There are few sports fans out there that would not want to be an owner of their favorite team. Unfortunately, it is not possible for all of us to live out this dream — unless by chance you happen to have a spare billion lying around. However, all is not lost. There are other ways for us to feel as if we have a stake in our favorite league, such as with fantasy sports. Many fans, including me, actually find themselves more interested in their fantasy squad than their home team. If the Eagles win, great, but if Tom Brady throws for 5 TDs and leads my fantasy football team to a championship, all the better.
The Concept
Professional sports have arguably never been more popular, but sometimes I question whether this ever-increasing interest is due entirely to the sport or if something else, like fantasy sports or sports betting, is partly the cause. Don’t get me wrong, our current major sports leagues can definitely stand on their own legs. However, their popularity is likely only increased by the rise of fantasy sports and online sports betting which, importantly, are deeply intertwined with the leagues in real life. But what if we could separate fantasy sports and sports betting from real life, and have these stand on their own without the need for real-life games or results? Would people still participate and as a result start to care less about the major sports leagues? I think they might. There is an argument that fantasy and sports betting are popular not necessarily because of the underlying games, but because of their inherent properties — e.g., control, ownership, financial incentive, gambling, competitiveness, bragging rights, etc. If these properties are harnessed on a large scale independent of major sports, fantasy would all of a sudden directly compete against that which it once depended on entirely. It is a crazy thought, but one that is becoming possible thanks to blockchain technology.
How does blockchain technology change the game? Among other things, it permits verifiable digital ownership, which is the key to unlocking a whole new world within fantasy sports and gaming. I will not be getting into the details of the technology in this article, so for those less familiar, I recommend also reading an easy-to-understand overview on NFTs and how they relate to digital ownership and scarcity.
Think of It Like This
Suppose you own a unique digital version of Bugs Bunny within a Tune Squad basketball metaverse. Would you rather watch this digital version of Bugs play or an NBA game on TV? What if I said the digital character is worth money, and the better it plays, the more you can sell or trade that character for. Or what if you also own the team that character plays for, and if you win, you’re one step closer to a championship in the Tune Squad metaverse, which comes with great notoriety. Call me crazy, but I think there is a large segment of the population that would rather watch Bugs Bunny play than actual NBA players. Having ownership and associated rewards is fun, even if in fantasy land and not real life.
Zed Run Shows Us What Might Be Possible
We’ve already seen some blockchain projects successfully carve out fictional sports universes. See Zed Run as an example, which is a digital horse racing platform where anyone can buy, sell, race, and breed their own digital NFT race horses. For anyone that ever dreamed of running their own racing stable, Zed Run provides a way to do so at a much more affordable cost — entrance costs less than $20 for some of the lesser breeds. Instead of watching your horse race live from the stands at a track, you are watching it race digitally over live stream, and can earn money if your horse performs well. Do people care that their digital horses have no real-life counterparts? Judging by the tens of thousands of people that have purchased digital horses on the platform, I’m not sure they do. In July 2021, TCG (The Chernin Group), Andreessen Horowitz, and Red Beard Ventures also invested $20 million in the project through Series A funding.
I have yet to come across a Web3 (i.e., blockchain-based) fantasy sports project of similar scale and success to Zed Run in other sports, such as basketball or football. This is not entirely surprising given the differences in playing style, which make these other sports much more difficult to replicate. There is also the issue of how to structure leagues and teams, whereas with Zed Run it is a bit more straightforward in the single-player racing context. However, interesting projects are starting to emerge here. In the rest of this piece, I will briefly explore some of these new projects, each of which are building something that stands alone from major sports leagues like the NBA and NFL.
Some Early Web3 Sports Projects
Below are a few early pioneers in the Web3 space that are pushing the boundaries of sports viewership and fandom. Will any of these projects be successful? Maybe. More importantly, these projects show a glimpse of what may eventually come to be — independent leagues built on blockchain technology that are competing against major sports for fan viewership and spending.
Rumble Kong League
Think along the lines of a Donkey Kong 3-on-3 basketball league. 10,000 unique Rumble Kongs (which are NFTs) duking it out on the digital court for supremacy. Each Kong is a potential player in the league and has a unique skill set (defense, shooting, finish, vision). If you own a Kong and want to compete, join a team with other players for a chance to earn rewards through league gameplay. The better your Kong performs, the more experience it earns and the more value it attracts. There is more detail to the league than what I describe here, but you get the gist.
The cheapest Kong currently costs about 1 ETH (~$1500), which is not cheap but is definitely a discount from the $10,000 floor earlier in 2022. The league also has an official virtual stadium with its own lore — Athlos Arena. Actual gameplay has not yet started, but is expected in the near future.
Is there any difference between watching your Kong play at Athlos versus the 3-on-3 teams at the Summer Olympics? Of course the Olympic gameplay will be miles ahead of the Rumble Kong League graphics — we’re not there just yet in terms of technology to compete with real life. You can also bet on Olympic sports if you want a piece of the action. However, if you want something more, such as an active ownership stake in the players and a sense of broader community, Rumble Kongs has something to offer.
Swoops
Swoops is another project carving out its own niche in the Web3 sports universe. The project is still in its infancy and like Rumble Kongs has yet to launch any gameplay. It is essentially fantasy basketball but with fictional players, each of which is a tradeable NFT. Interestingly, players will also age over time — so each player’s attributes, stats, and appearance will progressively change. There is also a play-to-earn aspect with tournaments, etc.
It is still unclear to me whether Swoops will have virtual gameplay or if it will be more of a trading card strategy game. Regardless, it is a cool experiment to see how much traction a fantasy sports game can gain without being linked to one of the major leagues. Some big names have also invested in the project, including Courtside Ventures, Alpaca VC, Gary Vee, and DraftKings CEO Jason Robins.
“This is truly a game of skill with multiple user profiles and journeys, whether that be owner, investor, or manager. The goal here is not just to be a simple game, but rather a full ecosystem for others to build upon” — David Goldberg (Alpaca VC General Partner) regarding Swoops
Real Gameplay, Web3 Ownership
A different take on the Web3 sports angle involves actual sports gameplay mixed with real ownership / participation via NFTs or other forms of crypto. This structure makes things a bit more complicated since real players are involved (with salaries, etc.), but it can make the gameplay element much more exciting for fans.
Fan Controlled Football. One novel project in this genre is Fan Controlled Football (FCF), which essentially aims to be a real-life video game. Here, real football games are played in a high-tech arena and streamed live on Twitch. Games are 7v7 with a 3-man line and full contact. There are no kickoffs, no punts, and no goal posts. Teams start at their own 10-yard line and drive 40 yards for the score. A few former stars are also playing in the league, including Terrell Owens and Johnny Manziel (see current roster here).
Now for the interesting part. Within game, plays are not called by the quarterback or coach. Rather, it is the fans that call the shot. On Twitch and in the FCF app, there will be a Run or Pass option when your team is on offense. After picking one, there will be four diagramed play options. Pick your favorite, get notified which play won the vote, and watch that play unfold on the field in real time. Additionally, who plays on your team will always be different. Each week there is a live draft where you can vote on who you want to be on your roster. Teams get two franchise players and one keeper after the first game, and everyone else is recycled weekly.
Season 2 of the FCF also added Ballerz Collective NFTs. Only Ballerz NFT holders were able to manage the four new expansion teams, which also provided access to private Discord channels and IRL events. For the NFT fans out there, two of the expansion teams were themed on the Bored Ape Yacht Club and Gutter Cat Gang NFT collections.
BIG3. BIG3 is another league to note here. This is a 3-on-3 basketball league with real gameplay (12 teams) founded by Ice Cube and entertainment executive Jeff Kwatinetz. Numerous former NBA players played in the league in 2022, including Joe Johnson, Nick Young, and Gerald Green. What is interesting for purposes of this article is the recent advent of BIG3 Ownership NFTs. These NFTs provide fans with various benefits, including, among various other things, VIP ticketing, meet-and-greets, and voting rights towards team actions. Each team also has 25 “Fire” tier NFT owners who, subject to regulatory approval, will receive 40 percent of the net proceeds from any future sales of their team. In May 2022, Gary Vee actually purchased all 25 “Fire” tier NFTs for the Triplets.
“I’ve been incredibly impressed with the pop culture relevance of the BIG3 league. Over the last several months, I’ve been able to get closer with league co-founder Ice Cube and the rest of the team and I’m extremely excited about the impact of the Blockchain on professional sports. All of those ingredients create a scenario where I am excited to join this incredible league.” — Gary Vee after purchasing ownership in the Triplets
We Are Still Early
Major sports are here to stay, but if fantasy and sports betting are any indication, there is potential for new entrants in the space. The projects surveyed in this article are at the intersection of sports, fantasy, gaming, and sports betting. Whether they ultimately succeed will depend on their capturing a portion of the audience spanning any or all of those industries (which includes traditional sports). How successful they are at doing so will determine whether disruption of the sports industry can occur.
The growth of these various industries will also only serve as a tailwind for new Web3 projects. For example, since the Supreme Court struck down a federal law prohibiting sports gambling in 2018, numerous states have legalized betting which has led to tremendous growth. In June 2018, sports bettors wagered $310 million for the month. In October 2021, they wagered $7 billion — a more than 20-fold increase (see below graphic). DraftKings even believes that the online sports gambling market, at full maturity, can gross in between $22 billion and $24 billion annually in the U.S., up from under $1 billion in 2021. This is all not to say that Web3 sports are directly correlated with the growth of sports betting or any of these other industries. However, they share properties, and prove that there is potentially a large market if built correctly.
There are still huge obstacles before any form of disruption of the sports industry occurs though. For example, ownership of players or teams typically has a cost, and many viewers may not have the means to participate. For leagues like the Rumble Kong League that are relying on virtual gameplay, this barrier to entry might hurt viewership. Realistically, I’m not sure tens of thousands of casual sports fans will ever tune in to watch a virtual game if they do not have a vested interest. This does not mean the Rumble Kong League cannot succeed, but it might limit its reach. It will therefore be a challenge for these new leagues to balance ownership incentives with broader interest / viewership. I am sure it can be done with free-to-play aspects, but it needs to be thought out. We are still very early in the development of these projects, and it is likely that most future successes haven’t even started building yet.
Comments ()