❌ Failed startup
✅ Successful startup

Sport Draftr: Shutting Down & Losing £45,000 Due to Legislation Changes

Will created Sport Draftr, a Daily Fantasy Sports site in the UK, offering leagues in the English Premier League, and UEFA Champions League. The product was loved, looked great, and it worked well, but due to a lack of knowledge in the gambling industry and legal changes in legislation, they were forced to close the company.

United Kingdom
Sports
Legal Problems
Capital

Will Laurenson

November 5, 2019

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Hi Will! What's your background, and what are you currently working on?

I’m Will, 30, and I’ve been working on a variety of product marketing roles in London for the past 8 years. I specialize in customer journey optimization; making sure traffic converts, and then either stick around as highly engaged and valuable customers.

Sport Draft was a Daily Fantasy Sports site in the UK, offering leagues in the English Premier League, and UEFA Champions League.

Sport Draftr's Dashboard

The main dashboard, showing a view of the leagues available on a week

Sport Draftr's Team

A league specific page showing the team builder page.

If you’re not familiar with DFS, you basically pick a new team each week, for each league you want to participate in. Most leagues would cover 1 week of fixtures (Friday-Monday, or Tues/Wed for the Champions League), but a few would just be the 3 pm games on a Saturday, or we’d have Sunday only if there were enough fixtures on. Your points get added up when players score goals, claim assists, make successful crosses, passes, tackles etc. 

The site was monetized by charging an entry fee to a league (e.g. You pay £5 per team you want to select and enter into leagues), we then took 15% of the entry fees, and the rest is paid out as winnings.

My role at Sport Draftr was marketing. Although I helped with the scoring algorithm, commercial model, pitched investors, my main responsibility was to grow the business through various channels including Facebook Ads, influencers, partnerships and refer-a-friend.


What motivated you to start Sport Draftr?

I’d always been looking for an opportunity to start something of my own. I worked in a very entrepreneurial role, with the founder of one of the biggest voucher/discount code sites in the UK. My role at the time gave me a lot of freedom to explore new technologies, and come up with new proposals that would add value to the business, however, it was always focused around that business's core focus; discounts.

I actually left the company shortly before starting Sport Draftr, and moved into a Head of Product & Marketing role at a startup, it involved a lot of early stage marketing strategy, as well as working on the overhaul of their entire website and business model.

My co-founder was a friend I had lived with for just over a year (we actually met in the back of a tuk-tuk in Thailand on the way to the full moon party!), but he moved to the US as his girlfriend was there. Fortunately, this turned into a bit of a blessing for us, as it exposed him to the US model of Daily Fantasy Sports.

We looked at the Daily Fantasy model that Fanduel and Draftkings had launched in the US and thought this would be great for the UK market. We have a huge gambling industry here, and so combining that with stats and the ability to pick your own team should have been a winner.

In the UK, Fantasy Premier League has been the go-to fantasy site for years, but the one big problem a lot of people face with it is that if you miss a week or two, or just have a bad week, you can fall behind so much it kind of gets a bit pointless and people lose interest.

We worked hard to build a model that could make any player a potential points scorer. The example we always use is that Michael Carrick (who won everything you can with Manchester United), was always a pointless pick in Fantasy Premier League. He doesn’t score, he doesn’t assist, doesn’t get a clean sheet bonus because he’s not in defense, and so why would you pay to have him on your team? With our model, he scored points for his passes, time in possession, tackles and interceptions that were the mainstay of his game.

I’d always been entrepreneurial, I had tested out a couple of different ideas such as a travel site, but always canned them because of high competition, and the requirement for huge amounts of traffic to make the revenue models work. A year or two before Sport Draftr, I was actually in a business development role looking for new markets and new opportunities for the company I was at to expand and generate new revenue streams, so the research and product development areas were already there for me.

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How did you build it?

We just kind of kicked it off and got started really. I designed some wireframes, we used 99designs to get our initial site done and my co-founder just cracked on with coding it all. We started applying for our licenses after speaking to lawyers (which actually wasn’t as helpful as expected). The initial advice was ‘you probably need this license, you might need that one,’ but nothing too concrete, so obviously we rejected their proposal of £10-15k per license application and just did it ourselves.

It meant writing our Know-Your-Customer policies, ISO policies, proving funds were available etc, but my co-founder came from finance so had been through all this before and writing it for ourselves wasn’t an issue.

I think we got the first version live at the end of August, having missed maybe the first game of the new season, and we agreed to go ahead with the business in February so the whole process took maybe 6-7 months to get live. 

It was good fun, my co-founder was based in the States so he’d normally send me some things to look at when he finished for the day, I’d pick them up first thing and have feedback by the time he was awake, so we developed quite a good way of working like that.

The best bit was obviously getting the site live though, getting our first users in and seeing people actually playing the games, and everything working as expected. You could sit there with the site open on your phone, watching the games, and you’d see everyone's scores going up and down as players scored or lost points.

We built up a bit of an email database before launch, and so pushed it out to that list, along with our friends and networks. We very quickly got to the stage where the main games each week were filled within about 15 minutes of us putting them up on site, which was normally as the current games closed due to the actual fixtures kicking off. It meant we had engaged users keeping an eye on their scores, but also getting setup for the following fixtures.


Which were your marketing strategies to grow your business?

We grew mostly through Facebook advertising. We’d promote blog posts about how players were performing, and we developed a ‘Power Ranking’ which gave an idea of which players would do best that weekend based on how they were performing individually, as well as their team's performance and oppositions. These proved really popular, along with player comparisons. When big teams were playing each other such as Liverpool vs Man City, we’d pick out 2 key players, highlight some key stats and asked people who they thought would score the most points that weekend.

We also got a load of good feedback on various forums which contributed to some OK organic growth.

One thing that really helped was launching in an industry that people are super passionate about - football. People loved the stats we were throwing out on social and were always happy to chip in with comments of their own. 

We got to about 1,000 users, of which about 50% played weekly across different games, with the average monthly spend peaking for us at just under £30.


Which were the causes of Sport Draftr failure?

A lack of investment, low revenue per user (per transaction), and a lack of experience in the gambling industry. It sounds like we really messed this up, but the revenue at scale could have been ridiculous. We would be taking 15% of all wagers, and not putting cash up ourselves like a bookie would. Our biggest costs would have been marketing and servers as we scaled.

Legal issues in the US scared off investors. It was around the time that the legislation was being looked into and Fanduel & Draftkings started getting banned in some states. Investors saw us losing potentially our biggest market, as well as the risk that they’d launch in the UK to compete with us (Draftkings did later that year but with a very American product, it never gained any traction as far as I’m aware). When we failed to close a round in March the year after we launched, we knew it was over.

We were definitely gutted, we had a product people really loved, it looked great and it worked well, but the commercials just didn’t work without the scale that investment would have brought us.

It took us a little while to close, filling out the paperwork etc, but the 2 big moments that we felt the most were when we had confirmation that our gambling licenses had been surrendered, and then when we had confirmation that the company closed. Fortunately, we didn’t have a staff or any other dependants, so it kinda was just a case of switching the website off and handling communications with users.

My co-founder has moved on to work at a few different startups as a CTO, which are doing pretty well, while I’ve worked for a Zipcar competitor, and in the gaming industry again. Now I specialize is customer journey marketing, helping companies convert more of their traffic into customers, and keeping those customers engaged and retained for longer, and at higher values. I love working with data, spending my days looking for optimization experiments, implementing them, and seeing the numbers move in the right direction.

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Which were your biggest mistakes and challenges you had to overcome?

Marketing turned out to be a huge issue. We didn’t know the gambling industry, and they didn’t know the DFS model, so affiliates and partners were trying to charge the commissions that they’d charge other gambling firms. We’re talking at least £60 CPA, but the biggest guys wanted over £200. Given that we were projected an LTV of around £50, it obviously didn’t work for us.

As mentioned before, Investment was a problem. I had relationships with some big funds from before, but they all had money from investors who wouldn’t touch gambling. 

Team resource was a problem as well. Although we didn’t have the money to hire, I didn’t have that much time for the project while working a full-time job. Pitching to investors, and trying to run all the marketing in just a couple of hours a day is really difficult when you’re desperate to grow as quickly as possible.

I wouldn’t put direct competition down as a big issue though. There were some guys who had been around a year or so longer, had backing, had the experience. But we didn’t have high opinions of them, and their platforms were definitely inferior. It was still just a brand new idea in the UK really, no one was looking for you, so you had to work hard to put your brand out in front of people.

Other mistakes...we probably tried a couple of channels that I should have known wouldn’t work. We got an ad in a digital magazine for university students and it drove nothing. The audience was probably right, I just doubt the quality of the magazine itself really (and having worked in the magazine industry, I should have known better.)

If I could pick out one main thing that we could have done better, it would be a focus. My co-founder should have dealt with 90% of the investment stuff, while I attended London meetings when necessary, and I should have just focused my time on marketing and bumping our numbers up as quickly as possible.


Which were your expenses? Did you achieve some revenue? In the end, how much money did you lose?

Revenue was just less than £1000, which means we probably took £6-7000 in entry fees. We just didn’t manage to keep the site alive without investment. I think we lost about £45,000, and a year's worth of time on this. So not huge amounts by some standards, but it was quite a high risk as we knew we were reliant on investment to really grow the company and keep it going.

If you had to start over, what would you do differently?

I wouldn’t make it a gambling service. We would have gone down a freemium app route of some sort, allowing us to get users from all around the world, not just the UK. It would have made getting users easier, reduced our costs and possibly completely removed the need for investment.


Which are your favorite entrepreneurial resources?

I have a bunch of newsletters all go into a folder, and I check through it every now and again. Blogs such as Groove (customer service), Crazy Egg, Hotjar and CXL for conversion, Internet Retailing and a bunch of others really. 

Dan Kennedy ‘No B.S’ books are great, and I generally read loads, but I have half a bookshelf full of books still to get through. They’re all business or marketing focused.


Where can we go to learn more?

The best thing would be to connect with me on LinkedIn. I share thoughts on Customer Journey Optimisation, and I’m always happy to chat there. There’s also my site if you want to understand a bit more about what I do (although you’ll understand why my co-founder handled the design side!)

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