There aren’t many technology gatherings where attendees can hear about the latest developments surrounding artificial intelligence in one room and then go next door to glean insights from former NFL players and a professional wrestler, but this is what makes Collision no ordinary conference. The brainchild of Irish tech entrepreneur Paddy Cosgrave, Collision attracted an eclectic mix of 11,000 developers, investors and media to New Orleans this week, eager to learn about future trends. And one of those trends will involve online sports leagues and betting, with potentially huge prospects for new business growth
An emerging and controversial forces in the sports field has been the rise of online fantasy team wagering sites such as FanDuel and DraftKings. Nigel Eccles, one of the co-founders of Fan Duel, took a break from fighting skeptical state governments to speak at Collision earlier this week.
FanDuel and DraftKings took in a combined $3 billion in 2015, despite legal challenges in numerous states across the country that severely disrupted their operations. “We sort of had a crisis in the industry,” said Eccles, in what may be the understatement of the year.
According to the FanDuel co-founder, at least four states (Virginia, Indiana, Tennessee and Mississippi) could soon pass and sign into law pending bills that would allow FanDuel to legally operate. But that still leaves many more states, including New York, which have banned the fantasy sports league service entirely.
At one point last fall, it seemed as though FanDuel and their competitor had purchased every available minute of advertising time on TV networks across the country. Their ads ran seemingly around the clock, nonstop. Eccles admitted on Tuesday that this may have been a mistake, bringing in millions of new players and dollars, but also inviting much greater scrutiny by state enforcement officials.
“Existing laws didn’t envision multi-billion dollar businesses operating at the scale we did,” said Eccles.
FanDuel is making changes in both their marketing approach and how they manage player involvement on their site. According to Eccles, they need to get away from the “road to riches” message and refocus on the “pure joy” sports enthusiasts get from playing in fantasy leagues.
In addition, acknowledging the criticism that FanDuel has received from rookie users who felt fleeced by experienced, data-savvy fantasy sports junkies, the site will begin separating newcomers from the highly-skilled players in an effort to level the field for all.
FanDuel also made an interesting acquisition last August when they purchased a data analytics company called numberFire. This followed the hiring of Zynga’s sports division team and another acquisition involving an app developer from Scotland (Kotikan).
The numberFire technology will allow FanDuel to offer the ultimate data experience for sports geeks: real time analytics on a play-by-play basis. As Eccles described it at Collision this week, users will have the ability to predict the outcome of a game based on the data stream over course of the contest.
This means that FanDuel fantasy players will see updated percentages in a typical NFL game, with each score or turnover converted into new predictions based on numberFire’s sophisticated analytics, thus raising the intriguing possibility that this kind of information could be as useful to interested sports bettors as to fantasy team players.
Meanwhile, another NFL season is approaching this fall, which is a significant deadline because for fantasy sports sites like FanDuel and daily sports gamblers, football is far and away the sport that gets the most betting action of them all. Eccles did not sound optimistic that he will have anywhere close to a majority of states grant permission for him to operate by then, even declaring at one point that he believed “it will take a couple of years.”
If Eccles’ company can survive and even prosper until then, they will be well-positioned to reap astonishing amounts of revenue at a scale that would make most Silicon Valley firms green with envy. But first they will have to survive legislation that will either give them life or kill them off, similar to the fate suffered by the online poker industry in 2006. For now, it’s a gamble that Eccles seems fully prepared to make.