Fantasy Sports Funnel to Casino
Trevor John, co-founder of Underdog Fantasy, on the business model of fantasy sports
This market is becoming a funnel business, not a single product business. Free fantasy keeps fans coming back cheaply, pick'em and daily fantasy teach them to deposit and play for cash, sportsbooks raise spend per user, and online casino is where the economics become strongest. That is why companies from Yahoo to FanDuel to Fanatics are all trying to own more of the same customer journey inside one app and one wallet.
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The step up in value is dramatic. Season long fantasy historically monetized through ads, daily fantasy added a 10 to 15% take on contest entry fees, sportsbooks unlocked much larger lifetime values after PASPA fell in 2018, and online casino carries the richest margins in the stack.
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Incumbents are expanding both directions. FanDuel and DraftKings started in fantasy and moved into sportsbook and casino. BetMGM partnered with Yahoo Sports to tap fantasy and media audiences. Fanatics starts even earlier in the journey, using sports merchandise buyers and loyalty rewards to cross sell into betting.
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For challengers like Underdog, PrizePicks, and Sleeper, the real job is to become the default habit before a user reaches the highest value products. The practical moat is not just odds or game format. It is having the app a fan already opens, trusts, funds, and prefers to keep using.
The next phase is a tighter all in one gambling bundle. More operators will connect free play, fantasy, sportsbook, casino, loyalty, and payments so that a fan can move from casual play to high spend gaming without leaving the ecosystem. As more states open online casino, the companies with the best early funnel and strongest wallet retention will capture the most profit.