The most successful entrepreneurs don't have crystal balls. They're just better at linking their visions of the future to concrete actions in the present.
In their 2015 book Strategy Rules, David B. Yoffie of Harvard Business School and Michael A. Cusumano of the MIT Sloan School of Management argue that this particular trait -- they call it the ability to "look forward and reason back" -- helped Bill Gates, Andy Grove, and Steve Jobs build three of the most extraordinary companies of the past 50 years.
So if you're concerned about how fantasy sports sites like DraftKings and FanDuel will fare as Congress investigates their legality, you'd be wise first to consider the long-term horizon of gambling as a legal activity. Fifty years from now, do you believe there will be more -- or fewer -- forums for legal gambling on sports?
If your answer is "more," you're probably a sports fan or a tracker of unicorn startups. You've seen that even with the potential risk of government intervention, both DraftKings and FanDuel boast billion-dollar valuations. You've also noticed that every major American sports league has endorsed fantasy sports in some form or fashion.
National Basketball Association commissioner Adam Silver has gone so far as to pen an op-ed piece in The New York Times supporting the legalization and regulation of all sports gambling, not just fantasy sports sites like DraftKings and FanDuel. "There is no solid data on the volume of illegal sports betting activity in the United States, but some estimate that nearly $400 billion is illegally wagered on sports each year," he writes.
Anyone with a healthy adult's level of follow-the-money skepticism can "look forward and reason back" to outcomes for that $400-billion sum (not to mention the billions of currently legal dollars already tied up in fantasy-sports wagering). It stands to reason that the leagues, the teams, and the government would sooner stick their fingers in that pie than leave it for others.
The television industry, deep-pocketed partners with the pro leagues, has also made no secret of its hunger to participate, notes the Times. FanDuel's investors include Comcast and NBC Sports. DraftKings' include Fox Sports. What's more, two of the NFL's most influential owners -- Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots -- are investors in DraftKings. And the NFL's Jacksonville Jaguars have a deep alliance with FanDuel: This season, the team opened FanDuelVille, a dedicated space at its stadium with room for 3,000 fans to watch games, monitor their fantasy football stats, and enjoy a few cocktails.
Given these fiscal realities -- not to mention the populist outcry that would come if the 57 million people in the U.S. and Canada participating in fantasy sports suddenly lost their pastime -- does it really seem likely Congress would confiscate the toy? "Most states offer lotteries. Over half of them have legal casinos. Three have approved some form of internet gambling, with others poised to follow," notes Silver. "There is an obvious appetite among sports fans for a safe and legal way to wager on professional sporting events."
If anything, the popularity of sites like FanDuel and DraftKings has compelled traditional casino operators to seek the same legality for traditional sports betting. "They both drive interest in the games and they both should be legal, and taxed and regulated," Joe Asher, chief executive of sports book William Hill's U.S. operations, tells the Associated Press.
Which is why it's probably safer to say that FanDuel and DraftKings will continue growing. In terms of business strategy, they've looked forward -- and seen a future where gambling on sports is not only legal, but endorsed by the leagues and TV industry. From this vantage, they've reasoned back to their concrete actions of the present day -- and wisely reached fiscal partnerships with those leagues and networks.
None of this is to suggest that FanDuel and DraftKings will have a cheap or easy time of it. Not every promising, valuable startup survives its legal challenges. Just last year, the Supreme Court hammered nails in Aereo's coffin. And not a day goes by, it seems, without Lyft or Uber enduring one government challenge or another. Sometimes, that's the price of innovation. Yesterday's illegal substances and frowned-upon hobbies are often tomorrow's perfectly legitimate business opportunities.