One of the most recognizable entrepreneurs in America is betting on the future of daily fantasy sports.
The Beverly-based startup, co-founded by professional daily fantasy player Peter Jennings, doesn’t compete with fantasy sports contest sites like Boston-based DraftKings. Instead, Fantasy Labs sells web-based software that can help fantasy contestants research and build lineups of promising real-life athletes, which they can then enter in another company’s fantasy contests.
Cuban’s stake is the first outside investment in Fantasy Labs, which was previously funded by its five co-founders, company president Dan Fabrizio said.
“People have been knocking on our door for the last six months because they see the industry’s hot,” Fabrizio said. The team held out. “Then somebody comes along like Mark Cuban, who’s a nice intersection of sports, celebrity, and entrepreneur, with a proven background in tech.”
The news comes at a contentious time for daily fantasy sports sites, which are under intense legal scrutiny in several states. New York is the most serious: DraftKings and New York’s FanDuel are fighting a lawsuit from Attorney General Eric Schneiderman, who accuses them of violating gambling laws.
Cuban’s stake, however, signals that he thinks the industry has a chance of withstanding the regulatory questions — in a news release, Cuban called it “an industry that is poised for huge growth.”
Fabrizio also is the founder of Sports Insights, a decade-old company which sells software that supplies real-time odds and other data to people who bet on sports in places where such gambling is legal.
“We saw daily fantasy emerging and it’s a similar type of thing — it’s trying to make predictions on the future of multiple sporting events,” he said. “We came in and said, well, we’re doing a lot of this stuff for the traditional sports betting market.”
The idea didn’t really catch on, Fabrizio said, until he met daily fantasy experts to partner with. That helped the startup bridge the “last mile” in developing a product that serves players’ actual needs, he said.
Fantasy Labs is among a recent wave of startups that seek to offer tools to players, who compete to assemble the best fantasy roster of real-world athletes. Among its competitors is the more recently launched RotoQL, co-founded by Boston-based professional daily fantasy player Saahil Sud.
“When we first started, we definitely got a lot of negative feedback from some of the professional players — somewhat jokingly — about giving up our edge,” he said.
But big players in the industry, including the major companies, realize that more casual players need to have a chance to compete with people who are essentially making daily fantasy a full-time job.
“They need people to have tools, to have information, to level the playing field so that people can have fun and continue to play,” Fabrizio said.
Most of the company’s small staff is based around the country, with Fabrizio operating out of the company’s corporate headquarters of Beverly. The investment will allow Fantasy Labs to expand hiring in the coming year, Fabrizio said.