Fantasy sports is big business. Players spend more than $30 billion a year on gaming. The companies behind it make $7 billion a year.
The leagues are now on their second or third generation of play — growing from 500,000 participants in 1988 to 59.3 million today in the U.S. and Canada, according to the Fantasy Sports Trade Association. In other words, the fantasy sports industry is here to stay, said Rob Phythian, CEO of SportsHub Technologies, a growing company in Minneapolis' North Loop.
About two-thirds of fantasy sports participants play only in friends and family leagues. They might have a member manage the league, or might use "commissioner" software available through Yahoo, ESPN and other sources, Phythian said.
SportsHub, Phythian said, is after the other third who want to play extra games or join tournaments online. "We call them the fantasy avid fans."
The company acts as an umbrella layer for smaller fantasy sports brands offering online leagues, taking care of compliance to state regulations, marketing and underlying business functions such as processing payments and accounting, he said. The industry has become more complicated since the big two in the business, DraftKings and FanDuel, came under fire for alleged misleading advertising and possible insider trading. Regulations are different state by state, which is why a business like SportsHub can help a brand grow.
Since he founded the company in 2015, SportsHub has acquired six businesses, including WhatIfSports and National Fantasy Championships. It is backed by angel and venture capital, including an infusion of an undisclosed amount last week by New York-based WISE Ventures. WISE stands for Wilf Innovative Sports & Entertainment and is backed by Minnesota Vikings owners Mark and Zygi Wilf and their family.
"The Wilfs really want to take a good look at the market for sports technology," Phythian said.
The Wilfs' fund formally launched last week, with the focus on early- and growth-stage sports, entertainment and real estate ventures. So far, it has made investments in nine companies.