting: what’s the best approach?

By William - 8 September 2022

For many sports fans online betting is an integral part of the matchday experience. Whilst traditional sportsbooks have typically seen the bulk of the action, the increasing popularity of fantasy sports sites means there are now more ways for customers to bet than ever before.

G3 discusses the appeal of both approaches and examines how increased competition has affected the sports betting market with FSB, Scout Gaming and Incentive Games.

In regulated markets across the globe, fantasy sports betting is designated a skill game and falls under different regulations. Do you agree with this classification?

Bob Akeret, Vice President, Operations at FSB: I agree that fantasy sports is a game of skill and that there is an opportunity for those that carry out extensive research and improve their knowledge of a particular sport to significantly increase their chance of winning.

Of course, there are casual players that combine their more limited knowledge with a little bit of luck to win, but, in most cases, the top prizes go to the players that are passionate about sports and committed to improving their understanding of teams and athletes, but also the game of fantasy sports itself.

Araz Heydariyehzadeh, Chief Commercial Officer at Scout Gaming: The classification of fantasy sports has continuously evolved over the past few years but has now reached the stage where it is considered a game of skill in most markets.

This makes it more straightforward for operators to be able to provide fantasy sports products to their users across multiple territories at once, which is something I can definitely get behind.

Victor Pronk, Chief Commercial Officer at Incentive Games: Pre-PASPA, the operators FanDuel and DraftKings were pure Fantasy operators. During this time there was a low single digit percentage of players that would win three quarters of all prize pay-outs.

The existence of sabermetrics (baseball analytics) and other forms of applied sports statistics and the use of them by professional clubs is proof that sports performance and outcome can be predicted with the correct skill set and data.

Fantasy sports betting has exploded in popularity in recent years. How should DFS brands look to differentiate themselves?

Victor: We believe that operating real money DFS as a stand-alone product in a competitive and mature market is very difficult. If you cater to the die-hard fans that are willing to put in the hours of research, it will be harder to achieve a large user base. Recreational players will quickly understand they have no chance of winning.

If you simplify the game concepts and increase the factor chance, it will attract a larger player base, but it will disappoint the die-hard fans that generate the most transactions.

Because we believe DFS is a very entertaining product as a company we have decided to approach DFS as a free to play engagement product. It allows us to focus on the entertainment value and not worry about the required skill element or other form of regulations.

Araz: The fantasy sports market has seen a lot of growth worldwide, and the pace of growth shows no signs of slowing down even outside of the US.

A lot of the earlier fantasy betting games were made to be as simple and casual as possible. For example, games were based around users having to pick very few players in their teams, or where the rules of the game meant that users only scored points for a very limited number of events (like goals).

Whilst these types of games are good at initially attracting users to a new vertical and familiarising them with that vertical, they can sometimes lack depth or meaningful engagement, which is needed to keep players coming back and to allow them to develop strategies which can feel more rewarding when they pay off.

At Scout, we have a wide variety of different fantasy games which fulfil different objectives. Our approach is to really take a good look at the objectives and audience of our partners and offer each one a tailored selection of game formats to match their short and long-term goals.

I don’t believe there is a silver bullet when it comes to fantasy sports betting content, it’s much better to create content that meets specific goals and helps to drive the user from one point in their journey to another.

The best way for fantasy sports brands to differentiate is to really understand their audience and their own market position and then create or deploy content from third parties like Scout that matches this audience and position.

Don’t try to be all things to all people, that often results in a muddled message that appeals precisely to nobody. It’s all about knowing your market and producing content for it.

Bob: FSB offer our operator partners the ability to take control of pricing in a number of ways. Our Price Boost tool means partners can offer a best price position across any sportsbook market while with Bet Boost they can award tokens to their player base that enables end users to inflate the price of the sportsbook opportunity of their choosing.
 
Of course, it is important for marketing, retention, content and trading teams to work closely together to identify ways to come up with headline boosts that capture player attention and deliver genuine value, while also acting as a point of difference compared to rival operators. 
 
It is also worth highlighting our hybrid trading model that we have made available in the US, as this allows operators to independently trade the sports of their choosing. For example, our operator partners can focus on the key US sports while allowing our expert traders to manage the rest of the long-tail global content.

With odds compilers for conventional sports betting sites rarely missing a trick when it comes to pricing markets, is there an argument that the player versus player model used in fantasy sports betting is more appealing to customers looking to consistently profit from their bets?

Victor: I believe there are enough missed priced opportunities the with majority of bookmakers, but players that will consistently wager those opportunities will be restricted. With the business model of player versus player, the operators profit margin is not affected by players that have an edge and therefore they can keep playing.

Araz: Because of the maturity of those traditional sports betting markets, even professional sports bettors and traders can sometimes struggle to drive any substantial margin.

There is an argument to be made that fantasy players with the highest skill levels can give themselves an edge over other players and that this might give those types of customers another option.

The big debate for operators though is whether or not an environment where very highly skilled players consistently take profits from less experienced or more casual players is conducive to their objectives.

In my opinion, there aren’t a great many situations in which that provides a good outcome for the operator or for the vast majority of users. The most effective way for the operator to handle this is to have a clear market position and objective in mind.

There are ways B2B DFS providers like Scout can provide games that pit the top players against one another and allow them to battle it out, without cannibalising fun or mass market appeal for more casual players.

My personal philosophy is that fantasy should provide the maximum amount of fun and entertainment for the largest number of users possible within a specific player segment, so products should be fun, exciting and for entertainment rather than generating large amounts of profit for a small group of people.

In more recently regulated markets, fantasy sports betting has been around for some time, whilst traditional online sports betting is only just being made available. Do you think we’ll see a mass migration of players in these markets from DFS sites to sportsbooks now that they’re legal, or will customers have the appetite to do both?

Araz: We already have reams of data from the US, particularly from the likes of DraftKings and FanDuel, that show there is a strong overlap between fantasy and sportsbook players. While these groups certainly aren’t identical, they do often share a number of key characteristics.

Recent data suggests that anywhere between 30-70 per cent of users in some markets initially only played fantasy but are now playing both. This indicates that fantasy is playing a role in educating users about sportsbook betting in some capacity.

There is also an argument to be made, and we have data from our B2B partners across the world to support it, that fantasy can act as a lower learning curve form of sports betting for users who may simply not be interested in sportsbook betting.

This does have something to do with the fact that fantasy originally started out as a free-to-play product, and users gained experience and skills playing fantasy games which they now feel more comfortable playing for money. The same isn’t true for sports betting.

Bob: I think that customers will continue to do both for the time being as fantasy sports and daily fantasy sports offer things that straight-up sports betting does not.

Almost all US sports fans will be part of a fantasy league with their friends, while a significant number will also continue to take part in daily contests for the fast-paced action they provide.

However, over time I think daily fantasy will become less popular as more states embrace legal sports betting. This is certainly the case as operators continue to roll out micro markets and prop bets as they offer very similar gameplay to DFS and, ultimately, is why operators looking to transition players from fantasy to real money betting offer them.

Victor: In some markets DFS was the ‘closest thing’ legally available for people that wanted to wager on sports. That segment will likely migrate to sports betting and significantly reduce their fantasy betting.

For the remaining players there will be those that will do both and those that will stick to just DFS. We believe that for the operators betting on sports will be a much bigger driver for their revenue and profits than DFS.

Sports betting odds are generally quite consistent across the board. How do and should online sportsbooks go about pricing their markets in a way that offers value and appeal to bettors?

Araz: Because sportsbook odds are usually very consistent, the differences in pricing generally appeal to a certain kind of punter and that is the more experienced, regular bettor which represents a smaller portion but a higher turnover segment of the market.

To the mass market, casual punter placing stakes of £5, the difference in prices between a favourite horse or team to win on two bookmaker sites is usually unlikely to be enough to sway them to sign up for a different site or to switch apps.

This segment of users tend to consider odds and sportsbooks in general as fairly ubiquitous and have their eyes drawn by different factors such as price boosts, promotions or loyalty rewards.

One of the big appeals of DFS sites is that they offer customers a new way to bet on the sports they love. Have traditional online sportsbooks responded to this challenge by creating new games, features and markets? Have there been any significant innovations of late?

Araz: Traditional sportsbooks are offering an ever-increasing range of markets on all sorts of minute data points. Bet builders then allow users to create customised bets at greater odds, along with bet of the day variants.

These features are extremely common now, and, in some cases, could be in danger of becoming excessive and overwhelming for casual bettors or new users.

There is a sentiment amongst some casual users that in order to get the value and excitement they need to make a small stake bet worth placing, they must include more and more selections on their bet slips and for markets like corners, yellow cards and shots on goal.

Fantasy turns this paradigm on its head. When a user picks a fantasy team, they are coming at it from a different angle entirely.

Instead of picking more and more things which are less and less likely to happen, they are being asked to pick the players they believe will actually perform the best and if they do that correctly, they can stand to win large returns from small stakes.

For example, in the €200k Premier League season game that Scout runs, a user pays a buy-in of €20, with the top single prize being €20k. For the average punter, that‘s a potential 1,000/1 return on their stake for picking the strongest team they can.

Essentially, they are betting on the things they actually think are most likely to happen, and that might seem like a breath of fresh air when compared to the current state of play with sports betting. What’s more, there aren’t many situations where you’ll get more than 100/1 for picking ten favourite teams to win.

In some of our other daily or weekly game formats, we have much lower buy-ins still with fairly high guaranteed prize pools that give potential returns of 5,000/1 or more for the game winner and even several hundreds to one for those that rank in the top five or 10 per cent of entrants.

Bob: I think US sportsbooks have evolved out of daily fantasy sports and that can be seen in the markets and odds being offered to players. Books are no longer just taking spread, total and moneyline bets, and instead are offering props, boosts, same game parlays and micro-markets to ensure that players remain engaged. 

This is something we are seeing globally, too, with bookmakers becoming increasingly granular with the markets they are offering such as the next point in tennis or the next play in football (not soccer!).

Of course, to be able to offer these wide range of markets, operators must be supported by platforms with genuine scale and stability. This isn’t something that all providers offer – just take a look at some of the headlines following major betting events such as the Super Bowl 2021 with operators suffering major outages. 

FSB prides itself on the near 100 per cent uptime record it achieves. This gives our operator partners the confidence they need to deliver superior betting experiences even during high-volume events such as the Super Bowl and March Madness.

This might not be considered headline innovation, but it is absolutely critical to ensuring players receive the experience they are expecting. 

In-play betting has become a major focus area for online sportsbooks. What are the key ingredients for creating an engaging in-play betting experience? What match data should be provided and, in turn, how should bettors look to use this information?

Bob: Uptime is absolutely key here as well, so too is low latency. In-play is all about delivering real-time engagement with players and bonusing forms part of this.

Our automated bonusing tools are hugely popular with our partners as they allow them to curate real-time bonusing rewards across their customer base to enhance the 24/7 in-play experience.

As well as this, operators also need to consider things such as data visualisations and having access to premium in-play friendly data feeds within their offering and this is something that FSB can support.

Victor: Although we do not provide in-play wagering, we do provide in-play free to play games. These games have been developed to engage with the players during a specific match and to help the operators to keep players coming back to their site.

An example is our game Free-4-All where players answer four questions before and during a match to win a share of a prize.

Araz: A good chunk of sportsbook betting now happens in play and most sportsbooks have strong and in-depth offerings.

Due to the high pace of the action, the key things that really need to be done are the speed of the apps, how quickly markets and prices become available after key events within a game, and how quickly the bookie can create specials in response to the action taking place.

How can DFS sites make themselves more appealing to traditional sports bettors and vice versa? Is there sizeable overlap between the two customer bases or are there noticeable demographical differences?

Araz: There is definitely some overlap, and the overlap tends to be the greatest when sportsbook users are being provided with games that have the shallowest learning curve.

When making fantasy appeal to a mass market sportsbook audience, the key is to not overwhelm that audience and use mechanics within the fantasy game content (such as goals and clean sheets) that those sportsbook bettors will already be familiar with so the introduction is fun and easy.

Over time those users can then be introduced to more deeply engaging fantasy concepts. Those will appeal to some user segments more readily than others, but there is always a way to match the game content to the audience segment.

Bob: There is definitely overlap between fantasy sports and sports betting, and operators are certainly looking to drive fantasy players to their real money books.

Daily players are a little different as they are incredibly analytical in their approach, and you certainly don’t see as many casual DFS players as you do sports bettors – sports betting allows casual players to put down a few dollars on their team to win.

Of course, there are plenty of opportunities for more serious sports bettors to get granular through micro markets, props, hedging, and so forth.