Q&A: Steve Krombolz, CEO of FantasyDraft

Q. What do you think the wider impact of the Fantasy Aces story will be for the industry?
A. It’s bad for everyone because it’s bad for the industry but especially so for the smaller sites because people start to question the safety of their funds and people might be depositing and withdrawing more oſten rather than leaving their money on site. But that’s fine, it’s their money. Overall it’s a definite black mark but I think we’re past that, especially since we came in as a white knight. We didn’t have to reimburse all the customers to acquire the database, but they are good quality players and the goodwill we generated meant it was worth it.

Going forward, I’m not privy to specific lobbying arguments but I’m sure it’s being used as a reason we need regulation. I’m not sure if there are consequences for Fantasy Aces, but I think people will be a lot less likely to make those mistakes again if there are consequences for the rest of your life.

Q. Do you agree the FanDuel/DraftKings merger will benefit the smaller operators?
A. We think we are third in the market, probably quite close to Yahoo, and we think we will pick up some high volume players. They’re spreading their play over three or four sites at the minute and with one less site to spread that action over, we can pick up the slack. We’re very high on the opportunities for us this year with the merger and our own plans.

Q. Do you think whoever emerges as the main rival to the merged company will have the same basic concept of DFS as them?
A. I think the model of DFS today is a good one that will be around for a long time but I think there’s going to be substantial growth in the number of users when we can nail the hybrid form of the game – the formats that combine season-long and daily concepts.

FanDuel and DraftKings have those in action right now and we are working on our own version, because that will bring more people into DFS. It makes it more accessible because you can be playing daily games with your colleagues, friends and family and that’s a lot less intimidating than a lobby full of strangers and pros.

Q. How involved are you with lobbying efforts around the country?
A. I’m in contact with folks from both companies and the lobbyists, but we don’t fund any of it. I’m highly optimistic they’ll be able to pass legislation in a number of states this year. But legislation is a double-edged sword for us. We want legal clarity but it’s so much financial strain on smaller operators or potential market entrants. Having said that, we’re in compliance, we’re licensed in every state that’s passed legislation to date and we will continue to do that.

Q. How do you compete with companies with vastly bigger budgets than yours?
A. On core gameplay, we can’t compete on GPP sizes, so we look to set ourselves apart with customer friendly features, like occasional rake-free head-to-heads, or simple formats where you can just pick three infielders and three outfielders in baseball contests rather than a player for each position. On marketing, we’ve primarily focused on grassroots marketing and word of mouth and blanketing the DFS community sites out there. We’ve also invested in endorsers. We haven’t renewed a lot of them recently, but we still have a relationship with Drew Brees, for example.