No Limit Fantasy Sports leverages its own cryptocurrency called NoLimitCoin.
With entrepreneurs starting to develop real-world applications for blockchain, the underlying technology behind cryptocurrencies such as Ethereum and Bitcoin, two blockchain-based startups are looking to improve daily fantasy sports and nab market share from DraftKings and FanDuel.
In 2017, the number of fantasy sports players in the U.S. and Canada ballooned to a record 59.3 million, helping to increase the overall value of the industry to $7.22 billion, according to the Fantasy Sports Trade Association. Startups are now looking to leverage these massive industry growth rates by building daily fantasy platforms based on blockchain technology, which they say guarantees quicker verification times, instant transfers, and increased transparency. The two biggest players in the blockchain-DFS market, No Limit Fantasy Sports and MyDFS, have different business models but operate under the same premise: making fantasy sports better and dethroning market leaders FanDuel and DraftKings, which control 90% of the market.
DraftKings and FanDuel “now have serious problems that include badly balanced marketing budgets, little external competition, a number of monopoly scandals, and the inability to challenge the tough laws and regulations that control the business of fantasy sports,” MyDFS wrote in a white paper.
By using the open-sourced and fast-moving nature of the distributed ledger (blockchain) rather than the closed, proprietary systems that FanDuel and DraftKings use, MyDFS and No Limit Fantasy Sports believe they can drastically reduce transfer times and fees, while providing a service that’s more transparent for the end user.
MyDFS launched its mobile fantasy sports app powered by blockchain.
As both use cryptocurrencies that alleviate the need for a financial intermediary for transactions, they plan to keep fees and transfer times low, thus increasing potential winnings for players. No Limit Fantasy Sports is promising to more-than-halve the rake fees (the amount the platform shaves off winnings as a fee for their services) to 5% from as much as 10% to 16% for FanDuel and DraftKings. MyDFS says it will take a 10% rake but that it doesn’t plan to go higher than that.
Unpredictable increases in rake have been a problem for FanDuel and DraftKings users in the past:
With blockchain enabling near instant transactions, winners would get their prizes immediately rather than waiting a week on incumbent sites. The blockchain startups also argue that that their use of cryptocurrency (Ethereum for MyDFS and a new coin called NoLimitCoin, abbreviated as NLC2, for No Limit Fantasy Sports) alleviate regulatory issues by taking fiat currency out of the equation, making it easier for them to embrace global adoption.
Both blockchain platforms offer fantasy football, soccer, ice hockey and basketball, though No Limit Fantasy also includes MMA and both pledge to add additional sports over time. MyDFS will incorporate data from FantasyData, SportRadar and Stats.
Of course, these blockchain-based platforms aren’t completely risk free. It’s yet to be seen how regulation will seep into the industry and what kind of rules and laws will affect blockchain businesses in the future. DraftKings and FanDuel benefit from an already well-established user base and years of experience navigating the complex regulatory world of fantasy.
