It's estimated by the Fantasy Sports Trade Association that 29.9 million people age 12 and above in the U.S. and Canada played fantasy sports in 2007. A prior study by the FSTA showed 19.4 million people age 12 and above in the U.S. and Canada played fantasy sports in 2006 and 34.5 million people had ever played fantasy sports. A 2006 study showed 22 percent of U.S. adult males 18 to 49 years old, with Internet access, play fantasy sports. Fantasy Sports is estimated to have a $3-$4 Billion annual economic impact across the sports industry. Fantasy sports is also popular throughout the world with leagues for football (known as soccer in the United States), cricket and other non-U.S. based sports.
The concept of picking players and running a contest based on their year-to-date stats has been around since shortly after World War II, but was never organized into a widespread hobby or formal business. In 1960, Harvard University sociologist William Gamson started the "Baseball Seminar" where colleagues would form rosters that earned points on the players' final standings in batting average, RBI, ERA and wins. Gamson later brought the idea with him to the University of Michigan where some professors played the game. One professor playing the game was Bob Sklar, who taught an American Studies seminar which included Daniel Okrent, who learned of the game his professor played. At around the same time a league from Glassboro State College also formed a similar baseball league and had its first draft in 1976.
While those two leagues focused on baseball, it may be football that produced the first version of the hobby. The Greater Oakland Professional Pigskin Prognosticators League began in the early 1960s with eight teams. George Blanda was the first player taken in the first draft in 1963. 1963 draft results
The landmark development in fantasy sports came with the development of Rotisserie League Baseball in 1980. Magazine writer/editor Daniel Okrent is credited with inventing it, the name coming from the New York City restaurant La Rotisserie Francaise where he and some friends used to meet and play. The game's innovation was that "owners" in a Rotisserie league would draft teams from the list of active Major League Baseball players and would follow their statistics during the ongoing season to compile their scores. In other words, rather than using statistics for seasons whose outcomes were already known, the owners would have to make similar predictions about players' playing time, health, and expected performance that real baseball managers must make.
Because Okrent was a member of the media, other journalists, especially sports journalists, were introduced to the game. Many early players were introduced to the game by these sports journalists, especially during the 1981 Major League Baseball strike; with little else to write about, many baseball writers wrote columns about Rotisserie league. A July 8, 1980 New York Times Article titled "What George Steinbrenner is to the American League, Lee Eisenberg is to the Rotisseries League" set off a media storm that led to stories about the league on CBS TV and other publications.
In March 1981, Dan Okrent wrote an essay about the Rotisserie League for Inside Sports called "The Year George Foster Wasn't Worth $36." The article included the rules of the game. Founders of the original Rotisserie league published a guide book starting in 1984. In 1982, Ballantine published the first widely-available Bill James Abstract, which helped fuel fantasy baseball interest. Fantasy fans often used James' statistical tools and analysis as way to improve their teams. James was not a fantasy player and barely acknowledged fantasy baseball in his annual Abstract, but fantasy baseball interest is credited with his strong sales.
Soon the hobby spread to other sports as well and by 1988, USA Today estimated that five hundred thousand people were playing.
In the few years after Okrent helped popularize fantasy baseball, a host of experts and business emerged to service the growing hobby. Okrent, based on discussions with colleagues at USA Today, credits Rotisserie league baseball with much of USA Today's early success, since the paper provided much more detailed box scores than most competitors and eventually even created a special paper, Baseball Weekly, that almost exclusively contained statistics and box scores.
Among the first high-profile experts were John Benson, Alex Patton and Ron Shandler. Benson became perhaps the most famous name in the business in the late 1980s, publishing his first book in 1989 and developing one of the first draft-software simulation programs. He had a 900 number at $2.50 per minute (He charged $150 per hour in the mid 2000s).
Patton published his first book ('Patton's 1989 Fantasy Baseball League Price Guide ") in 1989 and his dollar values were included in USA Today Baseball Weekly's fantasy annual throughout the 1990s.
Ron Shandler published his "Baseball SuperSTATS" book in November 1986. At first the book wasn't meant for fantasy baseball fans, but rather as a book of Sabrmetric analysis.
But it wasn't just baseball that saw new businesses and growth. Fantasy Football Index became the first annual fantasy football guide in 1987. Fantasy Sports Magazine debuted in 1989 as the first regular publication covering more than one fantasy sport. Fantasy Football Weekly was launched in 1992 (later becoming Fanball.com) and had $2 million in revenue by 1999. A large number of companies emerged to calculate the stats for fantasy leagues and primarily send results via fax.
In 1993, USA Today included a weekly columnist on fantasy baseball, John Hunt, and he became perhaps the most visible writer in the industry before the rise of the Internet. Hunt started the first high-profile experts league, the League of Alternate Baseball Reality which first included notables as Peter Gammons, Keith Olbermann and Bill James.
The hobby continued to grow with 1 million to 3 million playing from 1991 to 1994.
But the seminal moment for the growth of fantasy sports was the rise of the Internet in the mid-1990s. The new technology lowered the barrier to entry to the hobby as stats could quickly be compiled online and news and information became readily available.
While several fantasy businesses had migrated to the internet in the mid-1990s, the watershed era for online fantasy sports was in 1997 when two web sites made their debut that forever changed the fantasy sports industry: Commissioner.com and RotoNews.com.
Commissioner.com launched in January 1, 1997 and first offered a fantasy baseball commissioner service that changed the nature of fantasy sports with real-time stats, league message boards, daily updated box scores and other features -- all for $300 per league. Commissioner.com was sold to Sportsline late in 1999 for $31 million in cash and stock in a watershed moment for the fantasy industry. The sale proved fantasy sports had grown from a mere hobby to big business. By 2003, Commissioner.com helped Sportsline generate $11 million from fantasy revenue. Commissioner.com is now the fantasy sports engine behind CBSsports.com's fantasy area (after Sportsline was sold to CBS).
RotoNews.com also launched in January 1997 and published its first player note on February 16, 1997. RotoNews revolutionized how fantasy sports information was presented on the web with the innovation of the "player note" which were snippets of information every time a player got hurt, traded, benched or had a news event that impacted his fantasy value - all search-able in a real-time database. Most sites today follow how RotoNews had a "news" and "analysis" element to each player update. Within two years RotoNews had become one of the top ten most trafficked sports sites on the web, according to Media Metrix, ranking higher than such sites as NBA.com. RotoNews.com was sold to Broadband Sports in 1999 and later survived as RotoWire.com.
It wasn't long before the larger media players got involved. Yahoo.com added fantasy sports in 1999 and offered most of its games for free - a largely new business model for fantasy sports. A trade group for the industry, the Fantasy Sports Trade Association was formed in 1998.
Other entries during this era included Fanball.com, launched in 1999 by the parent company of Fantasy Football Weekly.
The first survey of the fantasy sports market in the U.S. in 1999 showed 29.6 million people age 18 and older played fantasy games. However, that figure was reduced in later years when it was determined the survey also included people who play NCAA bracket pools, which are not exactly fantasy sports (where you pick individual players).
While fantasy sports were fueled by the dot-com boom of the Internet, there was a turbulent period when many of the high-flying Internet companies of the era crashed in 2001. Fanball.com went bankrupt in 2001 (later to re-emerge in 2001). RotoNews.com's parent company, Broadband Sports, went belly up in 2001. The company would re-emerge as RotoWire.com.
There were also wide variations on business models. RotoNews.com launched the Web's first free commissioner service in 1998, quickly becoming the largest league management service. Yahoo.com became the first major media company to offer games for free in 1999. Due to the rising competition, Commissioner.com, which had charged as much as $300, offered its commissioner services for free starting with football in 2000.
Two years later the trend reversed. Sportsline moved back to a pay model for commissioner services (which it largely still has today). TheHuddle.com, a free site since 1997, started to charge for information. RotoWire.com moved from a free model to a pay model in 2001 as well.
Despite the economic instability, fantasy sports started to become a mainstream hobby. In 2002, the NFL found that average male surveyed, for example, spent 6.6 hours a week watching the NFL on TV; fantasy players surveyed said they watched 8.4 hours of NFL per week. "This is the first time we've been able to demonstrate specifically that fantasy play drives TV viewing," said Chris Russo, the NFL's senior vice president. The NFL began running promotional television ads for fantasy football featuring current players for the first time. Previously fantasy sports had largely been seen in a negative light by the major sports leagues.
Fantasy sports continued to grow with a 2003 FSTA survey showing 15 million people playing fantasy football and spending about $150 a year on average, making it a $1.5 billion industry.
Notable games in these new categories include:
In 1996, STATS, Inc., a major statistical provider to fantasy sports companies, won a court case, along with Motorola, on appeal against the NBA in which the NBA was trying to stop STATS from distributing in game score information via a special wireless device created by Motorola. The victory played a large part in defending other cases where sports leagues have tried to suppress live in-game information from their events being distributed by other outlets. The victory also accelerated the market for real-time statistics which were largely fueled by the growth of the fantasy sports industry.
The development of fantasy sports produced tension between fantasy sports companies and professional leagues and players associations over the rights to player profiles and statistics. The players associations of the major sports leagues believed that fantasy games using player names were subject to licensing due to the right of publicity of the players involved. Since the player names were being used as a group, the players had assigned their publicity rights to the players association who then signed licensing deals. During the 1980s and 1990s many companies signed licensing deals with the player associations, but companies did not. The issue came to a head with the lawsuit of Major League Baseball Advanced Media, MLB's Internet wing, vs. St. Louis-based CBC Distribution and Marketing Inc., the parent company of CDM Sports. When CBC was denied a new licensing agreement with MLBAM (they had acquired the rights from the baseball players' association ) for its fantasy baseball game, CBC filed suit.
CBC argued that intellectual property laws and so-called "right of publicity" laws don't apply to the statistics used in fantasy sports. The FSTA filed an amicus curiae in support of CBC, also arguing that if MLBAM won the lawsuit it would have a dramatic impact on the industry, which was largely ignored by the major sports leagues for years while a number of smaller entrepreneurs grew it into a multi-billion dollar industry, and a ruling could allow the MLBAM to have a monopoly over the industry.
"This will be a defining moment in the fantasy sports industry," said Charlie Wiegert, executive vice president of CBC. "The other leagues are all watching this case. If MLB prevailed, it just would have been a matter of time before they followed up. Their player unions are just waiting for the opportunity.
CBC won the lawsuit as U.S. District Court Judge Mary Ann Medler ruled that statistics are part of the public domain and can be used at no cost by fantasy companies.
"The names and playing records of major-league baseball players as used in CBC's fantasy games are not copyrightable," Medler wrote. "Therefore, federal copyright law does not pre-empt the players' claimed right of publicity.
The 8th Circuit Court of Appeals upheld the decision in October 2007. "It would be strange law that a person would not have a First Amendment right to use information that is available to everyone," a three-judge panel said in its ruling.
The U.S. Supreme Court upheld the 8th Circuit Court's decision by declining to hear the case in June 2008.
The Unlawful Internet Gambling Enforcement Act of 2006, which was an amendment to the larger and unrelated Safe Port Act, included "carve out" language that clarified the legality of fantasy sports. It was signed into law on October 13, 2006 by President George W. Bush. The Unlawful Internet Gambling Enforcement Act makes transactions from banks or similar institutions to online gambling sites illegal, with the notable exceptions of fantasy sports, online lotteries and horse/harness racing.
The bill specifically exempts fantasy sports games, educational games, or any online contest that "has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events, including any non-participant's individual performances in such sporting events...
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