iGaming Daily

Jessica Welman (00:04.759)
It's going to be a long, dry season for those who have participated in DraftKings, NFT Marketplace, and Rainmaker contests as the company has abruptly ceased operations on this project this week. We're going to talk about why the operator is giving up on the crypto space as well as a major signing for Underdog Fantasy on today's episode of iGaming Daily. iGaming Daily is presented by OptiMove, the number one CRM marketing solution for the iGaming market.

You too can take advantage of OptiMove. Get a first month free by going to optimove .com forward slash SBC. We've got the link for that in the description below. And with that, I am Jessica Wellman, editor of SBC America, joined by media manager Charlie Horner. Charlie, have ever dabbled in the crypto space?

Anaya (00:53.614)
No, no I haven't. It's something that I've read a lot about, learnt a lot about and to be honest, actively avoided for the last few years. So, yeah.

Jessica Welman (01:03.903)
Same. I was like, read a lot about, learned some about, still feel like I know nothing about the crypto space, but we're going to do our best with this today.

Jessica Welman (01:16.463)
Okay, so you were around at SBC Americas when this launched, so you might have written, we've written a little bit about it, but never really dabbled too much in DraftKings NFT marketplace.

Anaya (01:32.348)
Yeah, this is something that's quite interesting, obviously something that I'm aware of and probably written about over last few years. And at the time, it made a lot of sense. Crypto around this time was booming. NFTs were taking off big time. A lot of celebrities and sports stars were getting heavily involved in NFTs at this time. But almost as quickly as this scene has risen,

Jessica Welman (01:48.643)
Really booming.

Anaya (02:01.391)
it has fallen just as fast.

Jessica Welman (02:03.907)
Yeah, that was a very flash in the pan kind of thing, right?

Anaya (02:08.989)
Yeah, mean there are very very specific circumstances why this venture is finished, which we'll come onto shortly, but yeah, it's been a very up and down few years for the crypto and NFT space.

Jessica Welman (02:21.263)
Yeah, so this one, to give a little bit of context, it was in 2021, really when NFTs were booming, that they announced that they were getting into this with the DraftKings marketplace. had Tom Brady NFTs and Athlete NFTs. And then a little further down the line launched what were called Rainmaker Contests, where you

look through your portfolio of NFTs and put together a fantasy sports lineup with them to enter into contests. And then I don't really feel like we heard about it for a while, you know? This was not something that took off that ever was like a huge thing. And as you noted, know, NFTs kind of had their moment and very quickly stopped having their moment. So earlier this week, DraftKings basically said,

we're done with this and you can cash out what you have and we will give you compensation for it, but based on a changing legal situation, we're gonna give this the

Anaya (03:31.24)
Yeah, yeah, mean, obviously the legal ramifications of why they've had to close down Profound, but how much money this was making for DraftKings over the last few years, I'm not entirely sure. They probably would say that it's a way of attracting a different demographic of player, someone who can come in from, who are slightly more tech savvy, a little bit

different from the typical recreational sports better and convert those people into sports betters, but I'm not entirely sure how much this was making for DraftKings on a regular basis.

Jessica Welman (04:12.237)
Yeah, I mean, I don't think this was a financial boon for them. They did not really speak about it on earnings calls. It was not something that I think ever fully succeeded. But you were right. Most of the reason it's being shut down is legal. And what's going on is that someone brought a class action lawsuit against them in the federal courts in Massachusetts. And earlier this month, after

To give you an idea how long the legal system takes, this thing was filed at like the start of 2023. And just to get a ruling on the motion to dismiss, which is a very early piece of any court proceeding, it took about a year and a half. So this motion to dismiss was denied by a district court judge earlier this month. And basically what the lawsuit said was, hi, you're a publicly traded,

company regulated sports books selling unregulated securities in the form of these NFTs and things. And that's always been kind of why operators don't get anywhere near the crypto space. And it was always a little weird to me that DraftKings was so gung -ho about it. But yeah, they sided with the plaintiff on this one saying there's a thing called the Howie Test.

to determine if something is a security or not, where you're basically saying, is it something that has real money value? Is it something that anybody can kind of participate in? And then, is the value of what you're buying contingent on a third party doing things to make it worth more? And they said that it satisfied all of those, in particular because

DraftKings, you know, when it first started this thing, they had a bunch of podcasts. had, I'm not sure if he's crossed the pond, Gary Vaynerchuk or Gary Vee is like a big entrepreneur over here. He was on a podcast with Matt Kalish, who is the DraftKings executive, president of North America for DraftKings, talking about how you're gonna make money.

Jessica Welman (06:29.795)
by investing in these. So that was not great for them. Other statements by Kalish suggesting that you're gonna make money was not great for them. And then it's also, so these things, like in theory, you could take them to your crypto wallet and you could take them out of the DraftKings marketplace. But like really, the only times that these transactions were taking place was in that DraftKings marketplace space.

So that lawsuit's moving forward and about three weeks later the announcement came that they're like, okay, we gotta shut up shop here. What will be interesting, so in this lawsuit, think, I read so much legal stuff, I'm pretty sure they argue that the valuation at one point of all the NFTs and stuff on this thing was like $400 million.

I don't think DraftKings is paying out $400 million on the value of these NFTs. I think people are gonna get like pennies on what peak value was. Some of that is par for the course is my understanding for NFTs as we've noted. Plenty of people have lost a lot of money on this, but people who had these portfolios I don't think are getting tens and tens of thousands of dollars for them.

Anaya (07:53.041)
No, highly doubt it. But just going back to the lawsuit and the arguments that have been laid out, I have to say that I'm not surprised that the judges ruled in this way because there has been this sort of repackaging of NFTs and cryptocurrency more widely as an investment vehicle. The whole notion of it's not cryptocurrency, it's a crypto asset. It's something that if you buy, it's going

go up in value. These NFTs you can buy for a thousand dollars and in a couple of years they'll be, you know, ten times worth. And for a publicly listed sports book to be dabbling in this world, albeit in, you know, wrapped up in fantasy sports, I'm not surprised they've decided to close it down under these circumstances. And from this conversation that we're having just

I don't think you're one of the big proponents of crypto either, but do you get that same sense that this was always on the cards?

Jessica Welman (09:03.213)
I don't know if it, like, again, this is where I just admit I don't know as much about crypto because in my head I'm just like, well, they can't touch it. There's a long list of AML and other reasons, unregulated securities that thankfully it hasn't seeped over into our line of work too much. But it always was one that I raised an eyebrow at and I was like, I don't know how that's okay. But you know, the NFT piece because

I mean, what was it? They're like, it's collectible. I love when you were like, it's not a crypto security, it's a crypto asset. It reminds me of like, a slot machine. No, our thing isn't a slot machine. It has reels and sevens and cherries, but like it's a horse racing experience. It kind of reminds me of these kinds of arguments. So yeah.

Anaya (09:37.876)
Yeah, yeah.

Anaya (09:56.971)
think it is worth saying though that there are a lot of people who are really into the crypto space and there are companies who are working at bringing those kind of products into the gaming space. And similar with NFTs, I think there's people who are really vocal in their support of NFTs and the way they think they're being applied in different use cases. It's probably just worth mentioning that this is just in one case where...

Jessica Welman (10:26.007)
Yeah, that's a very good point to make that, you know, I don't think this is going to be some court case cited in every crypto case ever. It's just this particular instance of it because of comments that were made and the way that it's structured that it kind of fell this way. So that's the story on that. The lawsuit will certainly be keeping tabs on DraftKings racking up some legal bills this year.

Anaya (10:26.474)
where it's, it's,

Jessica Welman (10:54.535)
They've got that lawsuit. I know that they had a hearing. There's a Massachusetts state court case that is a class action lawsuit regarding their bonus offer and whether it is false advertising or misleading advertising. I know that they had a hearing on that last week and we're kind of waiting for the next news there. We have the Hermelin case that keeps on going and giving and so far

DraftKings has been on the winning side of a lot of things. I think in California this week they had another ruling go their way. So you can keep tuning into SBC Americas where we're just draftkingslegalreport .com for all of that. All right, we're gonna take a break real quick and shift focus to a signing that Charlie heard

Shout an expletive when I saw happen because I was so shocked by it. We'll tell you who that is and what it involves when we come

Jessica Welman (11:58.861)
Welcome back to iGaming Daily. Charlie, I know the answer of this because we talked about it on a call yesterday, but Bill Belichick is an NFL coach that here is more famous than most players. Has he made it much across the pond?

Anaya (12:16.884)
This is the first time that I'm going to be able to say I've heard of this guy.

He's the, yeah, I've heard of him. think, you know, as NFL's grown over in the UK, there is a large and loyal fan base. So I'm confident that a lot of UK listeners will have heard of Bill Belichick. Yeah, thank you. Yeah.

Jessica Welman (12:37.199)
If you got his name wrong, would have been perfect. Yeah, that guy. So, yes, Bill Belichick, if you don't know who he is, one of the most successful, if not the most successful NFL coach in history, multiple Super Bowls, multiple Super Bowl wins with the New England Patriots, has since left the organization currently, you know, doing some media stuff and apparently now representing underdog sports.

What's interesting about this for those who don't know Bill Belichick, like naturally not the most like camera ready guy. Very kind of gruff in press conferences a lot of the time, not one to be excited to talk to the media. Yet this deal is going to be a video series throughout the NFL.

sponsored and know done with underdog where he's gonna break down film and talk about players in a very kind of open sort of

Anaya (13:44.902)
It sounds like a fantastic deal for underdog to get a man of that stature in the game. With so much success as well to be breaking down the game, I'm sure lots of fans will be heading over to the underdog platform to get some of those insights.

Jessica Welman (14:02.401)
Yeah, this is going to be a YouTube series. even if you aren't an underdog person, you can still go and watch. They didn't disclose how much, you know, they never really disclose how much they're paying them. I'm sure he's getting a substantial chunk of change. What's really interesting about this in terms of just street cred is.

We've had many a pod over the past 18 months about various states where underdog and prize picks and those that offer fantasy against the house have been told that they're in violation of the rules or that they're, you know, unregulated or doing something wrong. So to have somebody of this stature affiliated with the company, in addition to just bringing eyeballs, I think brings a certain amount of credibility to the average person that this is on the up and

Anaya (14:55.105)
Yeah, I mean, we were, as we were saying, briefly chatting about this yesterday and I think it does. There's been so many legal tensions around the Underdog product and how they're doing things that having someone of this weight and stature and authority does give the Underdog, maybe not the legal boost, but definitely a PR boost in terms of its reputation amongst fans.

Jessica Welman (15:24.419)
Yeah, exactly. It's not gonna change the mind of regulators, but as kind of negative press has come out around them, I think to the average person, you feel a little bit better about taking part in something when you can see professional teams, professional people kind of associated with it. I will play devil's advocate on this a second. You tell me, can you think of any other coach of a sport

that has moved the needle for any sports betting fantasy casino operator.

Anaya (16:02.957)
I mean, here in the UK, we have a former football manager, Harry Redknapp, doing sort of adverts for sports books, but it's not really in the same way in terms of doing actual analytical content, though I think it can work. In sports broadcasting here, we often have guests on, like, Monday Night Football who will...

join the normal punditry gang and do some guest punditry. Usually that's in terms of helping them get a bit of exposure so they get their next job. Not sure Bill Belichick needs a boost in his public relations to get another job, but I think it can work. But it seems like it's a new route for US sports.

Jessica Welman (16:53.945)
Yeah, I think we've had some that maybe have been spokespeople. And I think, you know, certainly there are podcasts and other video content with former coaches. In fact, I think Underdog has one already with Jay Gruden, who does a podcast with Colt McCoy under the Underdog kind of media banner. I think there's certainly incremental

fandom and and stuff you can get from this but you know when you're investing in somebody of this stature I don't know what the expectations are but I'm I'm not positive on this. I'm curious to see the content too. I think that's really gonna be the make or break of this if he's giving just crazy good insights and looking and talking about football in a way that hasn't been seen in the space.

maybe it can really actually have a huge impact. I'm going to be rather agnostic on this until I see a little more of like what it's going to be.

Anaya (18:01.814)
Yeah, I agree. think the crux of it is in the content. Is he going to want to put all of his time and effort into making this the most groundbreaking analytical content that you've ever seen? Probably not. I mean, if he does end up getting another NFL job, he probably wants to keep some of his secrets to himself. But he could add another dimension and attract a whole new audience.

Jessica Welman (18:21.27)
Yeah.

Jessica Welman (18:26.617)
would love if he became just preoccupied with views and subscribers of his YouTube channel. It would be such an interesting turn for him. You know, we just spent a lot of time talking about content. I think as we go into football season, you're gonna inevitably see a load of new announcements about content deals and that sort of thing. But what we've also seen are some pretty epic.

collapses and fails of content deals. know, we're coming up on the year anniversary of Barstool, a content company, getting sold back to Dave Portnoy for a dollar after it was, you know, hundreds of millions of dollars was invested in it. And then to a smaller scale, recently DraftKings sold back V -Syn to Brent Musburger, who, you know,

rumor is it was also like a handful you know pennies and a lollipop and here you go you can have this company back they never announced how much they spent on it but the rumor is about 70 million dollars is the content format of bringing people into sports betting the problem or is the fact that these deals were just that massively over valuing what these companies could do for a sportsbook operator the

Anaya (19:52.481)
That's a potentially a 500 million dollar question.

Jessica Welman (19:56.729)
I know six more podcasts on this topic alone.

Anaya (20:00.786)
Yeah, absolutely. I I think what a lot of people are finding out is that it probably isn't as lucrative as they thought a few years ago. I think a lot of it probably has to come down to, they compete with the traditional broadcasters who have the rights to show the actual games? I I don't think DraftKings can incorporate sort of NFL or NBA games into

coverage, they're just relying on the outside insights of these sort of pundits and celebrity names who can talk about it. There's an over -saturation of content within the sports media market and there's only so many eyeballs and ears to consume this content, so undoubtedly there's going to be winners and losers.

Jessica Welman (20:52.685)
Yeah, listen, I think content can do lots of stuff, specifically our content. Contact our sales media person for how we can help you with our content. But we reached a point where just everything was being overvaluated in sports betting. VeeSin is a great company, know, Vegas based. They had the studio in South Point, very savvy on like the recruit, betters who...

were taking it fairly seriously, really great group of people, but like those people are already converted, you know? Like they know sports betting is there, that there wasn't necessarily the built -in ability to convert new people to DraftKings that was worth $70 million. So I think as long as people are tempering their expectations about content, we'll continue to see it be an important part of the sports betting space, but.

It's going to be smaller scale. We're not going to see these nine figure, eight figure deals for content in the future. All right. We are fully out of time. So I know you love consuming our content, though. Don't worry. We will be back with a new episode of I Gave Me Daily tomorrow. You can check out all of our written content on SBC Americas and you can head over to our YouTube page and just look at all of the things in the SBC portfolio.

Until next time on iGaming Daily.