As “digitally native” ecosystems like esports continue to synergize with blockchain technology, industries like fantasy sports could be primed for mass adoption, says digital research firm Messari.
In a newly published report, researcher Mason Nystrom argues that fantasy sports are primed for significant growth due to COVID-19. He also opined that blockchain-based applications could help boost fan engagement in this rapidly expanding market. Nystrom explained:
“While the peak culmination of esports and cryptonetworks waits for improvements in emerging technology and 5G connectivity, blockchain-based fantasy sports are poised for consumer adoption.”
Citing PwC research, Nystrom said betting and fantasy sports are expected to grow 7.2% over the next 3 to 5 years. This may bode well for the segment, as 75% of traditional sports betters also played fantasy sports according to a study from 2018.
Unlike traditional sports betting, where participants bet on the outcome of a game, wagering on fantasy sports is when you assemble a fantasy team and compete against opponents for a cash prize.
The need to digitize the sporting experience has taken on paramount importance after COVID-19 led to a drastic reduction in viewership revenue. With large indoor gatherings unlikely to return until at least 2022, the industry is looking for new ways to enhance user engagement. The end of a federal ban on U.S. betting markets in 2018 provides one such avenue.
Blockchain-based applications can be used as a foundation for digital ownership and monetization, with platforms like Ethereum offering a high level of trust. The trade-off right now, Messari says, is a poor user experience because if you lose your assets, they are gone permanently.
Fantasy games built on top of the blockchain operate by selling non-fungible tokens, or NFTs, that ostensibly increase in value based on how real athletes perform.
The top three crypto fantasy sports — Sorare, MLB Champions and NBA Top Shot – have already amassed over $10 million in sales. Sorare and MLB Champions are built on Ethereum while NBA Top Shot resides on the Flow blockchain.
Although there are hundreds of NFT assets currently tracked by sites like OpenSea, the vast majority have non-existent or extremely low volumes.