Leading sports crowdfunding marketplace StakeKings is set to move into daily fantasy sports (DFS). Is this the inevitable evolution of the sports tipster?
The first time I ever went to a race meeting there was a crowd just inside the entrance. Someone was selling tips, handing out the names of horses in small brown envelopes that looked just like your weekly pay packet.
Ever since people have gambled, there have been other people willing to offer them advice, form guides, and inside information – “Look, I shouldn’t tell you this, but the stable boy’s brother is a good mate of mine” – always, of course, for a price.
Inevitably there have been reputable and disreputable services. In the UK, the most famous is Timeform, formed just after the Second World War by Phil Bull, who sought to establish a mathematical, objective measure of a horse’s performance. A similar approach was developed in the US in the early 1970s by Andrew Beyer, the horse racing columnist for The Washington Post.
Timeform soon became the accepted standard in British horseracing, used by bookmakers and punters alike. In 2006 the company was bought for a reputed £15m ($17m) by Betfair and, since 2016, has been owned by Paddy Power Betfair.
As technology advanced, so the information supplied by Timeform – and the racing press – advanced with it. Analysis, which would once have taken a morning, could now be done with the click of a button – and the increased supply of accurate information, coupled with betting exchanges and increased competition among online bookmakers, meant making a profit from gambling was a realistic option. Even better, making a profit no longer involved tedious nonsense like driving to a racecourse every day – you could do it in your office or at home, surrounded by your laptops and your banks of screens.
Surprisingly, the increase in information and the growth of technology didn’t spell the end of the bookmakers. As we have written in many articles on this site, the number of online sports betting companies is steadily increasing and so are their profits. Yes, one gambler in a hundred may make a good living from betting on sports – but the other 99 don’t have the time, the financial resources to withstand long losing runs or, most crucially of all, the self-discipline.
If you can’t beat ’em…
But if you can’t be a winning gambler, why not invest in one? Or let one gamble on your behalf?
That’s the principle behind US company StakeKings – a site which allows you to buy a stake in a poker professional as he or she plays in a poker tournament. It’s “crowdfunding” a poker game, with you receiving a share of your chosen professional’s winnings. As the ad says: “Pick your pro in thousands of online tournaments. Log in and find your champion.”
The idea isn’t new – plenty of gamblers have been staked in the past, including one very famous secret agent…
What is new is the market that StakeKings are about to open up – daily fantasy sports (DFS).
DFS contests are rapidly increasing in popularity – not just in the US but, as we have written previously, in countries like India and Australia. Can you make a consistent income from DFS contests? Of course you can. But, like any form of betting, it involves time, commitment, and hard work. According to statistics from DraftKings – one of the leading DFS companies – over the last 30 days 11% of players made a profit from DFS contests. Roughly the same number broke even, with the rest enjoying being part of the action but, ultimately, losing money.
Statistically, 30 days isn’t a long period: let’s say that over the course of a year 5% of players make a consistent profit. Wouldn’t the weekend’s NFL action be a lot more enjoyable if you knew what players that elite 5% had picked? That’s the theory behind StakeKings’ move into DFS contests, with founder Tyler Hancock expecting the move to be as successful as the initial move into poker: “We are excited to bring an entertaining and safe staking experience to the fantasy sports industry, and believe that it will ultimately be a big hit.”
It’s tough to argue with that. With StakeKings vetting their pros to minimise any chance of backers not receiving their percentage of the winnings, it looks like the proverbial win-win – and an approach we’re likely to see emulated in DFS contests around the world.