Fantasy Front Door to Sportsbooks
Trevor John, co-founder of Underdog Fantasy, on the business model of fantasy sports
The real fight is not over fantasy rake, it is over who owns the customer before that customer starts placing higher value sportsbook and casino bets. Fantasy products are the cheap front door. They get fans to download an app, put money in a wallet, learn a game loop, and build a habit that can later be redirected into sportsbook and iGaming, where the economics are materially better.
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DraftKings and FanDuel already proved this path. They used daily fantasy to build millions of users before PASPA fell, then converted that base into sportsbooks. By 2024, sports betting had become more than 60% of their combined revenue, while fantasy was down to 5% to 7%.
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That is why challengers try to create lock in at the app level. Underdog sells paid drafts and pick'em contests with a single wallet. Sleeper leans on chat and season long engagement. Fanatics uses FanCash and one loyalty program across shopping, betting, collectibles, and free to play games.
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The incumbents still have the strongest position once users graduate. FanDuel was at 43% US sportsbook share and 27% iGaming share in early 2025, backed by years of product spend and market access. That makes early brand preference valuable only if challengers can keep users inside one ecosystem as they move up the value ladder.
The market is heading toward a full funnel model where fantasy, sportsbook, and casino sit in one account with one wallet and one rewards system. The winners will be the companies that turn a low cost, habit forming fantasy product into a durable on ramp for higher margin betting, instead of handing that customer off to FanDuel or DraftKings at the moment spending accelerates.