Daily fantasy sports operator Fantasy Aces is now less than a month from completing a reverse takeover of the publicly traded company and DFS site DraftTeam, and will attempt to parlay the business move into a more secure spot in the tier of DFS sites behind industry leaders DraftKings and FanDuel.
The latest with Fantasy Aces
The potential merger of the California-based Fantasy Aces and DraftTeam, which is listed on the Canadian-based TSX Venture Exchange, was first announced in June.
The transaction needs the approval of DraftTeam’s shareholders, and it is expected that will take place at a meeting on September 17.
As we already knew, Fantasy Aces will lead the resulting company. “The current Fantasy Aces executives and employees will serve as the sole operators of the new entity,” according to an annoucement that detailed the latest on the deal.
Also of note is the addition of a former major executive from Electronic Arts to the anticipated board of directors of the new company. More from the announcement:
Mr. Tom Cipolla has over 25 years’ experience in the digital gaming industry. The majority of his experience relates to his position as Senior Vice President and General Manager of Electronic Arts’ $2B North American Sales Division. During his time there, Mr. Cipolla’s responsibilities included package and digital sales, trade marketing, operations, category management, demand planning and strategic planning.
In another recent release, we got some insight into some of the metrics behind Fantasy Aces:
As of July 31, 2015 FA has grown its membership base in the last twelve months by over 400% while increasing its prize payouts to over USD$6.2MM, which corresponds to an increase in Management Fees to over USD $600,000. Additionally, FA game entries increased 800% during the period. With the completed merger and subsequent financing FA is poised for continued dramatic growth in all measurement categories.
Why did Fantasy Aces want to become a public company?
According to co-founder Trent Frisina, the decision by Fantasy Aces to acquire DraftTeam was a practical one.
“The main thing that was appealing to us was to be public instantly and get access to capital in public markets,” Frisina said. “Compared to going through private equity in the U.S. it was a major hurdle and frustration going that route.
“It seemed like the Canadian markets had a massive appetite for gaming and especially for daily fantasy,” Frisina continued. “DraftTeam was already a public entity. We didn’t have to try to do an IPO and go public. Basically, this makes us public right away and gives us access to that capital right away.”
That idea is backed up by Fantasy Feud, which was acquired in a business combination and is now a part of the publicly traded Gaming Nation, which also trades in Canada.
What’s next, once the deal is done?
Frisina said Fantasy Aces has a lot of plans that it’s already working on, in advance of the deal being completed.
“We’re going to focus on making our product a lot better,” Frisina said. “We’re doing a mobile application right now, for iOS. The goal is to have it done by mid-NFL season. We’re just trying to just scale and to acquire users, and get Fantasy Aces out there in front of as many eyeballs as possible.”
Frisina said Fantasy Aces does not have plans to massively expand its staff — staying “lean and mean,” as he termed it.
Fantasy Aces also said its weekly prize payouts this fall will range from $700,000 to $1.1 million.
Still focusing on live finals, moving into other sports
Fantasy Aces’ calling card has been its live finals. It’s coming off a successful $250,000 World Baseball Championship at Angels Stadium in Anaheim, Calif., where participants got to take batting practice in a “home run derby,” among other insider access at the park. “It went exactly the way we wanted it,” Frisina said.
The live finals will continue in a bigger fashion, with a $500,000 live final based on NFL, which will take place in Las Vegas at the Palms. Fantasy Aces is also ramping up its college football offerings, which includes the $100,000 Fantasy Aces College Football Championship live final in Newport Beach, Calif., in November.
All of that comes on the heels of Fantasy Aces launching a golf product this summer, with $10K guaranteed contests around the major championships. And while Frisina did not say a live final for golf was planned, he wouldn’t rule out the possibility for 2016.
Can Fantasy Aces be No. 3?
When we examined the state of the DFS industry this past spring, LSR put Fantasy Aces in the mix as the No. 3 operator.
Since that time, however, a lot has happened. FanDuel and DraftKings closed two huge rounds of funding. Yahoo and CBS entered the market. And Victiv was purchased by Amaya/PokerStars and is set to be rebranded as StarsDraft. Fantasy Feud is also planning on making a big push this fall, including a $1 million NFL final.
Today, who is No. 3 in the market continues to be a moving target, according to LSR’s site standings.
How FantasyAces leverages its new status as a public company will likely be key in carving out marketshare moving forward. FA is popular with players — along with Victiv, it was one of the favorite sites of players according to a recent survey by Eilers Research.
“That gives us more edification that we are there, but being at this stage, we wanted to be leaps and bounds above other sites, and that’s where we hope to go,” Frisina said.
Can Fantasy Aces use its popularity with players — and public capital — to hold onto its marketshare, or grow it? We’ll have to wait for the NFL season to see.
Correction: An earlier version of this story said Fantasy Aces would award $400,000 in prizes weekly for the rest of the year; that figure only represented NFL contests.