Fantasy Sports

Fantasy sports technology provides the platforms, data analytics, and engagement infrastructure that enables millions of users to build virtual teams of real athletes and compete based on actual sports performance, generating revenue through entry fees, advertising, and the growing convergence with legalized sports betting. The fantasy sports market reached $31.6-37.3 billion in 2025 and is projected to grow to $80.3 billion by 2031 at 13.7% CAGR, with daily fantasy sports (DFS) growing fastest at 17.6% CAGR. 84 million adults in the U.S. and Canada participated in fantasy sports or sports betting in 2025, up from 81 million in 2024. Mobile applications account for 76.7% of usage and grow at 14.1% CAGR.

The competitive landscape is dominated by two publicly traded platforms with combined revenue exceeding $10 billion. FanDuel generated $5.79 billion in 2024 revenue with 4.5 million users and over 40% U.S. sports betting market share. DraftKings generated $4.7 billion in 2024 revenue (30% growth) and guides $6.5-6.9 billion for 2026, with 4.8 million monthly active users and ARPU growing 43% year-over-year to $139 in Q4 2025. DraftKings finalized a $750 million acquisition of Jackpocket in October 2025, expanding into lottery. PrizePicks serves 45 states with pick'em contests covering 25 sports. Underdog Fantasy offers pick'em, best ball, and traditional draft formats across 40 states, though it laid off 100+ employees while pivoting toward prediction markets.

The contest format landscape has shifted dramatically from traditional salary-cap DFS toward simpler pick'em and prop-style contests. Players predict whether an athlete's statistics will go over or under a projected line, a format that's beginner-friendly and fast to play. PrizePicks and Underdog Fantasy popularized this format, which has grown faster than traditional DFS. However, the regulatory landscape is tightening: California's Attorney General issued an opinion in July 2025 that DFS (both draft-style and pick'em) violates state law, and New York explicitly banned prop-style DFS in finalized 2023 regulations. Five states (Hawaii, Idaho, Montana, Nevada, Washington) restrict DFS entirely.

AI is becoming foundational infrastructure for fantasy sports platforms. The NFL launched a Fantasy AI Assistant powered by AWS, and IBM and ESPN maintain a 9-year collaboration using IBM watsonx and IBM Granite models. AI predictive models account for weather, rest days, travel schedules, and matchup data to optimize lineup recommendations. The global sports analytics market is projected to reach $4.5 billion. Fantasy sports is increasingly functioning as a gateway to sports betting: 74% of fantasy players expect to engage in sports betting once legally available in their jurisdiction.

For founders, fantasy sports technology in 2026 rewards companies that serve the data and analytics infrastructure rather than competing as platforms against FanDuel and DraftKings. The most fundable approaches provide real-time sports data APIs and analytics, AI-powered lineup optimization and prediction tools, fantasy-to-betting crossover technology, engagement and gamification infrastructure that any sports media company can embed, and the regulatory compliance technology needed as states evolve their DFS and betting frameworks.