Q&A: Joe Brennan on the "next generation" of DFS

Resorts Digital made a splash in New Jersey in July with the launch of a “next generation” DFS format called FastPick, in partnership with supplier SportAD. In short, users are asked to pick one of two in a series of head-to-head matchups. For instance, in MLB, contestants would choose who will have more fantasy points, Manny Machado or Mike Trout, with the ‘house’ taking the other side of the proposition.

Resorts customers have to make a minimum of three selections for their “entry”, with the pay-outs starting at 5/1 and rising as more and more legs are added.

“We couldn’t be more excited to introduce the next generation of Fantasy Sports,” says Ed Andrewes, who leads the digital offering at Resorts.

“We’ve designed the platform to accommodate all sports fans who want to get a piece of the action but don’t have the time to compete effectively against the traditional ‘professional’ DFS players,” Andrewes adds.

The FastPick game, which is limited to New Jersey customers for now, will also be added to the Resorts online casino at www.resortscasino.com in July and then will be rolled out in to the brick and mortar casino via kiosks later in the year.

Contests will be available on all major US sports including NFL, MLB, NHL and NBA, as well as several European soccer leagues.

The CEO of FastPick developer SportAd, Joe Brennan, tells EGR North America how the product can help regulated gaming operators across the country tap into the DFS phenomenon and build a database for regulated sports betting.

EGR North America (EGR NA): You went live before DFS was officially legalized in New Jersey – how does the DGE categorize your product?

Joe Brennan (JB): As fantasy. The DGE has had regulations for fantasy sports for four years and no-one used it. As they define it it’s a non-gaming product and not subject to their gaming tax. Resorts still reports the revenue, but as of today there’s no taxes. Of course that will change when this DFS bill comes through. We get a 90 day window after the governor signs it. So we have a window of NFL football where we have some tax relief and after that it’s 10.5%

We’re happy with that. Our margins are 35% so you can pay taxes on that. FanDuel and DraftKings are at 7% so a 10% tax is a deeper bite into their revenues.

EGR NA: What kind of margin do you expect to see from this?

JB: Resorts sets the pick minimum at three, which pays out at 5/1 and that generates around a 35% hold. That’s probably the historical norm you would see on three team parlays anyway. The operator can set their own pay-out table, because at the end of the day it’s their bankroll. If they want to tighten that up or loosen it, that’s fine. We’re more interested in the matchups themselves.

The beauty of this is that it is a higher-margin product. By pushing people into accumulators, it makes it more interesting so encourages more pay and more yield. People like to try and take a tooth pick and turn it into a lumber yard.

Fastpick.com screenshot

EGR NA: Are you concerned about copycat products?

JB: We get asked a lot what prevents bookmakers like bet365 doing this. I suppose they could try but it might take a couple of years to develop this and a seven figure investment. This comes from a sports analytics background, and it’s on a player basis rather than team basis, so there’s a big difference between expected goal algorithms and what an individual player might be expected to do.

That’s where we are unique. Because that’s a capability nobody else has. We have guys who were DFS pros and played on FanDuel and DraftKings but they never worked there. Those companies have a very different business model to what we do. They’re more of a poker table whereas we are an oddsmaker. They provide a space for players to play against each other.

EGR NA: And what about the impact of regulated sports betting, which could potentially be introduced in New Jersey in as little as two years?

JB: Not at all. Year after year, prop wagering has grown to be a bigger piece of the pie in terms of betting turnover. This year’s Superbowl 40% of turnover was on props. This isn’t going away. Some people refer to us as sports betting lite. If you had full sports betting. I think that would be in addition to what we are doing right now, not at the expense of, because the betting market has shown they like these products. They like props and they like fantasy sports. And what makes it more likely to stick around is how simple we’ve made it.

EGR NA: Is there also an element of building a database for sports betting through FastPick?

JB: That’s one of the appeals of our product. Whether Congress or the Supreme Court overturns PASPA, there is a huge opportunity to create a national database for people who are interested in sports gaming for money. That has huge value. And specifically for the segment we want to work with – regulated gaming.

They looked at fantasy sports and they like it – it’s for money, it’s regulated, it has big stakeholders attached in leagues, media companies and team owners. And gaming companies want a part of this. They like the fact it appeals to millennials who aren’t gambling like they used to, and this is a way to get the on-board. Instead of waiting for legal sports betting to start in New Jersey. That’s going to take two to three years. Do you want to wait for that or do you want to start now? I’m sure that’s one of the big appeals for the US partners we’re working with.

EGR NA: So you’ve heard from companies about spreading this out in states without regulated online gambling?

JB: There’s a lot of opportunity for us to work with partners in different channels. So for example we’re rolling out in three steps with Resorts. DFS-only at fastpick.com. Then we’re launching this inside the Resorts Casino app and site, which is on the NYX OGS platform. NYX is the early leader in platform in the US for mobile and online, so integrating with them gives us a lot of opportunity with other operators and cuts down on integrating costs.

Then the third iteration is kiosks. Resorts is renovating its iGaming Lounge to be a kind of fantasy sportsbook, its analogue to a Vegas sportsbook. And there will be kiosks there. We’re hoping for that to be live by the NFL season. We’re talking to lots of companies throughout the US. And the reasons we’re seeing such early interest is because the casino and lottery industry wants to find a way to use fantasy sports. The salary cap model didn’t lend itself to that environment whereas this game does and they can add their brand to this and extend it beyond their physical location.

Joe Brennan

EGR NA: How do you think FastPick compares with traditional DFS?

JB: Unlike us, the salary cap model will have difficulty standing its ground in the face of simple sports betting because it’s so complex. That’s why we built the game this way and because it’s so simple. Instead of being asked weekly which of the 32 quarterbacks would you like on your team, and then doing that for 10 positions and trying to fit a salary cap, you pick one of two. That’s it.

EGR NA: How have the ongoing travails of FanDuel and DraftKings affected you?

JB: They’re in a really tough position because both companies have given the world a peek under their dress at their financials and its rough. A lot of the early word on the street is there is only room for one. If both of them have to raise capital it puts investors in a tough spot as you have to guess who’s going to prevail in this death match. For a company like ours and lots of others, the whole affair has been an incredible drag on our ability to enter the market. Because it’s sucked the oxygen out of the room when talking about DFS.

Our investors doubled down on us when we pivoted to B2B and without that it would have been tough. If we didn’t have that it would have been tough to survive. Which is why all these other companies have closed their doors. The DFS industry has to get out from under those two. For all the good they did in driving awareness of the game and the regulation they influenced, their troubles are too much trouble for the industry long-term.

The Resorts iGaming Lounge

EGR NA: Have you thought about expanding this game beyond the US?

JB: We want to be able to extend over to the UK. Here in the US the brick-and-mortars control everything but over in Europe we have a real interest in working more with the sportsbooks. We think this is a great prop wager category for them to add to football and cricket betting categories.

The big opportunity is offering simple props for the greater public. Will Rooney score more or less fantasy points than Lukaku? That’s interesting and it’s ready-made. Our week one Premier League matchups are up now. We have two agreements with UK bookmakers with a target of going live during the season.

We’re also looking at India and Australia and we think our model for cricket has huge upside because real-money DFS is permitted in India and there’s a huge audience where fixed odds is illegal but fantasy is allowed as a skill game. Our product is mobile friendly and for 85% of people the only way they’re going online is mobile. As I like to tell people in the US, the enthusiasm we have for the NFL, multiply that by 10 and you have the Indian passion for cricket. So we’ve developed some projections around that and we think we can hit the ground running.