Fantasy sports has been around for decades, but it wasn’t until FanDuel took the traditional format and turned it on end that the pastime really took off. This is the story of FanDuel: the company, the product, and where it’s headed.
Come Again…Fantasy Sports???
To understand what FanDuel represents, you first have to look back at what Fantasy Sports were before this company came along. It begins with real life football, baseball, basketball, hockey or soccer professional league players. Depending on your interest in sports, you may or my not know that each player has lifetime stats based on past performance. These stats are actual facts: home runs, touchdowns, percentages of winning games, ad infinitum.
These stats can be plugged into highly complex algorithms to come up with predictors of future performance. That’s how the real life sports teams they play on get made. Managers weigh the odds of hiring any given player, then make their bids and see what sort of team they come up with.
For fans who think they can assemble better teams, there’s Fantasy Sports. Players pick and choose to assemble what they believe to be the “winningest” team. Then, after registering their team with a Fantasy Sports platform like FanDuel, place bets against other fantasy teams and see how their picks do.
Fantasy teams are assessed according to how well the players do in real life. If one of your picks suffers a broken leg in real life, there goes his team and there goes your fantasy team as well.
At the end of the season, fantasy sports team pickers whose teams did well get money. It’s a legal form of sports betting, made possible by a 2006 loophole in legislation targeting online gambling websites. The regulations leave wide open the possibility of fantasy sports leagues, which remain untouched by the internet gambling laws.
That’s because fantasy sports is not a game of luck. Rather, it’s a game of skill necessitating knowledge about each player to assemble the best team.
How FanDuel Changed Fantasy Sports
FanDuel [located at FanDuel.com]took the fantasy sports experience and made it a daily experience rather than a once-a-season bet. They injected immediate gratification, excitement, and daily fixes into the scene, causing a tidal wave of interest and millions of new players.
Now, there’s no need for season-long commitment. Players can also edit their lineup choices anytime before the game starts, and payout is daily. You can see why this really took off.
The Company & Founders
Nigel Eccles is the CEO and co-founder of FanDuel. There are actually a total of five co-founders, but Eccles is the leader. His background includes a stint at McKinsey & Company, management consultant company spanning the globe with over 10,000 consultants and researchers. It’s safe to say this Eccles guy knows what he’s talking about when it comes to running a successful business.
Another co-founder, Chris Stafford, worked at Bank of Scotland before starting FanDuel. Christian Genetski, the CLO (legal officer), can claim federal prosecutor experience and big-time law firm partnership as well.
Their CTO (technology) was formerly the CTO at Play.com as well as Chemist Direct. Like the CEO, the CFO hails from McKinsey.
In fact, every single one of the executive team at FanDuel has a killer resume – these are the best and the brightest. That’s because these are the big leagues of business: this is no fly-by-night operation run out someone’s spare bedroom.
FanDuel Beginnings, Success, and Market Domination
FanDuel has only been around since 2009, when it was launched at the 2009 SXSW Interactive Festival after being cooked up in the co-founder’s Texas backyard. Remember: until FanDuel was formed, fantasy sports was a season-long event, with payouts for winnings occurring only at the end of each sports season.
You just learned that what the FanDuel team did was take that experience and shorten the time frame. Now there were daily and weekly fantasy leagues, which mean faster action, less commitment, and more frequent payouts. Just what the betting type loves!
Indeed, on the FanDuel website it spells this out rather explicitly:
“A new way to play fantasy…where winners can taste victory on any given day. Not just once a year.”
-FanDuel Website, “About Us”
That did the trick as far as getting millions of sports betting fans hooked. From office leagues to bar-based teams and individual players at home, people found the format enticing, exciting, and completely, wonderfully addictive. FanDuel has experienced wild success since then and continues to do so.
New Funding and Expansion
FanDuel just acquired a new round of funding, to the tune of $275 million. According to the New York Times, the total investor amount is now $363 million and includes the likes of Google Capital, Time Warner, and NBC Sports Ventures. Bigtime alright.
The Times article states the capital is to be used for increasing FanDuel’s global footprint and to help snatch up market share. Who’s competing? DraftKings, another daily/weekly fantasy sports outfit is fast becoming the number two in this industry. That’s if Yahoo doesn’t get there first.
Fan Duel Competition
DraftKings is FanDuel’s main competitor. Launched in 2011, two years after FanDuel, they’re quickly beating out other second-tier competitors, all of whom are vying for the #2 position. Not yet profitable, Draft Kings has a long way to go. They’re valued at $1 billion, however, and have racked up some serious sponsors and partnerships along the way (like Major League Baseball and Fox Sports).
The second serious contender in the short-term fantasy league arena is Yahoo Fantasy Sports. Eccles, CEO of FanDuel, was quoted in the New York Time article mentioned earlier that it was only a matter of time before Yahoo got in the game.
Yahoo has some of the largest online fantasy sports communities but they play the old-school leagues which last an entire season. Now, however, Yahoo will also be getting into the daily and weekly leagues. That will give both FanDuel and DraftKings a run for their money.
Eccles also expects ESPN to enter the scene as well. He states that had either Yahoo or ESPN entered the daily and weekly sports fantasy marketplace just two short years ago, things might have been very different. FanDuel might not be where it is today, sitting at the top of the heap.
So why didn’t the big players offer daily and weekly leagues back then? Complexity, to give a short answer. The software that’s required to run the complex trading systems is highly technical and more difficult than most realize. The six-years that FanDuel has spent developing theirs gives then an enormous head start.
The FanDuel Affiliate Program
The affiliate program offers commissions for enrolling new players in FanDuel. You send enrollees via affiliate links on your own website, then get referral fees when they join and make a deposit into their account. Here’s what you can earn:
— If Net Revenue Generated Is Less Than $2000, You Get 25%
— If Net Revenue Generated Is $2001-$5000, You Get 30%
— If Net Revenue Generate Is Over $5000, You Get 35%
“Revenue generated” is the lifetime revenue generated from your referred member.
FanDuel is very hot right now: with national TV commercials, major sponsorships going active all the time, and possible bets as little as $1, it shouldn’t be that difficult to entice people to join. The affiliate commission is pretty good and the company is going strong, so no hesitations from this point of view!