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We were able to get a few minutes with FanDuel's CEO and co-founder, Nigel Eccles, and get a brief rundown on daily fantasy sports in general and FanDuel as a company.
David Dodds: What did you do before creating FanDuel?
Nigel Eccles: In 2007 we started an online prediction market called Hubdub. That was very successful in terms of getting players, but it didn't really have a business model. So in 2009 we pivoted in fantasy sports, launching FanDuel in July 2009. Prior to Hubdub I helped launch two start-ups and was a consultant with McKinsey & Co. for five years.
Dodds: Give us a magnitude of what we are watching here. How big is FanDuel right now as compared to what it was three years ago (number of players, prize payouts, staffing levels, etc).
Eccles: Today we have around 250 staff across five offices: New York, Orlando, Los Angeles, Edinburgh, and Glasgow. Last year we did just over $600 million in entry fees. In 2011, we had a staff of about 15 and processed around $10 million in entry fees.
Dodds: How big is the daily space?
Eccles: Total entry fees in 2014 was just under a billion dollars, so we have about 60% market share. In terms of players we estimate there are around 1.3 million active paying players last year, of which around 1.1 million play on FanDuel (with some of our players playing on multiple sites).
Dodds: How big will this space (and your share of that) get in the next few years?
Eccles: We expect the market to continue to grow very rapidly. The FSTA estimate that there are over 50 million fantasy sports players in North America. We firmly believe that daily fantasy sports will become the dominant way to play fantasy sports. We believe that this coming season there will be more daily fantasy basketball and hockey players than season long players. At current growth rates we should surpass season long baseball within about two years and football within three to four years. One big driver of that growth is the 150 million sports fans who don't currently play fantasy sports. They are taking to daily fantasy sports very quickly. For example, around half of our fantasy basketball players never played season long fantasy basketball.
Dodds: FanDuel's Sunday Million ($25 entry) had prize pools exceeding $3.0 million dollars per week in 2014. Can this get much bigger?
Eccles: Yes - it can definitely get bigger! However, in many ways that is the easy part. Our challenge is to keep making it better. How do we improve the game experience? Make drafting smoother, improve the live scoring experience, help you share the experience with friends, etc.
Dodds: What big announcements can you share about the 2015/2016 football season?
Eccles: It is going to be BIG. Unfortunately, we can't really share specifics but I can say we are hard core on football. From the start of the season last year, we started asking ourselves "What does the product look like for NFL 2015/2016?" Like with Madden, we always need to keep upgrading the product.
Dodds: The site looks simple enough, but behind the scenes this is a complicated venture. You once told me you have a five-person team devoted to fraud. Explain a little about what goes on behind the scenes (support, infrastructure, etc) to run the biggest daily games site on the internet.
Eccles: So yes - there is a significant amount of infrastructure. At our peak last football season our systems were dealing with over 200 entries and edits per second. We were running a network of over 200 different servers. For this football season we will have over 50 customer service agents supported by specialist teams handling fraud, payments etc.
Dodds: Tell us about your licensing deals with the leagues and teams. Why is this important?
Eccles: NFL and NBA accounted for around 80% of our revenues last year, which is why we chose a strategy of going deep with those leagues. With the NFL we are official partners of 16 teams. With the NBA we are the official league partner and partner with 13 teams.
We felt these deals were important as it allows us to market directly to the fans of our most important sports. Additionally, it gives us the opportunity to offer unique prizes and experiences for our players.
Dodds: What advice can you give a fantasy football player that is new to the daily experience?
Eccles: Read Footballguys! Seriously, that is where I do my research for our internal leagues.
Dodds: What is FanDuel's policy towards introducing new sports?
Eccles: We try to measure demand for new sports and prioritize them that way. However, sometimes we have to balance introducing new sports against introducing new features. It is often better to introduce a feature that will be used by 100% of fantasy football players over a sport that would only appeal to 5% of our players.
Dodds: Let's talk a bit about the FanDuel eco-system. What measures do you have in place to protect beginning players?
Eccles: We closely monitor the new player experience. We definitely want new players to have a good experience so we try to channel them towards more suitable contests.
Dodds: Last year, FanDuel released a very popular mobile app for Apple. Are more things planned for mobile in 2015?
Eccles: Like the web product, the focus is to keep making it better. On top of the iPhone app we released in July 2015 we also launched the iPad app in January and Android apps in March and May. One focus we have is to make it so you never have to use the web version and can do everything you want on the app.
Dodds: Tell us about the FanDuel Insiders pages on the site.
Eccles: We are definitely investing more there. We definitely can't (and don't want to) compete with specialist fantasy sports content sites, our players are hungry for fantasy sports news and information. We are keen to keep building out Insider to meet that demand.
Dodds: The FanDuel LIVE events have been some of the most memorable experiences over the last few years for the players skilled enough to qualify. Is the plan to have more city specific LIVE events in the future.
Eccles: So our marquee events are World Championships we hold in the Cosmopolitan in Las Vegas. They are truly an exceptional experience. Even the people who have finished dead last in that event have told me it was one of the most fun experiences they have ever had. Outside of that we have the Playboy series held in the legendary Playboy mansion. Then this year we realized that it was getting more and more challenging to qualify for these finals so we launched our regional events series which has finals rolling across Dallas, New York, Boston, etc.
Dodds: Although most of our viewership eat and sleep football, what other daily games do you offer?
Eccles: After football, our second most popular sport is basketball. It is sometimes described as the pinball of daily fantasy sports as it is so fast and exciting. After basketball the other sports we offer are baseball, hockey, college football, and college basketball.
Dodds: What software improvements will we see for 2015 football?
Eccles: Our mantra is to keep making it better. You will see a number of improvements roll out prior to the season and as we get into the season.
Dodds: What is FanDuel and the industry in general doing to lobby for DFS in states where it is currently illegal?
Eccles: FanDuel is a member of the Fantasy Sports Trade Association (FSTA). We support the FSTA in lobbying in favor of fantasy sports with a particular focus on the five states we don't do business. We had some some success this year with Kansas passing a law making it clear fantasy sports is legal in that state. We also had bills considered in Iowa, Louisiana, Montana, and Washington state. We are hopeful to continue momentum in those states next year.
Dodds: If someone has questions about FanDuel, where should they go for more information?
Eccles: There are quite detailed tutorials and FAQs on the site. In addition, we have a big customer service team who are always on hand to help out.
Dodds: Close the deal. Why should someone play at FanDuel?
Eccles: Quite simply because it is a lot of fun! I suspect if you are reading this you are already in a season long league. You feel committed to your guys and you might be feeling bad about having some fun on the side. You worry that if you league buddies find out they'll get mad. They might even kick you out. But don't worry. This is 2015. Times have moved on. Live a little. (Or even, better set up a private FanDuel league for your buddies. Especially the guy who drafted Peterson last year. I think he might buy into the whole "no season long commitment" thing.)