Monkey Knife Fight, the country’s fastest-growing daily fantasy company, has new deals with the Miami Marlins and Miami Dolphins, partnerships it hopes will increase its presence and name recognition in one of the biggest states in the country. The deals follow a handful of other recent pro team partnerships with the Los Angeles Kings, Los Angeles Chargers, San Diego Padres and Los Angeles Galaxy.
There’s an intentional pattern there. All of these teams play in states with huge populations, where sports betting isn’t yet legal. Monkey Knife Fight has a long-term plan to build its user base in states like Florida, California and Texas using fantasy sports. It will transition to sports gambling once it’s legal in those places.
“The majority of Americans are years away from having legal sports gambling,” said Bill Asher, the company’s founder and CEO. “We’re in a unique position in these states to run a profitable fantasy sports site, while readying ourselves for gambling.”
If that plan sounds familiar, it’s essentially the path that both DraftKings and FanDuel took to become dominant forces in U.S. sports betting. Both companies spent half a decade gaining users in nearly every state by pushing daily fantasy contests, which they argued were legally separate from gambling. Once states were permitted to legalize sports betting, they were able to quickly pivot to gambling and capitalize on their customer head start.
While daily fantasy is still the bulk of revenue for both companies, Asher believes they’re focusing less time on it now that they offer betting—a bigger long-term opportunity—in smaller states like New Jersey, West Virginia and Colorado. Asher said he sees little point to Monkey Knife Fight being just another small gambling operator, fighting for market share in those places. He also believes Monkey Knife Fight’s product, which differs from the games offered by its two much larger competitors, will let it grow profitably in the interim.
As evidence, he cites the company’s Cost Per Acquisition (CPA), a metric that measures how much it spends in marketing to attract new customers. When DraftKings and FanDuel were at the height of their fantasy wars, it cost them around $500 to acquire a customer and the average customer spent around $200, Asher said. Neither company ever turned a profit off fantasy. Monkey Knife Fights’s current CPA is $132, Asher said, and over their lifetime, each user is worth around $500. While the company is profitable right now, he said it wouldn’t be once it accounts for this marketing push and the damage from COVID-19.
The company is also hoping the shock value of its name, logo and product will help it build a loyal following, which would see the company as more than just a platform. President Nic Sulsky likened its aspirations to Barstool Sports, which has a tight-knit community, sells its own merchandise and was valued at $450 million in a recent deal with Penn National Gaming.
“Say what you will about Barstool and that deal, but that’s a healthy price tag for essentially a brand,” Sulsky said. “So if we can take the blueprint that DraftKings laid out in front of us, and marry that with the potential brand uptick that a deal like Barstool’s has put in front of us, it sets up in an exciting way.”
Partnering with a local sports team gives companies easier access directly to the type of fans most likely to play fantasy games or gamble on sports. Through the Marlins, Monkey Knife Fight will get signage within the stadium, plus ads through the team’s website, local TV and radio presence. The Dolphins will promote the company through their social channels, and will rename their radio pregame show the “Monkey Knife Fight Countdown to Kickoff.”
— Matthew Rhys Baldwin (M.A) 🏴 (@MattRhys63) July 26, 2020
Monkey Knife Fight was founded in 2018, with the goal of creating a simpler product where casual players had a better chance of winning. The games resemble a series of prop bets—Will LeBron James have more than 8.5 rebounds? Who will throw for more yards, Patrick Mahomes or Aaron Rodgers?—that are bundled into a fantasy team. The company operates in 30 states.
The company has been funded so far entirely by Asher, who co-owns the adult entertainment giant Vivid Entertainment. Asher said they’re currently speaking with potential investors, including Silicon Valley venture funds and Wall Street firms.