For this year’s NFL Playoffs, the daily fantasy sports company FanDuel offered a “Bitcoin Bowl” contest in which winners were paid in bitcoin. The winner received 1 bitcoin. It was FanDuel’s first foray into cryptocurrency.
Now FanDuel is doing it again, with fantasy NBA. FanDuel’s Crypto Cup will launch on Feb. 22, and the prize money will be paid in cryptocurrency—but in Dash (DigitalCash), not bitcoin. The contest is “presented by Dash.”
Crypto Cup includes two NBA contests: one is a free contest, the other has a $3 entry fee. Users will have until the start of the first NBA game on Feb. 22 to enter their lineups. (Entry fees still have to be made in USD; FanDuel is not accepting entries in cryptocurrency.)
For the paid contest, the prize payouts are: 15 Dash to the winner; 10 Dash to 2nd place; 5 Dash to 3rd place; 4 Dash to 4th place; 3 Dash to 5th place; 2 Dash to 6th place; 1 Dash to 7th place. The free contest pays out 2 Dash to the winner, 1.5 Dash to 2nd place, 1 Dash to 3rd, and 0.5 Dash to 4th. Winners will need a valid Dash wallet address to receive the funds, and can use any exchange that supports Dash. (Coinbase, the No. 1 mainstream US brokerage for buying cryptocurrencies, does not.)
Dash is an open-source, peer-to-peer cryptocurrency that was forked from bitcoin’s source code. It first launched in 2014 under the name XCoin.
At the time of writing, 1 Dash is worth $690 USD and it’s the No. 12 cryptocurrency by market cap. Its value is up 3,450% in the past 12 months.
FanDuel takes a risk by committing to pay out prizes in cryptocurrency: the payout is not locked in at any set USD amount, so if Dash were to soar in the next week, the contest could cost FanDuel more than expected.
DraftKings has never paid out prizes in cryptocurrency.
So is FanDuel’s foray into crypto just a marketing gimmick, or does the company have bigger plans to integrate with digital assets or blockchain technology?
FanDuel CFO Andy Giancamilli will only say that it’s about innovating to keep things exciting for users.
“Our first cryptocurrency contest was a new experience and well-received by our users, so we wanted to continue to offer this unique prizing option,” he says. “We are at the forefront of the sports industry, so whether it’s Bingo or cryptocurrency as a prize, our goal is to innovate our contests and prizes to give more people more ways to play and win on FanDuel.”
Interestingly, DFS users may also over-index as cryptocurrency enthusiasts. When FanDuel launched its Bitcoin Bowl, Giancamilli said in a press release, “We’re recognizing that most of our users are early adopters of technology and have a significant interest in cryptocurrency.”
The entire daily fantasy sports industry faces a crossroads in 2018.
Last year DraftKings and FanDuel had to call off their planned merger, and FanDuel founder and CEO Nigel Eccles left the company at the end of the year. This year, the entire sports industry awaits the results of Christie et al vs NCAA et al., a case that the US Supreme Court heard on Dec. 4. The outcome will have a major impact on the legalized sports betting landscape in America, and on daily fantasy sports platforms. If New Jersey wins the right to legalize and regulate sports betting, many other states are expected to follow suit in a domino effect.
DFS market size = $327mm LTM (based on actual reported #s) and minimal growth; unicorn status for DK & FD hard (or impossible) to justify
— Adam Krejcik (@akrejcik) October 19, 2017
It’s worth noting that DraftKings and FanDuel, the dominant market leaders in this business, generated only $327 million in revenue from September 2016 to September 2017, according to the research firm Eilers & Krejcik Gaming. (Their “handle,” a term for the entry fees users paid, was over $3 billion, but $327 million is their revenue from contests—and the companies still aren’t yet profitable overall.)
Will jumping into cryptocurrency attract new users to these platforms? FanDuel says its Bitcoin Bowl was in the top five free contests for the year and that more than 50% of active FanDuel users entered.
Disclaimer: Yahoo offers its own daily fantasy sports product.
Daniel Roberts is the sports business writer at Yahoo Finance. Follow him on Twitter at @readDanwrite.