Eyes on the prize: Adam Wexler on why his PrizePicks DFS game can fill the void in non-betting states

“There will be a movie about the last few years in the fantasy industry one day, and we have had a front-row seat for the whole thing. When they say start-ups are rollercoaster rides, my time in the fantasy sports industry absolutely applies.” Those are words of

Adam Wexler, CEO of Performance Predictions, who has indeed known the highs – as well as the lows – during his time in the DFS industry.

His second-generation product, SidePrize, which let fantasy owners make side bets on their teams, was named ‘Rookie of the Year’ by the Fantasy Sports Trade Association (FSTA) in 2016 and was reportedly set to raise a seven-figure sum before the industry came crashing down. After the New York Attorney General made his damning pronouncement and investors exited the industry in their droves, Wexler went back to the drawing board; returning in October this year with a new product called PrizePicks.

The concept is the latest bid to simplify DFS. It requires players to pick two, three or four players from a list, and then predict if each player will go over or under their projected fantasy score. It is mechanically very close to a fantasy points parlay, but Wexler is adamant it is fantasy rather than betting, and the product will be marketed in fantasy states rather than betting states.

Here, Wexler tells EGR NA how the DFS world has changed post PASPA, and why his product could be the perfect complement for a European sportsbook supplier.

EGR NA: You have a history of launching DFS products; how has it changed in the post-PASPA world?

AW: I’ve been in fantasy for more than four years, and I’m on the board of the FSTA. This is the third product we’ve brought to market and is the culmination of everything we’ve done before. Our second product was the ‘Rookie of the Year’ according to the FSTA in 2016. SidePrize allowed people to place bets in their fantasy leagues. So, ‘I’m playing you this week, let’s have 50 bucks on the line to make it a little more interesting.’ It was unfortunate the industry was collapsing at that time – all the investment capital dried up and there wasn’t a way to scale the business at the time.

Fast forward to last year and the repeal of PASPA, I said: ‘The time is right, there’s nothing in the law that says you have to be playing fantasy against another party. Why can’t you play fantasy against the house?’ And sure enough, that little cottage industry has popped up with things like FastPick.

EGR NA: And how has the repeal of PASPA changed your thinking?

AW: The decision came out and everyone is clamoring to get up and running in New Jersey. Well, we pulled out of New Jersey. We’re more focused on markets that aren’t getting sports betting right away. They’re great opportunities for us to come in as a fantasy game and cater to a similar demographic.

EGR NA: You’ve been testing this for a good while. Presumably the main issue is setting the over/unders for players in the right place?

AW: We’ve been in private beta with this game, working out how to set the right lines for each sport, for almost a year. Then we formally launched in early October. Every sport is a little different and our profit margin changes by the sport. We think of it the same way casino games might have different margins.

EGR NA: It seems like you might be right on the line between DFS and gambling

AW: It is closer to the fence than your traditional ‘salary cap’ format. But by my count, there are eight different companies doing fantasy against the house now. It’s a growing category in itself and I don’t doubt there will be more competition before you know it.

EGR NA: DFS start-up Daily Number said recently they could become ‘infrastructure’ for a sports betting company in the future. Is that a similar plan for yourselves?

AW: As it stands, were focused on pulling in quality over quantity. Our business model isn’t just ‘build up a database and get bought.’ We have a real model; the unit economics are strong. We’re driving towards breakeven by the end of the year. We’re more focused on the ‘whales’ and serving those guys who have disposable income, want action and who come in and play our game every day.

If we find enough whales out there, we can build a very strong business. Not by serving hundreds of thousands of people, but by having members in the five figures and giving them ‘white glove support’ like you’d find in the VIP section of the casino. On our Facebook [page] our people talk about our incredible support and that’s something we pride ourselves on.

EGR NA: Whales are driving the business models for the standard salary cap games, but surely it’s different if those whales are essentially betting against you?

AW: We’ve got whales, but we also have sharks and, of course, were are more concerned with the sharks coming in and beating us. Every week we review how people are doing. If the sharks come in on certain sides, we take note and move the lines around. But we’ve been debating for the last year if it is in our interest to move the lines, or whether we just need to do more work in setting the lines in the first place. Because the question is, are we looking for balanced action or are we trying to maximize our profits? That’s something we’re still thinking about but, in general, if we set the right line out of the gate we won’t need to trade too much.

Adam Wexler and the Performance Predictions team

EGR NA: So is it much more of a struggle finding backing nowadays?

AW: The original product, SidePrize, raised $700,000 and were selected for the LA Dodgers accelerator program. On the day our demo for them, we were set to raise another seven figures, and that was the day the New York Attorney General said it was illegal gambling. That sunk us.

For this product, my last venture outside DFS was sold off and I was largely able to self-fund the business around Q3. We are currently doing a small raise in Q4 because I’m already deep enough myself. The big decision we have to make is, once we get to breakeven do we step on the gas pedal for B2C, go out and raise growth equity funding, or do we start white labelling it and look to partner with sports operators or the casino groups?

EGR NA: Any ideas currently which avenue you might pursue?

AW: The further along we get with B2B, the more it potentially makes sense. I got back from G2E after a lot of meetings there and one thing that seems to make a lot of sense for us is to find an exclusive channel reseller. These companies like SBTech or Kambi that are doing the RFPs for sportsbook deals – we feel like we have a tool that can help them stand out and get up and running in states that don’t have sports betting yet.

Through our game they can be building a database and a brand-new attractive revenue stream. That’s something we are thinking about even if we aren’t actively pursuing it yet. I view our trajectory as a very similar story to Unibet. As I understand it, Unibet was a powerful B2C brand, then it created Kambi as a very strong B2B brand – that’s something I can envisage us doing.

EGR NA: And SidePrize has been mothballed for the time being?

AW: Exactly. That’s just on the shelf at the moment. When it’s appropriate for us to resurrect it, we will. Ultimately, the goal with SidePrize is to rip down the walls between different leagues and turn it into a Tinder-style app where you swipe through fantasy teams and choose an opponent to bet your team against theirs.

EGR NA: What’s next for PrizePicks?

AW: Firstly, we’ve just launched our mobile app, which is huge, and we’re also trying to integrate PayPal. As you’ll know, the payments stuff is a nightmare. With so many real-money games it’s almost a rite of passage, jumping through all these hoops and hurdles to process money. But we look forward to the day when we have PayPal and credit cards and its simple to do. Hopefully one day we’ll look back [at the process] and think of it as funny.