Essays on evaluation of skill dominance, game design and online community of daily fantasy sports

Guide(s)

Kumar, U Dinesh

Department

Decision Sciences

Area

Decision Sciences

University

Indian Institute of Management Bangalore

Place

Bangalore

Publication Date

3-31-2023

Year Awarded

March 2023

Year Completed

March 2023

Year Registered

June 2018

Abstract

Daily Fantasy Sports (DFS), an emerging business, has observed tremendous growth across many countries. This business has gained attention from policymakers and the judiciary because of several legal cases relating to the format adopted by DFS platforms. As suggested by the judiciary and government think tanks such as NITI Aayog, there is a need to adopt statistical, data-driven approaches to address these problems. This thesis looks at three business problems related to this sector. The first problem concerns skill versus chance dominance in DFS platforms, i.e., whether contestants' performance in DFS contests is influenced more by their skill or by chance elements. Many countries use this criterion to draw a distinction between skill-dominant gaming activities (which are legal) and gambling activities (which are considered illegal in many countries). Chapter 3 of the thesis presents a robust, empirical approach to evaluating the effect of contestants’ skill and chance elements on their performance. Using a fixed effect stochastic frontier technique, we model contestants' skills and the random chances they face as two distinct error components determining their success in DFS contests. We distinguish the effect of a contestant's skill not only from chance elements but also from contestant-specific time-invariant factors such as their prior knowledge of the game. Utilizing panel data from cricket-based daily fantasy contests, we find that the effect of skill is significantly greater than that of chance, implying that contestants’ skills play a dominant role over chance in determining their success in DFS contests. We also observe that contestants’ performances in a contest depend on their past performances, choices of contests, and prior experiences. While Chapter 3 looks at assessing the effect of skill and chance in DFS setup, Chapter 4 of the thesis examines how we design a skill-dominant fantasy sports. Chapter 4 identifies parameters that affect the skill-chance balance of the game. It is often a problem for the DFS operators to ensure that the design of their gaming platform is skill-dominant by construct. We analytically show that a.) the number of athletes needed in a fantasy team, b.) the number of constraints imposed on team selection (in the case of individual sports and team sports), and c.) the number of available athletes for team creation influence the overall skill-chance balance of the game. This chapter also describes in detail the regulatory challenges faced by state governments and regulators. Based on insights from other countries that faced similar issues, a datadriven regulatory framework has been proposed that a.) classifies online games based on their nature of activities, b.) Lays separate guidelines addressing problems with each of these categories, c.) Draws a distinction between games of skill and games of chance quantitatively, d.) Lays guidelines for designing a skill-dominant game, and e.) Promotes responsible gaming and criminalizes deceptive advertising and fraudulent activities. In Chapter 5, we discuss how an emerging business like DFS can utilize social media information to interact with its users, comprehend users’ experiences, gain insights from user-generated content, achieve more visibility, and expand its online community. Since businesses often use social media platforms like Twitter, Facebook, etc., to engage with their users, announce developments, promote their products, etc., these platforms are considered a medium for the diffusion of social information. Building a larger online community helps firms to disseminate information to a larger audience, gain more visibility and increase their business value. However, research on how firms can grow and learn from their online community is limited. Using a text analytics approach, we quantify the effect of operator-initiated engagement (number of tweets posted by the operator’s official handle and users’ response to these tweets) and users’ perception of a DFS operator (reflected in user-generated content) and study their association with operator’s online community size. We find that the extent and quality of operator-initiated online engagement and users’ perception have a positive, significant effect on the operator’s online community size. However, the marginal effect of users’ perception of an operator is significantly greater than that of the operator-initiated engagement, thus indicating that users’ experiences send a much stronger signal than the official tweets posted by DFS operators in influencing users’ decision to join or quit the operator’s online community. The chapter also identifies the different user experiences using Latent Dirichlet Allocation (LDA) that have an impact on how users view the business generally and can be used by businesses to find areas that need improvement. The first two problems addressed in this thesis (Chapters 3 and 4) have direct implications for policymakers working on a regulatory framework for DFS and the online gaming sector in general. The third problem (Chapter 5) aids in understanding user experience and devising strategies to expand the online community. The thesis addresses contemporary issues, uses data-driven approaches to resolve them, and hopes to contribute towards evidence-based policymaking. It contributes to the literature on data-driven decision making, decisions under uncertainty, online community, and online engagement. We expect the thesis' conclusions will aid the DFS industry, the online gaming sector, regulators, and the judiciary in making data-driven decisions.

Pagination

xii, 125p.

Copyright

Indian Institute of Management Bangalore

Document Type

Dissertation

DAC Chairperson

Kumar, U Dinesh

DAC Members

Murthy, Rajluxmi V; Das, Tirthatanmoy

Type of Degree

Ph.D.

Relation

DIS-IIMB-FPM-P23-02

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