[toc]A company borne of the first law to regulate fantasy sports in the US has expanded to bring fantasy kiosks to seven states.
How did Eaglestrike go from idea to a widespread paid-entry fantasy option?
The backstory on Virginia and fantasy sports laws
In March 2016, Virginia became the first state to expressly legalize and regulate daily fantasy sports.
The Fantasy Contests Act laid out the legal and financial framework for DFS as a regulated business. It also mandated a $50,000 licensing fee for operators, a number that raised a few eyebrows across the industry. Some even opted to leave the state (or abandon plans to serve it) rather than pay up.
Six months later, Virginia began issuing the first temporary permits to DFS applicants. There were just four names on the initial list, including one no one had heard of: Eaglestrike.
A surprise among Virginia’s first four
FanDuel and DraftKings were, of course, on the front line. The “big two” of DFS were willing to get legal clarity at almost any cost. Fifty grand was barely enough to notice.
Second-tier operator FantasyDraft joined the early group from its base in North Carolina, too. It likely had to dig a little deeper to come up with the application fee, but the software and the team were pretty well established by that point. The move seemed to signal that FantasyDraft considered itself to be a serious player in the space.
And then there was Eaglestrike, a then-unknown startup that was not offering any contests at all. It didn’t even have a product. According to its application, the Williamsburg company planned to bring “touchscreen fantasy terminals” to brick-and-mortar establishments.
In-person DFS is nothing new
Recognizing a need to make their product more social, major DFS operators have long courted the concept of in-person contests.
FanDuel held the first live Championship event way back in 2010 with a $25,000 top prize. Nowadays, live finals are held for every major sport, with seven-figure prizes regularly awarded.
Potential new customers could be tempted with the promise of live action, too.
In 2005, DraftKings inked a major deal to bring a fantasy sports lounge to Madison Square Garden in New York. It was the start of an expensive trend of huge partnerships with premier sports venues.
Eaglestrike breaks the DFS mold
Eaglestrike’s model of hosting contests entirely in person is something new for DFS, though.
Users still draft players and enter lineups into contests, earning points based on the athletes’ real-world performance. But that’s where the similarities end.
Rather than compete against faceless online avatars, Eaglestrike hosts live contests at bars, taverns and community centers. The contests are held on custom terminals running propriety software.
Property owners can have a machine installed at no cost to them, and the establishment receives a share of the revenue. For Eaglestrike, it’s a lot cheaper than renting out a corner of Madison Square Garden.
Contests follow a format closer to what’s known as “pick ’em” in the industry, a lightweight draft method free from salary cap restraints. Eaglestrike currently offers week-long “Select 8” and nightly “Select 3” contests for NFL, for example.
A year into operation, Eaglestrike’s vision is starting to become clear.
How it works
While it’s a new format for DFS, consumers of other bar games will feel right at home with the process. Here’s how it works:
- Create an account or login at the terminal
- Choose from five sports (MLB, NBA, NFL, NASCAR, golf)
- Select a contest
- Draft players to fill your lineup
- Collect lineup card from terminal printer
- Order some wings and sweat the leaderboard while you watch the games
Users compete against other users from across Eaglestrike’s network of machines. Local and global contest standings are displayed in real-time on a dedicated TV inside the establishment.
Winnings are deposited directly into users’ accounts, and payouts smaller than $250 can be redeemed in cash on site. Anything larger than that is sent via check from Eaglestrike.
Users have to be at least 18 years old (21 in Massachusetts), and staff members are required to check ID before issuing a payout.
Expansion underscores early success
Sept. 8 marked the one-year anniversary of Eaglestrike’s first terminal installations in Virginia. Two contests were available for the 2016 NFL season opener, with 140 users competing across six machines.
One season later, that footprint has expanded in a noticeable way. Although it declined to give specific numbers, Eaglestrike says it now operates several hundred terminals and serves thousands of users in seven states:
According to Eaglestrike, it has taken on “significant investment” as it broadens its operation, too.
The first machines in Minnesota and Colorado were turned on just days ago, and future expansion is always in the works. The team of founders has grown to a small team of about 15 people, with machine production still presenting the primary bottleneck.
Through its first year of contests, Eaglestrike paid out nearly $250,000 in total prizes.
The appeal of casual DFS
Eaglestrike is starting to make some noise in the marketplace by charting a new path. The ground-up focus on the casual player inherently skirts some of the traditional complaints about hardcore DFS, too.
Adam Flore, a consultant to Eaglestrike, expounded on the big differentiators, in talking with Legal Sports Report:
Comparing it to ANY other traditional DFS operator would be an apples to oranges. The model is so fundamentally different. There will never be ESFS players whom submit thousands or even hundreds of dollars worth of entries per week.
Eaglestrike gives the everyday fan that goes to their favorite bar or fraternal club to watch sports another outlet to enhance their overall experience in that location. They know that the only other players who submit entries drink yellow beer, yell at the TV, and just like sports.
No one is sitting behind a computer writing algorithms, scripts, or getting rich.
Since the contests operate on its own software, Eaglestrike users do not script dozens of lineups and invest significant money each week. In fact, all contests carry a five-entry maximum, and $10 is the largest entry fee to date.
The pick’em format appeals to the casual fan and expedites the entry process, too. And deeper payout structures keep more of the user pool funded. The software also includes a self-exclude feature on par with other DFS operators.
Eaglestrike is to DFS as bar trivia is to Jeopardy. The ingredients are mostly the same, but the recipe is entirely new. It’s a lighter, more social version of the game, and it lives right between the jukebox and the Golden Tee machine at your friendly neighborhood tavern.
Virginia Online Fantasy Sports dabbles, too
While Eaglestrike is still the only provider with physical DFS terminals, it’s not the only one trying to bring the game into the bar.
Virginia Online Fantasy Sports is one of the newer licensees in the state, and it’s pulling up a stool, too. The company was founded by a pair of Richmond restauranteurs with the express goal of bringing DFS players to their local spot, Pop’s Bar & Grill.
VA Fantasy Sports runs $10 and $25 pick’em contests across four sports, including the English Premier League. Although the contests are run online, the partnership with Pop’s aims to provide the “ultimate fantasy sports experience” for VA Fantasy Sports users.
“If you’re going to play golf, you go to a golf course,” Director of Operations Mike Byrne told the Richmond Times-Dispatch. “If you want to do fantasy gaming, you come to Pop’s Bar and Grill.”
The cross-promotion will likely expand to more brick-and-mortar establishments in the future, and the slogan “Made by Virginians for Virginians” should help reinforce the local motif. Its contests are only open to players in Virginia.
EagleStrike is eying up a potential market that is much larger, though. “How many sports bars are there in the US?” Flore asked before answering his own question. “A lot.”
Small operators part of a healthy DFS community
The success of Eaglestrike and the ambitions of Virginia Online Fantasy Sports are good signs for the health of DFS in Virginia. It hasn’t been an easy road, though.
The Fantasy Sports Trade Association did support the passage of the bill, but it voiced the loudest concerns over the “onerous” application fee. It had hoped for something more like $5,000. The goal was also to make the market approachable for paid-entry seasonlong fantasy.
That was probably too far on the other extreme, but the fear was that large operators would establish an early stranglehold on the Virginia marketplace.
That certainly looked to be the case, with DraftKings and FanDuel at the front of the line for permits. The additions of FantasyDraft and Eaglestrike were welcomed sights.
In the year since, four more seats have been added at the table. The full list of fantasy contest operators registered in Virginia now stands at eight:
- Virginia Online Fantasy Sports
- William Hill
Things still shaking out in Virginia, elsewhere
The competition is certainly healthy for the marketplace. DraftKings and FanDuel may even welcome the fight.
Earlier this year, federal officials blocked a proposed merger between the two, claiming that a combined DFS entity would control more than 90 percent of the US market. As the space fills out with more providers, though, that supposed figure should begin to shrink.
Innovators like Eaglestrike are targeting an entirely new market, too — one that has been hard for the large operators to access. For some of the reasons Flore alluded to, DraftKings and FanDuel can be intimidating places for casual users to play. The platforms are tailored to more serious users who crave higher-stakes action.
Products like Eaglestrike will be the first DFS experiences for a large number of people over the coming years, though.
And it seems logical that tavern fantasy sports could create a natural stepping stone to more serious play, too. Conversations with Flore are littered with stories of husbands and wives playing together and elderly winners creating their first e-mail account to play.
Regardless of how it shakes out, Virginia is providing the first case study in fostering DFS growth at the legislative level. And so far, at least, local companies appear to be among the big beneficiaries.
Brave startups like Eaglestrike share some of the credit for that, too.