Fantasy Sports Onramp to iGaming
Trevor John, co-founder of Underdog Fantasy, on the business model of fantasy sports
Fantasy is becoming the cheapest onramp to the most profitable forms of online gambling. The core games across Underdog, PrizePicks, DraftKings, and FanDuel look increasingly similar, so the real asset is not a unique contest mechanic, it is the customer relationship, the app icon on the home screen, the stored balance, and the habit of opening one product first, then moving that user from drafts to Pick'em to sportsbook and eventually casino.
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The economics drive the whole strategy. Fantasy contests typically take roughly 10 to 15% of entry fees, sportsbooks are around 30% margin, and iGaming can reach about 70%, so companies use lower cost fantasy acquisition to feed users into much richer products over time.
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This is the same playbook FanDuel and DraftKings used after PASPA fell in 2018. Their existing fantasy user bases became built in distribution for sportsbooks, and sports betting now makes up most of their revenue while fantasy has become a much smaller slice of the business.
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The challengers differ mainly in how they source demand. Underdog leans on fantasy first, PrizePicks and Sleeper fight in similar pick'em lanes, and Fanatics uses a 100M plus commerce audience and roughly $19 CAC from merchandise to cross sell fans into betting and casino products.
The next phase is a full wallet stack around the fan, not a standalone fantasy app. The winners will be the brands that can keep users active year round, add sportsbook state by state, and plug in casino wherever regulation allows, turning a low margin game into a durable pipeline for much higher lifetime value.