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SportsTradex octane presentation
- 1. The Future Of Fantasy Sports Benjamin Lipson CEO / Founder ben@sportstradex.com www.sportstradex.com
- 2. Summary Fantasy Sports: any competition in which participants select and manage a team of athletes and compete based on the actual statistical performance of those athletes Daily Fantasy Sports: fantasy sports games based on a single day or week of professional sporting events Salary Cap Games: the predominant daily fantasy sports game format in which participants select their players subject to a predetermined budget
- 3. The Problem Fans desire to engage with their favorite sports team and players Season long fantasy games require too much commitment and suffer from attrition Sports betting is illegal Fantasy Sports gives them that engagement Daily fantasy contests provide immediate gratification and require less commitment Real money fantasy sports is legal
- 4. Market Size 51.6M 5.2M = 56.8M (?35%)
- 5. Market Spending Daily Fantasy Sports (¡°DFS¡±) Driving Overall Growth $15B Market
- 7. Competitive Landscape All Salary Cap Games $1B+ companies w/ investments from NBA, MLB Disney etc. legitimacy awareness growth
- 8. Competitive Analysis Fanduel and Draft Kings are building awareness and proving the model All users play multiple daily fantasy sites Sports Tradex distinguishes itself with unique products (game formats)
- 9. Our Games Draft started July ¡¯14 Pick¡¯em started May ¡¯13 started May ¡¯13 2014 Gross Rev = $1.355M 2015 Projected > $3M Trading
- 10. Fanduel¡¯s Growth 165% growth 172% growth $11.5M Q3 2012 49k $ $ $ $ $ $31.3M Q3 2013 130k $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
- 11. SportsTradex¡¯s Growth 376% paid user growth 1165% revenue growth$34k Q3 2013 $ $ $ $ $ $430k Q3 2014 581 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 122
- 12. Sports Tradex Users Acquisition costs include Google AdWords, our affiliate program, and other online marketing channels Acquisition Cost $150 Lifetime Value $900 As site grows, increased liquidity yields increasing user value
- 14. Tomorrow¡¯s Headlines Today 1. Daily Games Do For MLB, NBA & Oth ers What Fantasy Did For NFL 2. Sports Bars, Cable Providers Get In T he Game 3. Armchair Quarterbacking: Stadiums Of fer Interactive Games From Your Seat 4. M&A, Growth Power DFS Past Traditional In The Standings
- 15. SportsTradex Team Benjamin Lipson, CEO Michael Cohen, COO Technical Community Leader and Author 15 years software development experience Jonathan Birkholz, CTO Former CEO of poker website (~$5M in lifetime profits) Daily Fantasy Expert with $2M+ in net profits 2012 Texas MBA Former Commodities Trader at Macquarie Bank Hired team and raised $1M in multiple rounds Jeff Soffer, Marketing & BD Directo UT Law Class of 2012 Former Associate @ Serpe, Jones PLLC.
- 16. Benjamin Lipson CEO / Founder ben@sportstradex.com www.sportstradex.com Thank You ¨C Q & A
Editor's Notes
- #2: Good afternoon! My name is Ben Lipson and I am the CEO and founder of the daily fantasy sports provider, SportsTradex. It is a privilege and an honor to be here today to present on the exciting, changing world of daily fantasy sports. In October, I was in Saint Louis for a wedding with my girlfriend. (Now ex-girlfriend but that¡¯s a different story for a different time) We were walking around the downtown area on a Sunday afternoon. A guy came running up the hill towards us in just his boxers. My girlfriend had a puzzled look on her face and as the guy passed us, he simpy grinned and said ¡°I lost a fantasy sports bet.¡± This story and other actions ive witnessed like it illustrate the passion of fantasy sports players. Fantasy sports is inarguably one of the hottest industries in THE WORLD right now. Just two days ago, FanDuel¨C one of the leaders in one-day fantasy games¨C raised $275M at a $1.275B valuation. Fantasy games fuel the popularity of sports leagues and contributes to outstanding television ratings for live sporting events.
- #3: This may be elementary information for many in the audience today but I think it is helpful to start with a few definitions. Fantasy Sports is a term for any competition in which participants select and manage a team of athletes and compete based on the actual statistical performance of those athletes. Daily Fantasy Sports are those fantasy games based on a single day or, in the case of football, week of sporting events. Salary cap games are a category within daily fantasy sports that refers to the format in which participants are given a predetermined budget. Essentially you get a fixed amount of dollars with which to buy your lineup and every player has his or her own price tag.
- #4: Daily fantasy games are driving the growth of fantasy sports. They appeal to sports fans, sports gamers and sports gamblers for three primary reasons. First, fans are constantly scrambling for new ways to engage with their favorite teams and players to feel like a part of the competition. Second, traditional fantasy games suffer from attrition because of the season long commitment. The most fun aspects of fantasy are winning and picking your teams. Daily fantasy games maximize the opportunities to do both without requiring long commitments. At SportsTradex, we cater to very casual and very hardcore users. We see players that play every single day, those that play once a week and those that play even less frequently than that. Third, sports betting is legal but real money fantasy sports is legal. The UIGEA of 2006 established an exemption from federal gambling laws for daily fantasy games and permitting them to run with entry fees to play and cash prizes for winners. The daily fantasy operators take a commission on the total money that comes into the site.
- #5: Geographically, the fantasy sports market is limited to the United States and Canada. Between the 2 countries, there are almost 57M fantasy sports players in 2015 according to a research study by the Fantasy Sports Trade Association¡a 35% spike from the previous year.
- #6: Fantasy sports on the whole is a $15B industry. Average annual spending per person is soaring across the three major spending categories. On the whole fantasy sports spending increased over 400% from 2012 to 2015. BUT DFS spending increased over 1600% over the same period. To further illustrate the meteoric rise of daily fantasy sports, the total entry fees collected across all game providers in 2009 was roughly 50M. That number will exceed $3B for this year.
- #7: While the number of daily fantasy users is growing rapidly, they still represent a small fraction of the total fantasy user base as traditional players significantly outnumber daily players. The daily players however comprise a disproportionately large amount of the total market spend. As the daily fantasy games increase in exposure, more players will convert from traditional fantasy to both or even to exclusively daily. Therefore, I fully expect the number of players and the size of the market to continue to grow at the impressive rates of the last few years.
- #8: Currently, the daily fantasy sports industry has 3 true market leaders. Yahoo recently entered the market with their own daily product. Both FanDuel and DraftKings have reached valuations in excess of $1B. FD and DK have built awareness and legitimacy for the entire space. More capital flowed into these two companies over the last 3 years than flowed into all other fantasy companies combined. Investments from and partnerships with companies like Disney, KKR, the NBA and the MLB have brought a new level of attention to the daily games space. It also legitimized the legality of the real money fantasy sports. Essentially all dialy sites offer the same type of game¨C the salary cap style I referred to earlier. These games are popular and successful.
- #9: But I do not think there is anything inherently better about these games and SportsTradex focuses on product differentiation by offering unique game types. When surveyed, our users all report that the uniqueness of SportsTradex is one of the primary reasons they play at our site. I often make the imperfect but useful analogy to poker. Salary cap games are like texas holdem but there are many popular ways to play poker including omaha and 5 card draw. SportsTradex is branding itself as a the leader in non salary cap daily fantasy games. This is an area where there should be LOTS of innovation for fantasy sports. It is also worth mentioning that fantasy sports users play multiple sites. Unlike other businesses like internet providers, there is no economic disincentive to having more that one provider. In fact, there is a economic incentive to play fantasy sports through many game providers.
- #10: Sports Tradex offers 3 primary game formats. This is a screen shot of the tiered draft game. Combined, our games generated over $1M in entry fees last year and will generate approx 4M in 2015 again demonstrating the potential and the appetite for daily and unique daily fantasy games.
- #11: If you look at Fanduels early growth¡
- #12: AND compare it to SportsTradex growth over a similar period, you can see that our growth is on a very similar and promising trajectory
- #13: Perhaps the most important metrics for companies in this space, including sports tradex, are acquisition cost and LTV. We carefully measure these and we find that it costs us on average $150 to acquire our paid users. The users exhibit a wide range of behavior. In fact, the top 20% of users contribute over 80% of our revenue¨C which is consistent with lots of businesses and certainly with daily fantasy sports companies. The lifetime value calculates the site¡¯s commission from the average amount of contests entered. NOT entries; NOT deposited money