While daily-fantasy sports platforms DraftKings and FanDuel have spent months battling legal scrutiny from state lawmakers that wish to shut them down, Yahoo has been a quiet No. 3 player in the same market. And now it is making three significant changes to its daily fantasy product in the name of fairness and as a competitive advantage.
Yahoo Sports announced on Tuesday “three fairly simple changes,” as head of product Michael LaGuardia puts it, “that we think they dramatically change the complexion of the game and make it much more about love of sports and love of fantasy.”
Yahoo Daily Fantasy will now: Limit the number of entries per user in any contest to 10, or for a small contest, no more than 1% of total entries; label experienced users “veterans”; and ban the use of scripting software to manage multiple contest entries. Yahoo is calling the collective changes Fair Play.
The tweaks come at an inauspicious time for daily fantasy sports. After a DraftKings employee won $350,000 playing on FanDuel last fall, sports media leveled charges of insider advantage against the two private tech startups, which enjoy a combined 95% market share of the “daily” portion of fantasy sports. In New York, Attorney General Eric Schneiderman sent both companies a cease-and-desist in October, accusing them of being illegal gambling operators. They fought back with lawsuits of their own, but Schneiderman got his way, for now, on Monday when the companies agreed to end paid contests in the state until at least September. Last month, ESPN (DIS) got out of an exclusive, multi-year advertising contract with DraftKings.
Schneiderman did not send a cease-and-desist to Yahoo, which has largely remained out of the spotlight of legal scrutiny, perhaps because of its distant No. 3 position. And Yahoo Sports says it will continue to operate its platform in New York.
Fairness has certainly been among the hot-button issues in the space. LaGuardia says that Yahoo Sports has been in conversations with politicians and legislators, including attorneys general, “But the changes we’re making come out of what we’ve observed about the game. This is not a direct response to any legal pressure.”
Yahoo has offered full-season fantasy football for over 17 years. It announced a daily-fantasy offering last July, and less than three months later the industry blew up all at once, as DraftKings and FanDuel flooded the airwaves with commercials and the Nevada Gaming Control Board told the companies they needed to obtain a gambling license to keep operating in that state. You might wonder if Yahoo considered exiting the market amidst all the bad press. LaGuardia says no. “We don’t have any intention to stop,” he says. “We really see that our season-long and our daily platform play nicely together.”
DraftKings, too, has banned scripting in recent months—the term refers to software programs that let people enter a large number of automated lineups into multi-entry contests all at once, to increase their chances of winning. “That is not about sports and the fun of the game,” LaGuardia says. “We want you to win based on your love of the sport.”
Putting a warning label on veterans is a similar effort to protect newbies from so-called “sharks.” Veterans will be defines as users who have entered more than 1,000 contests within a single year, or who have entered more than 250 contests and won in more than 65% of them. Yahoo Sports doesn’t want to lose those players, either, but says the idea is to level the playing field. Yahoo will offer veterans a free, invitation-only contest this month as something of a peace offering amidst these changes.
Yahoo Daily Fantasy aims to position itself as a safe place, amidst intimidating competitive waters.
“I think folks know, given all of the news over the past several months, that this is a Wild West space, and Yahoo is the safe place to be,” LaGuardia says. He frames Yahoo as distinct from DraftKings and FanDuel thanks to its reputation, experience, and size: “We have been a well-respected public company for a long time.” The question, moving forward, is whether the idea of daily-fantasy is still respected enough for new users to try it.
Disclaimer: Yahoo Sports launched its daily fantasy sports platform last year; Yahoo Finance shares a parent company with Yahoo Sports, but is not involved in its fantasy product.
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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.
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