Yahoo Introduces Betting To Its Fantasy Sports

Faced with stagnant advertising revenue, Yahoo Inc. is hoping for a boost by joining a booming industry: fantasy sports betting.

Yahoo Inc. (NASDQ: YHOO), while facing a battle with stagnating ad revenues, is hoping to receive a shot in its earnings from one booming industry – fantasy sports betting. The Silicon Valley based search engine giant launched its Yahoo Sports Daily Fantasia service this week that has the potential to introduce millions of people in the legalized online gambling sport arena.

The service will be available initially through an app, which will allow users to compete either individually or in the form of groups by placing a bet based on the performance of the professional athlete. Yahoo is hoping to cash in on less than $3 billion in the form of entry fees, and is expected to grow at a rate of more than 40% annually to reach an estimated of less than $15 billion by 2020.

The question arises regarding the reason for tapping this market. According to Fantasy Sports Trade Assn, the amount of people playing fantasy sports for this year in progress is expected to total around less than 57 million till the end of this year. Sites, such as FanDuel and Draft Kings, have blossomed since the mid 2000’s, through a federal government act called the Unlawful Internet Gambling Enforcement Act. This law makes a distinction as game of skill rather than a chance, and that has made it possible to eventually legalize that in most states except in Louisiana, Arizona, Montana, Iowa, and Washington.

Ken Fuchs, Yahoo’s Vice President of Products, said that the move would give the company more mobile presence in the field of professional sports. It targets a demographic of early teens to late adults to create transactional revenues of 10% for each wager. Many eyebrows were raised when the company announced that it was awarded the NFL rights to broadcast the contest between the Buffalo Bills and Jacksonville Jaguars back in October last year, even that was held in London.

It must be noted that Yahoo already has a traditional sports fantasy service that has been around more than a decade, and users spent more than 500 million hours on it. The Sunnyvale tech giant is expected to plough in a $100 million investment to its service giant, the likes of Draftking and FanDuel.

Yahoo is currently fighting to boost advertising sales growth, but has been late to the party when it comes to adopting mobile technology that is only now catching up. This explains why they are starting the service on a mobile app initially.

Yahoo stock price ended the day at $37.61, a gain of more than 1%.