SBC News Voice of the Sports Betting Industry
Sam Guigui is the COO at Draft Fantasy, a Premier League daily fantasy operator which was set up with partner Elie Steinbock, Founder and CEO, who spied a gap in the fantasy market.
We caught up with the pair of them to discuss regulation, why they think there’s space to compete and that the scene will keep evolving, Honolulu and marketing strategy.
SBC: What’s the origin story and how does Draft Fantasy differ from the big dogs of FanDuel and DraftKings?
Elie: About 3 years ago, as I was finishing my Computer Science degree, my next destination was the Israeli army. I had a few ideas for projects I wanted to work on before I left. One was a draft-style fantasy football game for the Premier League. For some reason, despite the fact that over 50 million Americans play draft-style fantasy sports, and that millions of English fans also love fantasy football, no such draft game existed for the Premier League.
I was able to build the core of the platform before enlisting, and as I worked as programmer developing tank software I continued to the develop the website as a side project. In our first full season the site had 15,000 signups with no money spent on marketing. Needless to say, I realised I had something with tremendous potential.
My roommate, Sam, was in school completing an International MBA and was gearing up to join the Israeli army whilst I had a year of service left. One night we went to an investment party and met our third partner, Tyler Swartz, who was advising start-ups after recently going through an exit with Wigo Inc. Although Sam and I were in the army, we decided to give Draft Fantasy Football our full attention to grow our user base and get funded.
We decided to expand our offerings to the US football league (MLS) and then a game for the 2016 European Championships. We partnered with 101GreatGoals for the Euros and saw tremendous growth before shifting our focus to the current Premier League season, which brought us to over 60,000 registered users. This recent success has been noticed by many including the Blue Startups accelerator in Honolulu, where we will be working for the next few months.
One of the biggest differences between our company and ‘the big dogs’ is that we are focused on the draft style of play. Even in the American markets where DraftKings and FanDuel started, they have always offered a salary-cap style game. We are the market leaders in draft for the Premier League and plan on building on our success in the draft space.
SBC: Will the legal crackdown across the US result in a regulated and more rewarding environment for DFS operators or will it mean smaller operators are forced to close up shop?
Sam: I think fantasy sports is still in its infancy as an industry in general. There is still tremendous room for the industry to grow, especially outside the US. There are many innovative ways to make fantasy sports more appealing to attract more users. On top of that, I believe that we have only seen the beginning of growth in the DFS world and regulation in the US and the UK may even serve to aid in the industry’s expansion.
The impact regulation has on the ability of smaller operators to succeed is a double edged sword. There are some important factors that lead me to believe that there is plenty of room for small operators. The first factor is that I think much more capital will enter the fantasy space because before regulation there was uncertainty surrounding DFS, whereas now things are clearer for investors across the globe. The second is the ability for companies to be innovative and develop a good product without the fear of being shut down. Fantasy sports fans want to play a fun game and feel safe placing their money with companies. The last major factor, and possibly the most important, is that whilst regulation may create a barrier to entry, it also standardises the process and clears blurred lines.
Furthermore, if we take a look at a places such as the UK where gaming is already regulated, we have seen many companies enter successfully. The major gaming companies are constantly looking for ways to improve. Coming from Tel Aviv, there are many startups that have taken on an abundance of issues facing the gaming sector across the world and taken on critical niche markets.
DFS is another up and coming area in gaming where small operators can improve and innovate to capture tremendous value, and I don’t see regulation being the death of developments in the DFS space, especially considering the hyper growth we have seen to date.
SBC: How much value is there in the European market and where does it lie? Some operators are focusing on a B2B proposition with bookmakers…
Sam: When considering that the US market is still expected to grow at a compound annual growth rate of 7.3%, I think the European market will be following in a big way.
In my mind football (soccer) and American football have a lot of similarities, which start from the character of the fans and their relationship with the sport and teams. American football has proven to be the perfect sport for fantasy, but the potential for football (soccer) to shatter the perception that it’s not on the same level will happen in the near future.
Football is the global sport and Europe is the beacon of football. I think the major value in European fantasy sports lies in making a culture of fantasy football like fantasy sports have become a culture in the US. For example, in the last few years US sports channels like ESPN, NBC Sports, NFL Network, and others have begun to report on fantasy and have used it as a way to describe the success or failures of players. From what I’ve seen, the European media has yet to do this in the same way, but it will come.
I think fantasy companies that want to capture value in the European market have to understand each market separately because Italians may not want what Scandinavians want and that starts with the leagues. The ability to expand into other European leagues is not just a matter of offering a game for them. Fantasy companies have to find ways to make the game fit what the users’ cultural preferences are and then tap into or even create the fantasy culture.
I think B2B has major potential in the DFS space but that it also comes with inherent issues. B2B allows companies to exploit their specific qualities and build products that will attract niche markets and could lower the barriers for entry by lowering costs and risk.
The downside with B2B from what I’ve seen is that companies that just produce fantasy websites without actually understanding the sports they build games for may not understand their customers. This can result in products that are not focused on the fans and their preferences based on each sport and culture.
SBC: How much space in the UK market specifically is there for DFS and what marketing strategy will you be employing? Are affiliates with an aptitude for modern marketing platforms the way to go?
Sam: To have a definitive answer on the UK market for DFS is very difficult, especially considering that even free-to-play fantasy football is behind American fantasy sports.
It actually amazes me that we at Draft Fantasy have the opportunity to be a leader by offering draft-style fantasy football. As an American when I realized that almost the entire fantasy football world was playing season long salary-cap style fantasy football, I couldn’t believe it.
When it comes to DFS, it is quite new in the UK and in most countries around the world. I think the money that FanDuel and DraftKings have been spending on marketing is actually educating the market for the rest of us. When other DFS operators enter the market and fans see that there are other ways of playing DFS, there will be a shift. DFS users will begin playing in multiple ways in order to see what they like the best. While one of the most difficult parts as a fantasy football operator is marketing and educating the market, we have had success by providing a product that users really want.
We at Draft Fantasy have been incredibly fortunate to have tremendous organic growth. Draft-style fantasy football encourages people to set up leagues and invite their friends because it makes fantasy football more competitive, more personal, and equals an overall improved experience. We plan to ride the organic growth that this gap has provided us as far as we can. Until now the market has chosen us, but we must continue to educate the market. We have also caught the attention of famous football names and brands, who now use and promote our platform. We will continue to build on these strategic influencers and work with them to build our brand and expand our reach.
Considering how big the affiliate world is for gaming, I assume it will be similar for fantasy sports. We can already see that affiliate marketing has its place in fantasy sports. We plan to use smart affiliates who are in the space and have built clever and creative corridors into our fantasy football platform. Just like most things with regard to the fantasy football market, I think affiliate marketing is still in its infancy. This provides major opportunities for those who are innovative and find ways to take advantage of the fantasy boom. They will be the best affiliates for us and other companies in the sector.
SBC: Ambitions for the remainder of 2016?
Sam: Thankfully, so far 2016 has been an incredible year for us. We have grown to triple our size in a matter of a few months, offered a game for the European Championships, built partnerships with global online football brands including 101GreatGoals, Football365, and TEAMTalk, and above all, have proven that we are poised to take on offering the best fantasy football platform.
For the remainder of the year, we will be working in the Blue Startups accelerator program in Honolulu to further develop our product. This includes launching our new app and other exciting games that will be rolled out in the next few months, growing our social media presence on Facebook, Twitter, and Instagram, and building on our already existing strategic partnerships. Having been behind the Tetris boom and many other gaming successes across the globe, we are very confident that Blue Startups will help us grow to a new level of success beyond what we previously were capable of.
We are also raising funds to grow our company from three people and 60,000 registered users. We will be meeting with investors from Tel Aviv, London, Honolulu, and Silicon Valley among other places.
If anyone is interested to learn more about Draft Fantasy and our plans for the future they can get in touch at [email protected].
