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Explainer: Why is fantasy gaming so hot, how does it really work, is Dream11 unique, and other questions answered

Whether it is a game of skill or a game of chance has long been debated. This question has reached the Supreme Court and the top court has suspended legal proceedings for now. It is legal in most states now. So, play and enjoy. If you’re lucky, you can get richer by Rs 1 cr.

October 14, 2020 / 09:27 AM IST

While fantasy sports has been around globally for over a decade, it is relatively new in India. More so this year, when Dream11, valued at $2.5 billion is the title sponsor for the Indian Premier League (IPL) cricket tournament. Fans, starved of cricket during the pandemic, are thronging apps like Dream 11, and companies are spending over a billion dollars in the next few months, anticipating record demand. But not much else is known about exactly how these startups work. We decode why are users crazy about them, is their business legal, and how it changes your outlook of your favourite sport.

What is fantasy sports?

Fantasy sports involves selecting the players who you think are going to perform the best in a match. It is a common practice globally for cricket, football, baseball, etc. From 22 players on the field (in cricket and football), you pick the 11 who you think will perform the best, and can win money based on how those players actually perform. So, for cricket, say, your players earn points based on how many runs they score, wickets they take, catches, and run-outs.

So you just pick players and win money?

It is a bit more than that. You are given certain credits (akin to money for buying players) and you can pick players within the boundaries of those say, 100 credits for 11 players. Different players are priced differently, so you can’t just pick all the top players. You also have to pick players from both teams (either 6-5 or 7-4 in an 11-member team).

To participate in the money-making “pools”, you also have to pay an entry fee (between Rs 15 and Rs 50 generally). To win the ultimate prize (of up to Rs 1 crore), not only do you have to pick the perfect 11, but also the perfect captain and vice-captain (or triple captain on some apps), who gives you 2x and 1.5x points of what other players give you. So, to really win the top prize, you not only have to pick the best 11, but also the best two players on that day. Chances of winning the top prize is infinitesimal because to get more points than others, you have to have a ‘differential’, a player whom no one would generally expect to do brilliantly, but you captained him/her.

How many fantasy sports apps are there? Is Dream11 any different?

Too many to list. In India alone, there are at least 40 apps, including My11Circle, HalaPlay and Paytm First Games. They all do pretty much the same thing of picking players with certain credits, having captains, and payouts, etc. In this sense, Dream11 is not different.

However, Dream11’s differentiator is its scale. If the objective of fantasy sports is to win money, you need big pools. And big pools need a lot of players. So, although product-wise, all apps do largely the same thing, Dream11 had 50 million users last year, and $2 billion in transactions on its platform (about $150 million in revenue for Dream11), much more than competitors. This year, those numbers are likely to be even bigger, making it unique.

Sounds like it is a matter of luck

Well, that has been the argument. Whether fantasy sports is a game of skill or a game of chance has long been debated by investors, analysts and lawyers. Most states in India consider it legal so far. However, it cannot be played in some states such as Andhra Pradesh, Assam, Odisha, Telangana, Nagaland and Sikkim.

The Bombay High Court, in a 2019 order, declared it a game of skill. This was challenged in the Supreme Court by Gurdeep Singh Sachar, who had filed a Public Interest Litigation to initiate criminal proceedings, saying it constitutes gambling. However. the Supreme Court has passed a stay order, suspending legal proceedings for now.

Also, while luck could play some part, it is unlikely that anyone who doesn’t play a sport will pick 11 random players on his whim and win money. Fans who track the game, players, and their records closely pick them based on prior performance, and sometimes, instinct.

Is it mandatory to play with money?

No. These apps have a free or practice mode as well, where you can pick players and track their performance, and compete with your friends in groups, without money.

Why is it so popular?

Fantasy sports tests the knowledge of passionate fans, many of whom anyway spend a lot of time reading about these games, players and analysing them. This gives some outlet to all that information. It also fosters competition with millions of others, and as you bring in more friends to play with, it creates some vitality. Winning money, even a small amount, also has its own thrill, something all these apps rely on.

Out of say, 40 lakh people playing in one pool of a match, only 5-10 will really win big money - Rs 1 lakh or more. But 50-60 percent of players win something -- even if it is just what they have paid (a zero-sum game then). But even winning that small sum keeps users going.

What is a pool? And how are these winnings distributed?

A pool is a group of people who have pooled in money to compete in a game. For example, 40 lakh people have put in Rs 10 each. So, from a total pool of Rs 4 crore, Rs 1 crore goes to the winner, Rs 50 lakh to the runner-up and so on. Lower the rank, smaller the payout, with, say ranks from Rs 25 lakh to Rs 30 lakh winning Rs 50 each (which is what they paid to play anyway).

Does playing this change how you watch the game?

It does. Most fans watch a game supporting a team -- India, Australia, Mumbai Indians, etc. But when you have a fantasy team, you are backing players much more than teams. So, even if your favourite team is playing well, you sometimes end up rooting for them to lose, because you want someone on your fantasy team, who is in the opposition, to do well. Opposite to traditional sport-watching, fantasy sports has very little team loyalty.

Can’t a company just have large pools using its own money, or investor money?
Generally, that’s not how it works. The fantasy sports business is globally very profitable because of its low-cost base, and while many users pay to play, payouts are obviously fewer. If a company decides to fund pools using its own, or investor money -- venture capital dollars -- how long is it sustainable? Investors say companies cannot spend million dollars a game every day in the hope users will turn up someday.

M. Sriram
M. Sriram
first published: Oct 14, 2020 09:27 am