Tell us about your background and how you ended up founding StatHero?
That’s a great question. I normally tell the story about my background, and I definitely have a pro-college sales background, but my passion was always sports and sports betting. Fantasy sports came around in around 2009/2011 when I started; so, that’s where I directed a lot of my attention and noticed that to be happy and truly successful in what you’re doing, you need to be passionate about it – which is what I was with sports betting. Now, I have over 20 years of experience across multiple facets including DFS/sports betting. StatHero started because I saw an issue the marketplace needed to address, and that was the winability of not only sports betting, but also fantasy sports. I found myself, like others, just constantly losing. I craved the action of sports, but felt there needed to be a change, so that’s why StatHero was created.
Can you tell us about the app because the gaming market in general is incredibly competitive, what’s the USP that makes you stand out?
Right, yes. Now, there are so many different companies trying to do something or adding a ‘me too’ product out there. Sports betting is all the same product, and we all learned last year that fans are smarter than we think, they are going to take those free plays and keep hopping from site to site – so now all the attention is going to innovation. That is why StatHero is so important for us, to constantly be innovating the world of fantasy sports and making sure that we’re doing something brand new in the space. Fantasy companies will get in trouble if they have those ‘me too’ products or those prop-based products that sportsbooks already have. The reason StatHero is different is because we’re bringing winability back to the marketplace. Not just DFS but sports betting in general, the whole entire sports gaming space. How we are doing that is through transparency. On our head-to-head products, we release line-ups for players to choose who they want to play against. Usually on a head-to-head product, you have no idea who or what you are playing. But with StatHero, you know that and can choose
your opponent. When we released that product, we noticed a big thing; players are winning, and winning 45-60% of the time. I think we are the only platform that can research what players are doing when they are consistently winning, and they are spending 3/5 times more money – which makes sense, right? If I’m consistently winning or I have a shot at winning and I know it is all on me vs games of change, I’m going to invest more of my money. This is because I know I’m going to have more fun and have more of a chance to win. That’s why StatHero is standing out in the way that it is, because players are looking and playing, and they realise "wow, this isn’t a house always wins kind of thing. I’m playing StatHero but I have all the control at my fingertips, and I’m able to sustain my winability."
So, from a business perspective, how do you make more money if your players are winning more?
That’s something we get asked all the time. The answer is we take 10% commission more in our hosting fee than any other DFS platform. Players are willing to pay that because of the advantages that we’re giving them. So, we keep the same DFS margin, while giving those players the same advantage. Players would rather pay a 20% hosting fee for a 60% chance of winning, rather than traditional fantasy where they pay 10% and the chances of hitting are less than 15% just to get money back.
Is that more comparable to a poker operator than a sportsbook, because in poker it’s a rake?
Yeah, but for us it’s definitely a hosting fee. With poker I think you’re taking a rake across the percentage of whatever is in the pot. The 20% we take right from the get-go, but again, the players are winning and not noticing as much because it’s kind of like that ‘lucky’ slot machine, if you keep collecting there’s more excitement there and you’re having fun to put things back into the app.
If we’re to talk about DFS and fantasy sports industry wide, how would you describe the landscape of this sector at the moment?
I’ll speak as a CEO and Founder of a DFS company. I believe the future is bright for fantasy sports because the need and want will always be there. Take season-long fantasy sports for example, fans are becoming more and more involved, with all kinds of different groups of people now playing. So there is always going to be a want to put your onus on players rather than actual teams.
Players are becoming so much more popular because there is so much more control involved; look at the prop and how popular props are getting, especially looking at these prop parlays with sportsbooks. It’s because you know how a player is going to perform and you have confidence in saying, "I know this player, he’s more likely going to get this, and I have to figure out how well he is going to perform." I think that’s why fantasy sports are going to always be there and why if you innovate people aren’t thinking, "fantasy sports are just like traditional sports and I’m just going to throw my money away." If they realise "holy cow, I have more control over here and it’s based on my skill," then I’m going to continue to play fantasy sports. I think on the sportsbook side, that’s why you see sportsbook companies like FanDuel and DraftKings not really talking about fantasy football anymore because they think sportsbooks are going to bring in revenue.
But players are eventually going to get there, and they are already getting there, to say "why do I continue to feed this sportsbook beast, when most experts in the world are hitting 50% on a long-term scale?" That’s why I think that fantasy sports will always be something that’s out there and will continue to grow.
You mentioned FanDuel and DraftKings, are you trying to claw market share back from companies like that or are they still the forces they were in the sector, even though they are focusing more on sportsbook right now?
A reason why they are okay with only focusing on sportsbooks right now is because when people think of fantasy sports, they think of playing thousands of people, entering your line-up and crossing your fingers, hoping you hit the lottery. We aim to educate the players out there, which have had a bad experience and consistently lost money, those who write-off fantasy sports by saying "I don’t get it." Betting on sports is popular due to how quickly you can get in on the action. I can look at a game, take a side and now I’m in, I’m invested. To give them that same experience with fantasy sports, which StatHero does, we have our PickEm product. Instead of looking at two teams on the sportsbook side of things, you are looking at two sets of players.
Now you can pick the team of players who you think is going to beat the other; it is exactly like a sports betting experience, but there’s more skill involved and more chances to win in the long term. So to answer your question on the FanDuel and DraftKings side, I believe that sportsbook will all be their focus now, and on our end that leaves an opportunity for us to say, "hey, you’re having these consistent losing experiences, come play something that you actually have a shot
To your point about competing with them and market share, that’s not really our focus; our focus is mainly on player experience. We want to make sure the players have an unbelievable experience – a winning experience. We don’t worry so much about getting an influx of hundreds of thousands of players because our players are spending three or four times more. We don’t need as many players as a FanDuel or DraftKings to hit that revenue target. We want to keep the focus; we don’t want to get too big out the gate where we’re not paying attention to players. That’s the number one importance right now.
The full interview with Jason Jaramillo can be found on the Gambling Insider website, in our GI Huddle section.