Daily fantasy sports are at a complicated crossroads. DraftKings and FanDuel are dealing with Congressional investigations and agreeing to pause operating in New York to try and resolve legal issues. Meanwhile, Virginia has created its own legal framework for fantasy sports companies to operate and Maryland and other states are considering their own bans or allowances for the fledgling industry. Washington, D.C.-based startup Syde offers its own version of the business model, but it may offer the seed for a much wider solution to the politics of the fantasy sports.
"The way things are now, there's not much of an ecosystem for fantasy sports," Syde co-founder and University of Maryland alumnus Ryan Huss said in in an interview with DC Inno. "It's hard to build one when there's uncertainty. That's part of why our game is different."
Syde is an app that offers fantasy NFL, NHL, NBA and MLB matchups, but in a way very distinct from DraftKings and FanDuel. It's pitched to a much broader, more casual audience, not just the die-hard fans who spend a lot of time building expertise on every player to draft a perfect team. Syde creates several dozen pre-made matchups and users pick one or the other "Syde." If you're right, you double your money, minus the 10 percent of the entry fee that Syde takes. For instance, a $5 buy-in gets you $9, double the $4.50 of the actual bet. Buy-ins can range from $2 to more than $50, but that's small potatoes compared to the hundreds of thousands of dollars that DraftKings and FanDuel brag that some of their users win.
"It's all in one click," Huss said. "We want it to be easy for anyone who likes sports to play along without the high stakes or time commitment."
And it's partly the major dollars that earned the two big names an FBI investigation. That started when a DraftKings employee won $350,000 on FanDuel, a basically impossible amount to win on Syde. The major fantasy sports companies have been hiring well-connected lobbyists and making their presence known on Capitol Hill, but are having a mixed effect at the state level. Virginia is arguably a win for fantasy sports companies since it's now possible for them to legally operate there. The problem is that it's a $50,000 fee to get that license.
"The big companies can afford that, but it shuts us and any other new company out," Huss said. "It effectively kicks us out."
The argument over defining fantasy sports plays a part as well. Is it gambling, a game of skill, both? Those definitions matter a lot in terms of regulation. Some states, like Maryland, are still considering what to do, and Huss hopes that Syde and other small fantasy sports startups can persuade Virginia to change its rules by succeeding elsewhere. But that might take just as much luck as picking the winning team blind would.
"[Syde and its competitors] have so much to offer to the places we operate," Huss said. "Getting squeezed out before we have a chance is a mistake."
