How Fantasy Got in Trouble

Fantasy grew rapidly into a $1.1 billion industry mostly on advertising revenue. Then it upped the game by offering “prizes” and the market tripled. A race for market share ensued.

A “lottery effect” distorted the market. Fantasy sites found that new players flocked to whoever advertised the biggest prize pools (not the best odds). In order to increase their prize pools the fastest, fantasy sites had to allow players to enter more than once. (If everyone played twice, that would double the prize pool.)

Wall Street traders and poker pros didn’t just play twice—assisted by computer scripts and optimization software, these high-volume sharks created as many as 1,000 lineups a day, putting over $100,000 on the line regularly. The scripts allowed them to make last-minute adjustments to their lineups to take advantage of gameday breaking news.

Officially, the odds of winning were always 50%. Finish in the top half of players and take home your share! But the reality couldn’t be more different. In MLB fantasy, 91% of the prize money was being won by only 1.3% of the players. DraftKings data showed that over 89% of players lost money.