[toc]Starting a daily fantasy sports site with real money entries in the current environment in the United States would certainly be a challenging — and perhaps unwise — endeavor. With the legal landscape in New York and beyond, and the uncertain regulatory schemes being considered in a variety of jurisdictions, it could be exceedingly difficult for a DFS start-up to gain any traction.
So theScore — a company that provide sports news, scores and stats via a mobile platform — decided to dip its toe in the proverbial DFS water, by taking the entry fees out of the equation. Earlier this month, it launched QuickDraft, a mobile-first DFS platform that is free to play, but still has cash prizes.
“QuickDraft is really a natural extension of what we do here on a day-to-day basis, which is just providing great mobile experiences for sports fans,” Benjie Levy, president and COO of theScore, said in an interview with Legal Sports Report before its launch.
The move comes after theScore acquired the fantasy platform Swoopt late in 2014. QuickDraft is available on iOS (no Android, yet), and via a mobile-optimized website.
QuickDraft and theScore: The basics
QuickDraft isn’t reinventing the wheel with its DFS product; anyone familiar with fantasy sports and its daily variant could pick up the game quickly. Right now there are just NFL contests, with NBA and NHL offerings planned, and Major League Baseball coming next season.
For the NFL games, users pick five fantasy players and compete against others in public or private contests.
Ever since the acquisition of Swoopt, theScore has been working on reengineering the app to work more closely with theScore, which boasts 10.5 million monthly active users, according to Levy.
“As we continued to look at the space, and look at opportunities that came up to leverage our infrastructure of sports fans, it became clear to us that there were DFS opportunities that were out there that made sense,” Levy said. “We really saw an interesting, mobile-first, differentiated approach to the DFS market that was more casual in nature, and resonated more with our users who were more traditional fantasy players.”
Free-to-play DFS contests
The big difference between QuickDraft and nearly every other DFS site out there is that every contest is essentially a freeroll. No money is needed to enter a contest, and cash prizes are awarded in public contests, which are guaranteed to run. Thousands of dollars are being handed out via QuickDraft.
That “no entry fee” model is not meant to be a long-term play, however; theScore originally planned to roll out its DFS offering for real money. But the landscape for DFS changed this fall — including New York’s attorney general issuing cease-and-desist orders to DraftKings and FanDuel for allegedly operating in violation of state gambling laws.
That news, and other issues surrounding the industry, led QuickDraft to launch its product without the headaches and uncertainty that comes with taking deposits and entry fees.
“We thought the free approach was the best approach to get this thing started,” Levy said. “We can focus on the product and our users, and not worry day to day about which attorney general is coming out with a new press release. We can move forward with positivity, and then we can build toward something when the environment ultimately settles a little bit.”
No worries about skill vs. chance
By taking out the “consideration” involving in playing QuickDraft’s games — i.e. money paid by users — it generally doesn’t have to worry about running afoul of gaming laws at the state level. Gambling is usually defined by a three-pronged test: if there is the aforementioned “consideration,” if there is a “prize” that can be won, and if there is “chance” involved in the game.
DFS sites base the legality of their real-money contests, in most jurisdictions, on being a game of skill. Because it does not offer its contests with real-money entry fees, QuickDraft accepts users from all 50 states. And that lets QuickDraft operate apart from the issues that most DFS sites are encountering in these uncertain times.
Of course, that means revenue isn’t being generated, at least not in the traditional sense in the DFS market. But theScore has other interesting things going for it, in the short- and long-term.
An all-in-one sports platform?
Many see integration of real sports and fantasy sports as the future of the DFS industry. That’s evidenced by DraftKings and its ad deal with ESPN, which includes integration of fantasy content on both ESPN’s TV and online platforms. Yahoo, another sports media giant, launched its own DFS product earlier this year.
Existing DFS platforms, especially DraftKings and FanDuel, have ramped up efforts over the past year to create their own content that brings users to their sites or apps, or helps to keep them more engaged.
TheScore will look to leverage its existing platform — which already includes the ability to personalize real-time news, scores, stats and alerts via its mobile platform — to create added engagement via DFS. All the information provided by theScore is perfect for a daily fantasy sports user, and QuickDraft should create even more engagement for the users of the core product.
Customer acquisition for QuickDraft
The ready access to sports fans via theScore also provides a lower barrier to customer acquisition for QuickDraft than other DFS operators have.
“It’s a very engaged audience, and we know a lot about our audience. Over half of them take the time to personalize their favorite teams and players,” Levy said, talking about users of theScore.
How easily those customers can be acquired and converted to QuickDraft is an open question, however.
Yahoo launched DFS this year — the online giant has access to tens of millions of sports fans and seasonlong fantasy players alike via its online sports news offering and fantasy app. It’s safe to say its offering has underwhelmed in year one; it has solidly held down the No. 3 position, but the amount of money flowing in and out of the platform has waned significantly throughout the NFL season. The money moving through Yahoo is tiny when compared to the scale of the company itself.
But theScore, like Yahoo, can experience gains via DFS aside from the bottom line of entry fees — or the lack thereof in QuickDraft’s case. Integration of a fantasy product can lead to more eyeballs on its sports and fantasy news, whether or not the DFS offering itself is directly profitable.
QuickDraft can also create more opportunities for advertisers to reach engaged sports fans and fantasy players, a way to monetize the platforms outside of entry fees.
eSports down the road?
The other intriguing part of theScore’s launch of DFS is the potential correlation with eSports.
The company also has an eSports app and provides news and alerts for games like League of Legends and Dota 2. Levy said he does not currently have any immediate plans to launch an eSports fantasy product, although that is a sector that quickly grew when Vulcun and AlphaDraft launched about a year ago.
It’s another intriguing bit of potential synergy that could benefit theScore, should it go that route.
For now, however, it’s clear theScore has the long game in mind. The company is proceeding cautiously in its foray into DFS, which could be the new normal after the rapid expansion of the DFS industry that occurred in recent years.