Oaktree - Inspiration from the World of Sports 5-15min

If everyone believes it’s a bargain, how can it not have been bought up by the crowd and had its price lifted to non-bargain status as a result? You and I know the things all investors find desirable are unlikely to represent good investment opportunities. But aren’t most bubbles driven by the belief that they do? ... Logically speaking, the bargains that everyone has come to believe in can’t still be bargains . . . but that doesn’t stop people from falling in love with them nevertheless. Yogi was right in indirectly highlighting the illogicality of “common knowledge.” As long as people’s reactions to things fail to be reasonable and measured, the spoils will go to those who are able to recognize this contradiction. ... Smart fantasy football participants understand that the goal isn’t to acquire the best players, or players with the lowest absolute price tags, but players whose “salaries” understate their merit – those who are underpriced relative to their potential and might amass more points in the next game than the cost to draft them reflects. Likewise, smart investors know the goal isn’t to find the best companies, or stocks with the lowest absolute dollar prices or p/e ratios, but the ones whose potential isn’t fully reflected in their price. In both of these competitive arenas, the prize goes to those who see value others miss. ... rather than judge a decision solely on the basis of the outcome, you have to consider (a) the quality of the process that led to the decision, (b) the a priori probability that the decision would work (which is very different from the question of whether it did work), (c) the other decisions that could have been made, (d) all of the events that reasonably could have unfolded, and thus (e) which of the decisions had the highest probability of success.

ESPN - Welcome to the Big Time 35min

At its peak last summer, a daily fantasy get-rich-now commercial aired every 90 seconds on television. Combined, industry leaders FanDuel and DraftKings plunged more than $750 million into TV commercials, radio spots, digital ads and other promotions. In the weeks leading up to the 2015 NFL season, the two startup companies spent more on advertising than the entire American beer industry. ... Daily fantasy's meteoric rise -- breathtaking for its breakneck speed, avalanche of investors' cash and ever-spiraling valuations -- spurred the two companies' endlessly annoying, record-shattering arms race for new customers and industry dominance. ... The two companies processed a combined $3 billion in player-entry fees in 2015. ... as quickly as it boomed, the industry bottomed. One year after their headiest moments, FanDuel and DraftKings are still not profitable. Both privately held companies' valuations have been sliced -- by more than half, according to some estimates. The companies have hemorrhaged tens of millions of dollars in legal and lobbying expenses. (DraftKings' attorneys fees once ran as high as $1 million per week.) And the fog bank of the industry's uncertain future has made it nearly impossible for either company to raise new money.

BuzzFeed - Game On 15min

Salerno is up against many things — startup costs, consumer whims, a complicated and inefficient regulatory apparatus — but most immediately, he’s up against FanDuel and DraftKings, behemoths that have dominated the industry for the past half-dozen years. You know them because you’re one of the millions of customers who assemble football or baseball lineups on their sites, hoping to score payouts worth hundreds or thousands, maybe even millions. ... Or perhaps you’ve followed the regulatory crackdown that, since last October, has driven the industry to the brink of extinction. Like Uber, Lyft, and Airbnb, other self-described disruptors that operated in legal gray zones and got in trouble, daily fantasy sports companies are now at a major moment of reckoning. ... Salerno thinks he’s come up with a daily fantasy game that does right by everyone. In his model, customers wager in a style that resembles horse-race betting, one already legal in most of the country. If Salerno is successful, he’ll have not only staked out profitable territory in the high-risk, legally ambiguous, crowded, and very, very lucrative world of daily fantasy sports, he’ll have invented a fairer — and, crucially, more legal — way to play the game, showing two of the world’s hottest startups that it pays to play by the rules. ... He was among the first operators to allow people to place bets over the phone. In 1984, he co-developed hardware and software that let patrons trade their betting slips for computer-generated tickets and cashiers instantly look up every bet and payout; the first-of-its-kind system became a virtual monopoly across Vegas when Nevada required all race and sports books to be computerized. In 2002, Salerno developed one of the first self-service kiosks where gamblers could place sports bets 24 hours a day.