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Sunday, October 19, 2014

Dear Mr. Fantasy

This article appeared this week after Hotbox Sports Ventures made its first big announcement with the NJ Devils.

#CuttingEdgeSport takes a look into the growing market, and dollars, found in the latest form of fantasy football...

A sampling of the free-to-play game currently on Devils' site
The area of pay fantasy in the United States, the loophole that exists in federal law that allows a form of legalized wagering by fans through daily and weekly games based on statistics, continues to evolve. In recent weeks, the two biggest competitors in the marketplace, Fan Duel and Draft Kings, have raised millions in capital in attempts to gain more of the market share and awareness in the minds of consumers by buying up large blocks of advertising in and around every sports event they can possibly attach themselves to. At a Bloomberg conference in September, NBA commissioner Adam Silver said he could see a time where gambling plays into the business plans of the league, assuming it is legal, and lobbyists are earning large fees trying to sway the political arena one way or another to keep, or change federal law which currently prohibits online sports wagering everyone outside of the state of Nevada.

The business, it is theorized, can bring in millions to professional sports teams if it is controlled and legalized and be an amazing revenue generator, not to mention fan engagement platform, for sports in the United States as it is in other parts of the world. Still, the stigma of gambling, along with a powerful lobby of Las Vegas, has kept almost all forms of online sports wagering off the books, but that battle is continuing on.

Leading the way are a handful of states that see gaming as a holy grail. The biggest of which is New Jersey, which has seen its once lucrative business in Atlantic City fall on very hard times as casinos have opened all around the state. The thought, led by Governor Chris Christie, is that legalized inline sports gambling can be even bigger to a new generation of first adopters than the lottery was to a generation decades ago. Battles in the courts or modify or overturn federal law have been beaten back, but loopholes and persistentcy still exist, and another loophole was opened a but wider by the NHL’s New Jersey Devils on Wednesday.

The Devils, under new ownership and led by dynamic CEO Scott O’Neil, have looked to many alternate ways to drive sales and buzz for a team that has traditionally been under marketed in the competitive New York scene. Last year O’Neil led the charge in having New Jersey be the first U.S. team to have an online gambling site, Party Poker as a sponsor. That opened the gates for other teams who were more conservative in their approach in other markets, and has led to online gambling becoming a key and growing category for some teams. Now O’Neil and the Devils have gone another step further, taking the fantasy sports category and introducing a  pay-based fantasy game, the first in American pro sports, with local gaming company Hot Box Sports.

While several teams have engaged free fantasy games where cash prizes are involved, creating a game that has a fee is another shift, and a potentially very lucrative shift, for professional sports.

The deal will include traditional sponsorship components, but will also allow fans both in arena and online, to have fans select Devils players in a series of statistical categories for a game or series of games, with very large cash prizes attached if the predictions hold out. It is restricted for now to only Devils games and players, but Hot Box is banking on the fact that there can be cross-promotion with other teams in the NHL to grow the base and the revenue stream for all involved.

"Hotbox Sports has been working behind the scenes for a few years on building relationships and offering free-to-play games that help the teams and their sponsors in activation and on mobile via apps, fan rewards programs, you name it,” said CMO Terry Lyons, who worked for years behind the scenes running communications for NBA International. “All the while, everyone constantly asks, 'How do we monetize digital?' Our entry fee games are a perfect solution and can be integrated with team media partners and a sponsor who wants to activate."

It is that type of win-win which can make an entry point for teams into this lucrative digital gaming space, while keeping costs and issues with controversy controlled. For this deal, the NHL was well aware of the stakes, and everyone was kept in line to make sure no lines, or rules were crossed with regard to online wager on sport. Fantasy, so to speak, has brought reality to fans who want to see an ROI on their gaming experience.

"Fantasy sports plays an important role in a fan’s experience, and we wanted to bring Devils fans a game where they could focus on their favorite players and their favorite team,” added O’Neil, now CEO of the New Jersey Devils and Prudential Center in a press release. “Our collaboration with Hotbox Sports, offering both free-to-play games and this first-of-its-kind entry-fee game, will ensure Devils fans have an unrivaled fantasy game experience."

Where all this goes next in the States is up for debate. Some argue that sports and gambling will never see the light of day, while a growing audience feels like the time has come. Regardless of what the future holds, it is clear that in the present in the States fantasy sport, for money, is a reality, and that a new opportunity for revenue was opened this week.  The Devils and their partner took a gamble, and it looks like it could pay off for many teams going forward.

Got any thoughts? Let us know using #CuttingEdgeSport

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