The GamingMalta Interview | US-fantasy Sports Giant Sets Up European Operational Base in Malta

DraftKings Inc., today announced that its subsidiary, DK Malta OpCo Ltd., has been granted a Controlled Skill Games License from the Malta Gaming Authority (MGA) following Malta’s recent introduction of a new regulatory regime for certain games of skill.

GamingMalta spoke exclusively with Jeffrey Haas, Chief International Officer of DraftKings on why they chose Malta and their future plans.

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DraftKings is a well-known US name in the fantasy sports sector. For those who may not be so familiar with the company in Europe, can you give us a bit of background to the company?

Daily Fantasy Sports started out primarily in the US about seven years ago. DraftKings itself was founded in Boston Massachusetts in the USA in 2012. We started the business with solid aspirations to grow and be a real competitor to the market leader at the time, and in the last five years we have focused on creating the best experience possible for our players and are now the market leader internationally. We have a substantial presence in the US, Canada and the UK, which are the three markets we operate in today.

What is the history and background of the fantasy sports industry?

Season-long fantasy sports football started off about 30 years ago as an industry in the UK, Europe and North America. When it first started, it was primarily broadsheet newspapers that published the names of all the players, with their prospective salaries and allowed people to select line-ups, draft teams and enter into competitions. People would tear out the back page of the newspaper, fill it in with a pen, mail it in to the newspaper and they would manually tally and keep a score. This was something that was increasable engaging even 30 years ago. That’s where it all started off.

The internet, as with many other sectors, disrupted the traditional print industry around fantasy sports, and around 20 years ago people started working on season-long online sites, with Yahoo being the industry leader.

About six years ago some people started looking at the product and noticed that the disengagement rate for season-long fantasy sports was 75 per cent after just four or five weeks. While the product was incredibly popular, people quickly lost interest because it took too much work to keep up with changing players through the season. The people looking at this at the time were saying how do we solve this problem, what if we ran our contests for a shorter duration either for one week or one day and the concept of Daily Fantasy Sports was invented.

What does the current licensing landscape for daily fantasy sports look like?

In the US we are regulated as a game of skill in ten states and we expect many other states will pass legislation and regulation for our category in the near to medium term. While in the UK we are classified as pool betting, if we were to go into the Danish market, we could get what is called a manager games licence, which is the fantasy sports licence for operating in Denmark. We can also get a skill game licence in Italy, so there are a number of jurisdictions that have a licence for games of skill, but nothing is as intentionally designed as the Maltese legislation has been crafted to be.

The award of a Maltese licence represents a new milestone in Draftkings history. What are your thoughts on Malta’s initiative to regulate skill-based games?

The Malta Gaming Authority (MGA) is a proactive regulator which is very much in touch with emerging consumer trends and technology and it is refreshing to see that the Maltese government, which is responsible for regulating in terms of Malta’s laws, followed advice put to it by the MGA on regulation of skill-based games. What I mean by this is that when we looked at legislation in other markets across Europe, we found that nobody had considered our category at the time laws in those markets were being drafted, whereas Malta has crafted something that safeguards consumers, which is obviously critical. Nobody wants a black eye in our industry, but apart from safeguarding consumers, the Maltese licence ensures that any business operating in and from Malta has a certain level of integrity. I think the Maltese regulation is exceptional because it was designed intentionally with the prospect of creating a framework for operators to be successful and for consumers to be well protected.

What are your plans for Europe and how will Malta feature in those plans?

We are going to test the waters in a lot of different European markets and understand how our products fit in those markets. We want to see how daily fantasy sports resonates with perspective players in different jurisdictions, what sports they like to play and what they do and don’t like about our product. The fact is we are going to be the first significant operator in many of these markets, and there is no way for us to really understand the market potential, so it’s going to involve a lot of market testing. We are definitely taking a long-term view on the opportunity in Malta and the markets we intend to serve under the MGA licence.

What would you highlight as the key trends that are most influencing the fantasy sports sector?

The major trend is the conversion of season-long fantasy sports to daily, but we are seeing media companies and sports organisations taking a greater interest in the sector. DraftKings exists at the intersection of technology entertainment and sports. We create a fantastic experience to bring sports fans closer to the games they love. This suddenly puts a flag in the ground for business that is interested sports, media or technology.

One of our biggest investors in the US is Fox Sports. They are a global player and understand the synergies of working with us. We are attracting a tremendous number of eyeballs, who are massively involved in our product, who love sports and digital products, and we invite any other media company to contact us and discuss how we can work together. That is also true for sports organisation and leagues. We can help them create a better relationship with their fans and attract new ones.

What initially attracted DraftKings to set up in Malta?

Malta is an extraordinary base for our business to grow upon. Sensible regulation from a professional and mature regulator was important. The Malta licence allows us to operate in and from Malta across the EU in any market that does not locally regulate fantasy sports. We were also attracted by the ability to find experienced, multilingual and educated staff from across Europe. Another very important thing was technical infrastructure and connectivity. It is also easy to travel from Malta to the places and markets we are going to want to do business.

What was you experience in dealing with the Malta Gaming Authority?

In short, the MGA was tough but fair.

Looking to the future, what are your plans for the Malta operation?

We will locate our European operations base in Malta, from where we can scale in a number of other jurisdictions around the world. We are putting our regulatory and compliance function in Malta just now, and the intention is to grow from there as the business develops with customer service, fraud, payments, and localisation functions coming online as the business grows. At the moment, we are just getting started and in the process of staffing up. We are taking our initial steps, but our expectation is to be investing a lot in Malta over the years to come

What personal message would you like to convey to the international iGaming community about Malta?

Malta is a wonderful island with very good infrastructure and great opportunities for growth, and I hope many other people will join us in establishing operation there.

Interview: CountryProfiler in cooperation with GamingMalta.

2016 Round Up

Here at GamingMalta, we’re saying goodbye to 2016 and hello to a gaming 2017, ensuring Malta remains the Home of Gaming Excellence. We are sharing some of our milestones. There were a lot – including the setting up of our operational structures, the brand launch, a new website and taking our promotional vehicle on the road, exhibiting at EiG in Berlin, MiGS & SiGMA in Malta to Go Gaming Live in Tel Aviv, Israel.

BRAND LAUNCH

The Valletta city bastions served as the backdrop for the official GamingMalta brand launch, which was held at the Chophouse, Tigne Point, Sliema. It was a great networking event attended by many of the industry’s stakeholders and the Hon. Dr. Emmanuel Mallia, Minister for Competitiveness and Digital, Maritime and Services Economy.

A NEW WEBSITE | GAMINGMALTA.ORG

October saw the launch of our new website, highlighting our mission. Malta offers a great environment for business to prosper and the best ambassadors are those who have come to Malta and grown their businesses. The testimonials on the website are centre stage in communicating this success story.

2017 will see the website continue to be a central information hub for the sector.

‘HOME OF GAMING EXCELLENCE’ VIDEO

It’s true that this Mediterranean island is something special. The sun shines in the sky. And the sun also shines through in the ingenuity and the will to succeed that you witness everywhere in Malta. Our new video embraces all this and brings to light the factors which make Malta the Home of Gaming Excellence.

ON THE ROAD

We exist to attract new business so we went on the road to exhibit at some of the major igaming events, both in Malta and overseas.

EiG in Berlin was our first official overseas stop where we shared a co-branded exhibit stand with the Malta Gaming Authority. This was an opportunity to engage with players in the industry and promote the advantages of Malta’s gaming ecosystem.

We are poised to give start-ups a helping hand. So, it was exciting to sponsor the Pitch Theatre at EiG which gave us the chance to hear about the latest business launches and vote for the innovations that are transforming the sector. Various presentations took place at the GamingMalta sponsored Pitch Theatre on the EiG showfloor during the three day event.

In early December, we popped over to Tel Aviv in Israel for GO Gaming Live and it was a pleasure to host the Gala event for c-suite executives at the Azraeli Tower while also exhibiting at the one day expo.

On the local front, we were pleased to be part of MiGS and SiGMA which have grown in stature over the years to become two of the most reputable and sought after events in the global eGaming calendar.

Success breeds success. Thank you for being part of this success. We look forward to intensifying our efforts and connecting with you again in 2017.

GamingMalta is an independent non-profit foundation set up by the Government of Malta and the Maltese Gaming Authority (MGA). Tasked with promoting Malta as a Centre of excellence in the remote gaming sector globally, it is also responsible for liaising with the local relevant authorities to improve Malta’s attractiveness as a jurisdiction and enhance the ecosystem of the gaming industry.