In the current heated environment of U.S. gambling ventures being merged and acquired, the daily fantasy sports space is a particular object of attention.
“Mimicking the structure of a true sportsbook, Rivals allows users to play 1-on-1 against StatHero (the House), unlike most DFS games requiring users to play within a larger group,” the company announced. “Moreover, this rollout gives users in states where betting isn’t legal the experience of a sportsbook.”
The latter sentence is a key — StatHero already is launched in 32 states, more than the total that offer legal Las Vegas-style sports betting.
The potential value there is enormous, because the three most populous states — California, Florida, and Texas — have yet to legalize sports betting but do allow daily fantasy sports.
Additionally, StatHero Founder and CEO Jason Jaramillo told US Bets that his games also operate in New York, the fourth-largest state, which has legal sports betting but only in relatively remote upstate commercial and tribal casinos. There is not yet any mobile sports betting component in the Empire State, although Gov. Andrew Cuomo has expressed some support for the idea after longstanding opposition.
Differentiating from DraftKings and from FanDuel
StatHero has a fair amount in common with Monkey Knife Fight — which recently was acquired by Bally’s — including an attraction to those who want to risk money on sporting events based on their own expertise but not take on the world-class “sharks” who feast on the vast majority of amateur DFS players.
Monkey Knife Fight’s approach is to appeal to the casual sports risk-taker who finds spending a couple of hours seeking an optimal fantasy lineup too time-consuming. So those players make the simplest of wagers, such as whether LeBron James will score more or fewer than a certain number of points in that night’s game.
Rivals players, however, enjoy the challenge of creating a lineup. What they do is check out a half-dozen or so salary-capped lineups made public in advance by StatHero, then create their own lineup. The customers then make their own decisions on how much money to risk, taking on “the house” and not other DFS players.
“There are a bunch of people out there aching to try something new, because the odds of winning [typical DFS tournaments] are so low,” Jaramillo said.
Jaramillo added that “in four weeks of testing, the game has grown 300% organically, showing a 90%-plus week-to-week retention rate, with users spending four times the industry average.”
More details on Rivals, and another DFS partnership
Stathero’s Rivals concept currently has live games for the NBA, PGA, and NHL. It also offered games during the recent NFL playoffs. The games are awaiting final approval from New Jersey, the mecca of the expansion of U.S. legal gambling options.
There is a 20% “hosting fee” for entrants — roughly double what a traditional sports bettor would face — which Jaramillo said is necessary due to the significant advantage that players have by knowing who their opponent — the house, in this case — has chosen as its lineup.
“If you compared it to a sportsbook, they are able to take on money equally on both sides and just take their cut — but we can’t do that,” said Jaramillo, who said a number of states beyond New Jersey also are weighing regulatory approval.
These new-breed DFS companies are becoming increasingly attractive in the wider sports gambling space.
The announcement of Bally’s acquisition of Monkey Knife Fight specifically touted the value in having an existing customer base in California, Florida, and Texas, and how that would allow Bally’s to have a head start on potential sports betting clients once those states finally “join in on the action.”
Last month, Caesars Entertainment announced “a strategic investment” in two-year-old SuperDraft, with an option in place to buy 100% of the company.
“The addition of daily fantasy sports fits seamlessly with our strategic vision for mobile and online sports,” Caesars CEO Tom Reeg said in a statement. “SuperDraft’s innovative multiplier game mode is unique in the marketplace, and we believe it offers a tremendous opportunity to strengthen our position in the sports gaming landscape.”
SuperDraft, like its rivals, is live in more than 30 states, and features a “multiplier mode” that “replaces the traditional fantasy team salary cap with a multiplier applied to each player — allowing maximum flexibility in team building while creating more opportunities for everyone to win.”