There’s nothing imaginary about the scope of the fantasy sports market, valued at an estimated $7.22 billion in the U.S. — or the complexities of managing payments for those platforms. In October’s Payments as a Service Tracker™, DraftKings’ chief international officer, Jeffrey Haas, discusses the company’s efforts to improve the global payment experience and the challenges of navigating regulatory requirements in different markets. Plus, notable developments across the PaaS space and over 100 providers in the directory — including five new additions — in the Tracker.
Whether they’re diehard fanatics sure to catch every play, or fair-weather followers with varying levels of interest, sports fans are increasingly splitting their loyalties between real world, hometown teams and teams of their own creation.
The evolution of “fantasy teams” has created another level of enjoyment for sports fans by allowing participants to build digital teams of real-life professional athletes – and to compete with those teams based on those players’ statistical performances in professional games.
Despite the name, however, there’s no make-believe around the success of the industry. In fact, the fantasy sports sector has been growing rapidly in North America in recent years, and is now estimated to be worth roughly $7.22 billion, according to news from the Fantasy Sports Trade Association (FSTA), a group representing fantasy sports players in the U.S. and Canada.
The FSTA also reported the number of people participating in fantasy sports grew from 41.5 million in 2014 to 59.3 million in 2017, and that the average fantasy player spends approximately $556 annually playing games.
Unsurprisingly, companies are looking to capitalize on that growing market. Several have emerged in recent years, doing their best to offer fans platforms on which to play in contests and win prizes, including cash. The best-known names in the industry, FanDuel and DraftKings, are companies whose commercials have become U.S. sports media staples.
If this North American growth is any indication, fantasy sports is poised for significant international opportunity in the next few years.
DraftKings’ chief international officer, Jeffrey Haas, recently spoke with PYMNTS about the challenges involved in introducing fantasy sports to new markets, and which sports generate the most interest in different global regions.
“The Game Within the Game”
According to recent reports, the global fantasy sports market will expand at a compound annual growth rate (CAGR) of 10.16 percent between 2016 and 2020. That growth, Haas explained, has largely come from fans who are eager for new ways to engage with fellow fans worldwide.
“It adds an additional layer of engagement around the consumption of sports,” he said. “If you’re watching a game with your friends, your family, your colleagues – in a pub, at home or at the game – playing a fantasy game with your dream team adds an extra dimension to your immersion in the sport.”
According to Haas, DraftKings specializes in daily fantasy sports that can offer competitions over shorter periods of time, such as a day or a week, instead of a full sports season. The shorter time period means users have a more immediate competitive gratification. With the ability to either challenge an acquaintance or enter public pools to win larger prizes, users have the opportunity to compete against fans from around the globe as well as their own friends, family and coworkers.
“We are the game within the game,” Haas said.
Removing Global Payment Friction
However, in order for that game within the game to attract any players, it needs to provide a means by which users can pay – and get paid, when they win – as easily as possible.
DraftKings’ service, Haas explained, allows users to make payments using credit cards, PayPal or digital wallets, such as Skrill and NETELLER. When a player wins a prize or redeems points, the funds are credited to the same method of payment used to set up their DraftKings account. The idea is to provide fantasy fans a more seamless, enjoyable user experience when using the platform, he said.
“Like any eCommerce experience, nobody wants friction [in terms of] being able to make a purchase,” Haas noted. “We provide an entertainment service, and any point of friction means that our acquisition and conversion rate of customers will diminish.”
Addressing those points of friction can become even more difficult as the company expands internationally.
DraftKings expanded into the U.K. in early 2016, and has since launched in several other global markets. Determining which payment options the company should offer to local sports fans in new markets is a key challenge upon entry, Haas explained.
“If we’re not able to identify or offer the locally preferred payment methods or technologies, the ability to make deposits with us, and confidence in doing so, can be significantly reduced,” he said. “Then we’ve spent this money marketing to our customers … and they come to our site to have fun with their friends and register with an account only to find out that they can’t [play], because they can’t [put money into] their account.”
To address such challenges, DraftKings recently partnered with payment solutions provider Paysafe, to expand their payment methods in Europe through Skrill Quick Checkout. The platform offers customers the ability to use preferred local payment tools, including over 100 alternative payment methods (APMs) specific to their geographic region.
International Growth
DraftKings’ most recent expansion included Austria and Ireland in October. With this international growth, Haas has noticed distinct regional fantasy sport preferences.
“In Europe, it’s fantasy football,” he said, citing the world’s most popular sport, better known as soccer in the U.S. “In India, it’s definitely fantasy cricket, and there are a number of fantasy cricket sites there. As you get into Latin America and Africa, it’s fantasy football again.”
Haas also noted fantasy golf is also very popular in the U.K. and Ireland, although globally, DraftKings offers over 10 sports, including NFL, MLB, NBA, golf, NASCAR, MMA, soccer, CFL and eSports, and a range of leading leagues, including: WNBA, Premier League, UEFA Champions League, UEFA Europa League, Major League Soccer and Liga MX.
Expanding into new markets doesn’t just mean new sports, however. It also means encountering and addressing each new market’s regulations regarding fantasy sports and gambling. Haas said DraftKings works to implement the necessary anti-money laundering (AML) and Know Your Customer (KYC) protocols to ensure fantasy sports player payment information is kept safe. The company works hard to remain in compliance with expectations outlined by different nations’ regulatory bodies.
“Every market has its challenges,” Haas said. “We do our best to assure that our Is are dotted and Ts are crossed.”
As the global fantasy sports market continues to expand, DraftKings and other platforms are all set to dot plenty of Is and cross quite a few Ts to maintain their places in the winner’s circle.
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About the Tracker
The PYMNTS.com Payments As a Service Tracker™ is designed to give an overview of the trends and activities of merchant platforms that not only enable payment processing of new and old technologies, but also integrate with other features to improve the merchant’s experience, including customer engagement, security, omnichannel retail, analytics, inventory management, software and hardware management and more.