12/11/2014 1:44PM

Racing Symposium: Racing should explore fantasy games

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TUCSON, Ariz. – Racetracks and betting companies should explore mining the customer base of fantasy sports leagues for new fans and create their own fantasy games to capitalize on the market’s explosive growth, racing officials and fantasy-league experts said Thursday on the final day of the University of Arizona Symposium on Racing and Gaming.

The officials said they believe there is significant crossover between fantasy-league players and horseplayers, creating ample opportunities for racing to market its product to the 40 million fantasy players in the United States. However, those same arguments have been made in the past about the crossover potential between other market demographics and racing, and those projections have failed to pan out in any meaningful way.

Symposium planners scheduled the panel on fantasy sports due to the recent staggering growth experienced by companies that offer cash payouts to players who pay to participate in daily fantasy leagues. The market’s leaders have raised tens of millions of dollars recently in venture capital while drawing hundreds of thousands of regular paying customers to their sites.

Tom Dwyer, the chief executive of a daily fantasy company, Ballr.com, said on the panel that his company is seeking to draw players who will pay $5 to $10 a week to participate in its daily offerings. He called the business plan of emerging daily fantasy companies “ridiculously simple and flexible” and said the market is being flooded with upstarts looking for a piece of the action.

“It’s a real business opportunity,” Dwyer said. “It’s not all fun and games. It can be extremely profitable.”

Looking at that figure of 40 million fantasy players, John Ford, the chief executive of BAM, a company that owns and operates the BetAmerica account-wagering company, said he launched sites offering fantasy games on popular sports and was now looking for some way to lead those players to horse-race betting, which has a much higher margin than the fantasy games.

“Fantasy players are very similar to horse-racing customers,” Ford said. “It’s drawing a demographic that has a much higher potential to gravitating to become a horseplayer. I think of fantasy games as a soft introduction to racing.”

But for all their similarities, there are also stark differences, Dwyer said. Seventy-five percent of daily fantasy customers are playing in leagues involving the National Football League. The rest are spread out on a smattering of other major sports, and racing is nowhere on the radar, Dwyer said. What’s more: the information that daily fantasy players use to build their teams costs nothing, unlike detailed racing data, which typically come at a hefty price.

“We’re working with the greatest content in the U.S.,” Dwyer said. “It’s called the NFL, and it’s free. And there’s tons of information out there about it, and it’s all free.”

Still, Dwyer said the two market populations shared some similarities. Hai Ng, the moderator of the panel and a partner in a technology company, agreed with that assessment and encouraged racetracks and betting companies to explore novel ideas, such as creating NFL fantasy leagues among a racetrack’s most frequent customers, or creating leagues that are hybrids, using NFL players and jockeys, for example.

“These are extremely social games,” he said. “Racing and fantasy share that. You need to build on that.”

But there are still reasons to be highly cautious. The NFL brand, though under siege, is still one of the most powerful brands in the world, and fantasy play may be somewhat unique to its product. And similar predictions were made about the crossover potential of the young men who 10 years ago rushed into live poker, when handle on horse racing was $15 billion a year. Today, it’s less than $11 billion.