Coming off the Thanksgiving weekend of football action, it’s a good time to look at the future of online fantasy sports. Two tech companies, DraftKings and FanDuel, own the vast majority of the daily-game market, where people bet real money on the performance of athletes they choose for their “teams.”
But there’s still room in the market for another type of player. In particular, someone who can build a fantasy-sports game for mobile-first.
Take it from Jeremy Levine, an entrepreneur who has been working in the fantasy-sports business since 2009. Levine is the co-founder and CEO of StarStreet, a company that began in Boston as a kind of stock market of pro athletes and evolved into a daily fantasy sports site. The assets of that site were acquired by DraftKings in August (terms undisclosed), and Levine has since moved to New York.
Now he’s got a new game in the iOS app store. It’s called Draft, and it’s specifically designed to be played on smartphones. You pick a top player—say, Tom Brady in the NFL—and challenge a friend to do a fantasy draft on the spot. He or she downloads the app, picks two players, and bounces it back to you via push notification. Once each of you has made five picks, you get a message asking if you want to put $10 on it or play for free. Draft will take a cut of the proceeds. The company is starting out with football and plans to add basketball and baseball in the coming months.
“If we get this right, we’re expanding the base of fantasy players,” Levine says.
The idea is to lower the barrier to fantasy games—and make them even more addictive. As Levine sees it, there are 1 million people who play daily fantasy games, and about 40 million who play some form of season-long fantasy sports. DraftKings and FanDuel have very good mobile apps, he says, but those offerings are not really “mobile” games. What’s more, big guys like Yahoo and ESPN have been focused on mobile for the past few years, but “it’s out of fear,” he says.
Meanwhile, if someone can crack the code on mobile fantasy sports—following the model of turn-based games like Words With Friends or Draw Something—the payoff could be immense, Levine says. Draft’s target market, for instance, is “anyone who watched a football game this year,” he says.
It’s most interesting to hear Levine talk about lessons learned from StarStreet. When the company moved into daily fantasy games, it focused on creating “the best experience for hardcore players,” he says, rather than for the average consumer. But because of that, “it became a hard place to win money.”
“That was the worst decision I ever made,” he says.
Meanwhile, DraftKings and FanDuel went mass-market, raised tons of money, and might eventually rival the Las Vegas sports books in terms of action. They are certainly forming big content partnerships with professional sports leagues. “By this point next year, all the pro teams will be sponsored by those guys,” Levine says.
For now, Draft is a continuation of the StarStreet business. It’s backed by the latter’s previous investors, which include Techstars and Paul English of Kayak and Blade fame. Levine relishes the chance to become a big player in the fantasy sports market—and he hopes to deliver, even as he remembers StarStreet’s mistakes.
“We were the leanest of lean,” Levine says. “FanDuel and DraftKings had so much more money. We had four people. But that wasn’t the right thing to do. We should have raised, hired, and got out of the way.”
