What Is the 10 Trillion Won 'Fantasy Sports' That Even the KBO League Is Joining?
by Kim Heungsoon
Published 19 Jun.2020 11:55(KST)
Updated 19 Jun.2020 13:10(KST)
[Asia Economy Reporter Kim Heung-soon] The American sports media outlet ESPN has been broadcasting one selected game from the Korea Baseball Organization (KBO) League, our professional baseball league, live across the United States every day since the 5th of last month. As major sports leagues in the U.S. were suspended due to the impact of the novel coronavirus disease (COVID-19), ESPN aimed to quench fans' thirst by providing Korean professional sports content, which was the first to start a new season even without spectators. There is another strategic aspect to this. It is for operating the sports gambling market, where betting is conducted based on real-time game data. One example is 'Daily Fantasy Sports (DFS),' which allows betting and rewards based on game results over a short period ranging from one day to a week. According to related industries such as gaming and broadcasting on the 19th, it is known that the demand from the DFS market was partially reflected in ESPN's broadcasting of the KBO League.
◆ What is DFS, a 10 trillion won market?= DFS is based on 'fantasy sports,' which originated among American sports fans from the 1950s to 1960s. Fantasy sports involve users acting as scouts for actual professional sports games. Users bet a certain amount online, purchase players to form a virtual team, and then distribute the pot to the person who scores the highest by aggregating the real game records of those players. While traditional fantasy sports usually compile results over a season to rank participants, DFS shortens this to a per-game or weekly basis, allowing bets and distributions of up to $1,000.
Although unfamiliar domestically, the fantasy sports market is rapidly growing in the U.S. According to the Fantasy Sports Trade Association (FSTA), the fantasy sports market size in North America was estimated at $26 billion (approximately 28.6 trillion won) as of 2016. The related market soared after the U.S. Supreme Court legalized sports gambling in May 2018. According to the Korea Institute of Sport Science, the fantasy sports market has grown at an average annual rate of 10.16% until recently. Separately, the DFS market alone is predicted to have expanded to over $8 billion (approximately 9.7 trillion won). The two leading companies in the U.S. DFS industry, 'FanDuel' and 'DraftKings,' have joined the ranks of 'unicorn companies,' startups valued at over $1 billion.
◆ Opportunity amid COVID-19 adversity, what about Korea?= The DFS market was also hit as COVID-19 prolonged. Since the game is based on data from players active in leagues, actual games must be held, but with the global suspension of professional sports due to infection concerns, service operation became impossible. However, as major soccer leagues in Germany, Spain, England, and others reopened after Korea, and the U.S. Major League Baseball is considering opening, expectations for market recovery are high in regions like North America and Europe where DFS is active. Even if leagues resume without spectators like in Korea, clubs can secure data to operate DFS, although revenue is impacted.
In Korea, some sports betting is possible only for games classified by the Game Rating and Administration Committee. Users can bet on outcomes such as win/draw/loss by purchasing paid items or charging coins on authorized sites to receive game money. However, it is impossible to distribute stakes by converting actual game data into scores in the form of fantasy sports. According to the National Sports Promotion Act, only the Sports Toto business, which allows betting and payouts in cash, is legalized, and there is no legal basis to operate DFS or similar services.
Some voices suggest that amid the contraction of the sports industry due to prolonged COVID-19, it is necessary to consider introducing fantasy sports to utilize its positive functions. An industry insider said, "Developing fantasy sports games or fostering industries for sports data analysis and utilization could increase interest in professional sports," adding, "If addictive factors are analyzed and regulations on rewards and participation methods are established, institutionalization could be possible." They also added, "If soundness is guaranteed, a system where participants pay entry fees and receive prizes could be used as a project to raise funds for the National Sports Promotion Fund."
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