After the Easter holiday break, team SBC’s Social Gaming editor Rasmus Sojmark caught up with iGaming industry expert Melissa Blau to discuss new venture FastFantasy which aims to transform the burgeoning US daily fantasy sports market by simplifying its play and game mechanisms.
Through iGaming Capital Blau has become one of igaming’s best renowned consultants, helping numerous new ventures enter and expand their services in the igaming market, Blau’s industry insight and analysis has been featured in several media and news publications including, iGaming Business, BBC News and Venture Beat. Blau discusses the current state of the US daily fantasy sports market and how igaming operational competencies can be potentially transferred to this fast growing sector.
SBC: Hi Melissa can you breakdown FastFantasy products to SBC readers, what new angle and player services does your team wish to bring to the Fantasy Sports Market?
Melissa: There is a lot of excitement in the US when it comes to fantasy sports. With real-money play permitted under federal law, many feel that fantasy sports could be an excellent alternative to traditional fixed-odds sports betting. The early leaders, though, haven’t yet been remotely close to profitability, despite having overwhelming market share (FanDuel & DraftKings combined account for >90% of the US daily fantasy sports market).
We believe that FastFantasy games will have a broader appeal than the current leaders and potentially show better margins, because we’ve paired fantasy sports down to its simplest form, and give players significantly higher opportunities to win when compared to the current fantasy sites. Rather than take hours to manage & select a team to then compete against thousands of fantasy players, only to see the overwhelming majority of prize money go to a small handful of sharks – no one’s idea of fun, right? We believe that everyone will have the same opportunity to win with FastFantasy.
SBC: Many of our readers will know you from your consulting work with new ventures in the igaming market, what has attracted you to expand your knowledge, competencies and insight into the fantasy sports market?
Melissa:The decision to focus on Fantasy Sports for several reasons. While I have worked in the iGaming sector for over 12 years, initially in Europe and the UK, I am now mainly focused on regulated US iGaming. My initial foray into iGaming started with casino, poker and bingo, followed by sports and then live dealer. I have been looking for a new platform that is focused on the US for some time. Initially I focused on a suite of alternative means of entry combining an array of models for poker, casino, bingo and sports, trying to emulate a UK/European style sports book, yet using only legal means of entry. Unfortunately, I was side tracked by my consulting business which required all of my time. When I spoke to Joe about his game format for Fast Fantasy, a light bulb that went off in my mind. He created a skill-based game using traditional fantasy scores that simplified the player experience, while still maintaining the skill element.
Fantasy, and especially daily fantasy sports is a rake based model. Similar to poker, it requires sufficient liquidity in order to effectively compete and it is extremely difficult to uproot the incumbents who have the power to always offer greater guarantees on more markets. It is also peer to peer which is subject to Fish-Shark model. This model is similar to what has been witnessed in online poker, whereby we see a playing format that does not accommodate all players participating, since the majority of winning players are from a small pool.
I also equate the early days of daily fantasy sports to Betfair’s exchange wagering model vis-à-vis the bookmakers. Betfair, despite offering better odds and a more social experience never amounted to more than 5% of the sports betting sector. Again, a small number of people were creating the liquidity and winning a disproportionate amount on the network. Bookmakers, on the other hand, are able to better control the win/loss acting as a house. When the bookie wins too much, they have the ability to alter that the following week with more generous odds that are carefully managed, or through a promotion. What’s important is that they work towards a targets win percentage over time, creating an interaction with the player so the player comes back. Peer-to-peer games don’t do that.
With DFS, the first games started out as peer-to-peer but the sector is ripe for another game format.
Some people say that rake based games are legal in fantasy and that housed-banked games are ‘pushing the envelope’. I don’t see they logic. Here in Europe, both rake and house-banked games are treated the same. The test is not around the game format (rake versus house) but rather making sure this is a skill based game. I have seen a lot of great new ideas, but this one for me really was the one I thought really was different. There are a lot of land based casinos looking closely at the sector, and this format is the only format that would work for them for a number of reasons.
SBC: FastFantasy will be targeting a market with two established leaders (FanDuel & DraftKings) who have gained high visibility partnerships with sports franchises and media partners. What will be your team’s approach to marketing and growing your product?
Melissa: We think it would be a mistake to start down the same path that FD & DK are on right now. They are spending tens of millions of dollars, as fast as they can raise it from investors, on advertising in tradition media – TV, radio, print, sponsorships and outdoor. Because of the relationships our team has grown in more than a decade in online & sports gaming, from operators to affiliates, we believe that we can leverage those in to rapid, healthy and profitable organic growth. We have partners reaching out to us to be their platform, both in the US and internationally. We believe that will translate into meaningful value and growth, over a huge wealth transfer from investors straight to advertising and media-buying firms.
SBC: Operationally can any learnings and insight from the igaming market be transferred to the Fantasy Sports products or is it better for development to be independent?
Melissa: Yes, absolutely. iGaming has been battle-tested on a daily basis for more than 15 years, and it provides our team and our platform with a solid foundation for entering the fantasy sports market. But we also believe that the innovations we are bringing will raise the bar for the industry. We’re very confident that we will disrupt this market and then use that disruption to our advantage.
SBC: Is Fantasy Sports the social mechanism that the online sports industry has been waiting for?
Melissa: Twitter dominates the sports social media space. We do plan on integrating some Twitter content and functionality. Fantasy is “social” to the extent that it peels back the bookmaker facade and reveals that it is individuals bringing the liquidity into the market, but it’s as social – more or less- as poker in that regard. There are established, dominant pathways for “social” in the online world, and it may be more fruitful to integrate them rather that recreate or differentiate.
SBC: Finally In terms of market progression and player development, how do you see the fantasy sports market developing? What new consumer demands and expectations will operators have to prepare for?
Melissa: The two issues the industry need to solve in order to achieve breakout success is, 1) reducing the time investment that players must make in order to participate; and 2) create more winners!
On the time factor, research has demonstrated that the number one reason people either stop playing or never even try playing fantasy sports is the amount of time needed to play a game. We would argue that if anything, FanDuel and DraftKings have exacerbated the problem rather than bringing a solution. However, we are very confident that we have a solution, and that we will thus be able to attract and retain players from a broader segment than the current leaders.
Regarding the number of winners, it’s clear that daily fantasy sports are starting to suffer from the same effects that online poker did when sharp players began gobbling up all of the prize money, causing an accelerating percentage of casual players to churn off of the sites and not return. Again, we feel very confident that we have the solution, and that it will make it much more fun and lead to greater retention and organic growth. Just watch and see!
Melissa Blau – Senior Management Team FastFantasy