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Sporting Crypto - May 9th 2022: Stakes raises $5.3M for NFTs for sports wagering fans
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Intro Notes, Plugs & Amendments 🔌🔧
Crypto prices are down but this newsletter stays written.
Many are experiencing their first or second drawdown from a crypto price perspective. I’ll tell you for free that seeing 95% drawdowns within a year in 2017 was far scarier…not that it can’t happen again! That’s not a brag, it was actually horrible to watch and be a part of. Obviously, better for it now and all of that jazz but still - not nice!
Nonetheless, VCs and investors are still flooding their time, attention and money into this space and there remains a crazy amount of interest. People aren’t thinking about the price too much, they’re thinking about what they can *do* with this thing, the thing being Crypto.
🔌 If you would like me to come to an event and speak about Sports & Crypto / NFTs, please reach out on the above platforms.
This Week’s Deep Dive: Stakes raises $5.3M: NFTs for sports wagering fans
Stakes have raised $5.3m for NFTs aimed at sports wagering fans.
The New York based startup has taken investment from the likes of Digital Currency Group, FBG capital and many more as they aim to make sports wagering more social by offering a ‘Web3 experience’ for fans using NFTs as rewards.
Their CEO, Kevin Wang, had this to say about their ambitions:
“Digital sports betting increasingly feels like math homework – devoid of the emotion, energy and sense of community that motivates fans, especially this new generation of sports lovers. Stakes re-imagines sports betting for the 21st century by using NFTs as rewards. We combine social media, gaming and crypto to tap into what sports fans are truly after: friendly competition, showing off knowledge and earning bragging rights. NFTs are a unique way to achieve this.”
And whilst Stakes is trying to disrupt the gambling market, they’re more of a prediction style app that allows users to wager based on opinions and the rewards are NFTs.
“Stakes does not compete with any traditional sportsbook doing regulated real-money betting. There are already plenty of options for people to bet with cash or crypto, legal and otherwise. We want to appeal to sports fans that will never become hardcore or even casual bettors because the very nature of sports betting alienates a large segment of sports fans. Stakes is a web3 social wagering platform used to create a public sports fan reputation, with NFTs that represent your status. Anyone can create their predictions and others can wager with video game virtual currency to agree or disagree with you. Stakes is always free to play and is not considered gambling. We are very different from real-world sports betting, prediction markets, fantasy sports, free to play prediction games and social media platforms. We have elements of each, but we believe we are creating a new category of sports wagering platform that is web 3 native.”
After wagering or making a prediction, winners collect non-fungible tokens (NFTs) to memorialize their winning predictions. Stakes has already minted over 8,000 “proof-of-flex” NFTs to over 2,500 users as a reward for sports predictions.
I love the term Proof-of-Flex.
These POF NFTs are earned for free by correctly making predictions. They become digital bragging rights immutable on a blockchain. If you have an immutable public track record of the accuracy of your predictions, there is a more empirical way to measure - according to Wang.
The gambling market is crazy
Gambling in the US has reached an inflection point as more states start to pass laws that are far more lenient.
Americans have wagered over $100 billion since June 2018 - with $57 billion of that coming in 2021.
With legal betting now available in 32 states as of 2022, it seems as though the gambling market in the US is only just getting started as new legislation starts roaring through the country.
This market’s growth is truly just beginning in the US.
Fantasy sports are a religion
If it isn’t gambling, the attention of sports fans in the US is captivated by Fantasy Football.
In fact, this is a worldwide thing.
Over in the UK - where I hail from - about 8 million people per year enter Fantasy Premier League, the Premier League Football fantasy game.
The fantasy sports market in the US is valued at $9bn (revenue), having doubled in the last decade.
It’s estimated that the United States boasts 46 million fantasy players…that’s one fifth of their adult population.
Dream 11, Indias’s biggest fantasy platform boasts 150 million users.
These numbers are pretty ridiculous.
The most interesting thing about these markets is that whilst some of them aren’t directly monetised by players through wagers - they often are off the books.
We’ve all been in a fantasy work league or a draft league with friends where there’s a pot of cash on the line.
It makes it fun, for most and allows for greater bragging rights.
We need more free NFTs
So the gambling and fantasy markets are huge.
NFTs have had their mainstream moment and seem certain to be embedded in the future of short-form media, collectables and social.
But right now, NFTs are hard to access for most people. They’re expensive and the barrier to entry is not just monetary - it’s also technical.
To actually go and buy an NFT, requires some technical literacy.
Now there are many applications that are helping with that - in fact, POAP makes owning and minting an NFT as easy as swiping on your phone - but for the most part, it’s still technically difficult.
Free NFTs are appealing because the bleeding edge cases so far have been highly exclusive and money driven.
And that will continue, just as sports memorabilia is sold for huge amounts on a regular basis.
But is that what NFTs will be…forever?
Cheaper NFTs will come and so will free ones.
It will be a combination of the following:
Web3 infrastructure allows for cheaper and easier smart contract deployment
Web2 infrastructure that allows for mobile to become a bigger part of web3 (think sending NFTs to someone on Gmail, but not quite)
Brands realise that they’re an insanely powerful marketing and engagement tool that doesn’t require ‘selling’ to fans
So why is this interesting?
The answer is simple:
Sports fandom is sticky and fans love predicting stuff.
But the thing is, your hot takes are usually in spoken word or written down. And they’re usually in WhatsApp chats or on social media.
The reason sports Twitter has become as big as it is is because of hot takes.
“This player is better than this one”
Only to be tormented by your friends in a couple of years if you were wrong.
But these bragging rights and takes aren’t tangible. There’s no attachment to the thing that proves ‘you were right’ and maybe, just maybe, NFTs are that thing.
A screenshot of a tweet doesn’t quite cut it when you want to hold one over your friend.
I never go and browse and marvel over old tweets where I’ve predicted a football player to become really great.
Why? I should feel good about being right…we all do, right?
But because we live in such an instantaneous world where gratification is sought so actively - we’re always on to our next take. There’s no time to breathe or give yourself the flowers you deserve for being right.
NFTs could be the way to showcase your gallery of correct takes.
What that’s worth? Well…only the beholder can answer.
But we’ve all looked at sports trophies we won ten years ago…so why not a digital trophy for beating your friend in a prediction league?
Stakes attempt to leverage that weird feeling you get when looking at an NFT you own alongside competitive sports fandom to create a product that might just be the thing that has some form of product market fit within all this madness.
Even mainstream media and fan media is driven mostly by who is the most right and who is the most wrong.
Especially in US tv shows. Most of them are debate driven!
The beauty of sports is the stories involved.
Fans predicting and debating things are basically the crux of that.
How do you monetise when you give NFTs away for free
The one issue here is monetisation.
Stakes will need to drive large numbers of sports fans onto their app and create hyper-engaged communities.
Monetising models like this come from exclusive drops in the future, secondary market royalties and big partnerships.
But to get there, you need to press on the accelerator when it comes to user growth.
And taking that much VC money on will definitely put pressure on their team to do exactly that.
It’s not impossible, but it’s difficult.
Creating enough volume on secondary markets for free NFTs as well, for most, is a very tough task.
The likelihood of these models is that they will need a variety of robust revenue streams and evolve beyond their original beachhead.
Stakes also have in-game tokens and whilst creating robust tokenomics models are really difficult, it’s not impossible to create an in-game currency that can make the business money as well as help the userbase monetise.
What Stakes do in the future is impossible to know but if they can create a large, sticky and engaged userbase - that’s one part of the puzzle.
More sports crypto stories & things to put our radar
NBA Top Shot was arguably *the* thing that put NFTs on the map, let alone sports NFTs. So why haven’t many done a good job since?
PSG and Messi are selling NFT videos via auction to celebrate his Ballon D’ors! Current bidding is at $57,000 if you fancy it!Lionel Messi’s Ballon d'Or #7 Personalized Video NFT Auction is LIVE! Bidding is now Open for this dynamic digital creation with an exclusive real-life experience Go psgballondor7.com to submit your Bid today for this amazing "1 of 1 Video NFT"!
Algorand are going to be the official blockchain partner for the World Cup 2022 in Watar
McLaren and Okx have signed a major multi-year partnership
Socios have signed up a host of MLS and NFL teams over the past couple of weeks as they expand into the US.
Great reads, great tweeting and more general ‘stuff’ that could impact you
Web2 giants start to encroach on Web3 land. Really interested to see how big tech players develop their crypto strategies over the coming months and years.
As a creator, this is pretty scary. Decentralised alternatives to centralised services should be created if not just to ensure that centralised services are held to account.popular web3 podcast banned by YouTube/Google with no explanation https://t.co/tGmNbJXQ9L🚨🚨🚨 The Bankless @YouTube account 'has been terminated' 🪓 No warning. No notification. No justification 150,000 subs 10,000+ hours of content Hey @YouTube, our community would like a word! RETWEET to let YouTube hear you: It’s not okay to ban crypto content https://t.co/MJQ4MGwtYDBankless 🏴 the UNBANNED @BanklessHQ
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