Karma Gaming, the Halifax startup that develops online games for regulated lotteries, has released FrontRow, the world’s first mobile fantasy sports product built for the lottery industry.
Fantasy sports — in which a fan builds a team from players across a league and sees how they perform each week — has become a huge business. The two top fantasy sites, DraftKings and FanDuel, are both valued at more than $1 billion. But most regulated lotteries have missed out on the craze.
FrontRow is designed to let regulated lotteries, mostly government-owned bodies, get into the fantasy game through their customary sales channel of retail outlets. And it also gives casual fans a shot at winning. That’s a key, as Bloomberg has reported that 0.5 per cent of fantasy players (known as sharks) account for 98.5 per cent of the winnings in mainstream fantasy betting.
“This product announcement is our first step into the lottery retail channel, which still drives over 95 per cent of global lottery revenues,” Jay Aird, Karma’s co-founder and chief information officer, said Friday.
“Focusing on integrating mobile technology into the retail channel is an exciting move for Karma, as it opens up the North American market considerably.”
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Karma, which has launched online gaming products with lotteries in Canada, Europe and the United States, designed FrontRow so all the exchange of money occurs at a retail outlet. That means the lotteries can use the product whether or not their jurisdiction has passed online gambling legislation.
The system lets customers download the FrontRow app on their mobile device, and then go out and buy FrontRow tickets from their local lottery retailer. They use their smartphone to scan the code on the ticket, and can pick from a variety of sports and games.
Rather than pick individual players, the customer picks his or her favourite teams, and the app automatically assigns a roster based on the choices.
During the game, the app lets the customers follow the performance of the players they have been assigned. If they win, the customers take their ticket back to the retail outlet to collect their winnings.
Because the ticket holder does not pick individual players, the system allows a greater emphasis on enjoyment rather than having casual players lose money to sharks week after week.
“The fantasy sports industry is exploding around the world right now, and lotteries don’t want to find themselves in the same position they did when online poker took off,” Adam Caughill, director of new business development for Ontario Lottery and Gaming Corp., said in a statement released by Karma.
“We need a seat at the table fast.”
Aird said the response from the lottery industry has been strong and the company is now in discussions with “a number of” North American lotteries for adoption.
“FrontRow offers lotteries an exciting opportunity to incorporate deeper customer learning into the retail channel for the first time,” Karma CEO Paul LeBlanc said in the statement. “Lotteries will benefit from the FrontRow analytics dashboard, which provides real-time sales updates, engagement rates as well as additional insights.”
In 2013, Karma Gaming received $5 million in funding from: Rho Canada Ventures, the Canadian arm of Rho Capital Partners, which has offices in Palo Alto, Calif., New York City and Montreal; Innovacorp, the Nova Scotia innovation agency; and Vanedge Capital of Vancouver.
