Bracketology: Fanhood's March Madness sweepstakes targets the casual fan long-tail

By Michael Carney , written on March 12, 2013

From The News Desk

The world is filled with casual sports fans who love to cheer on their team and talk trash with their frenemies, but who have never played fantasy sports or placed a bet in a sportsbook. The majority of the more than 75 million fans that filled out March Madness brackets last year fall into this category. For these people, the prospect of online gambling is likely unappealing, but engaging with friends online around major sporting events is another matter entirely.

Fanhood, which launched its hit Facebook social gaming platform in October, is doubling down ahead of for the craziest four weeks of college basketball. The company’s Most Social March Madness Bracket – ok I could do without the superlative in the name – taps into its user’s social graph to make each game in the 64 team tournament a highly engaging and entertaining experience. The real stakes are bragging rights, but a sweepstakes component offers the chance to win a $4,000 cash prize. Users are entered into the sweepstakes simply by filling out a bracket. Their name is added an additional time for each game they win, and for every pool they enter and every friend they invite to join a pool.

By analyzing its users’ wall posts, school history, check-ins, and friend graph, the app can determine which team you care about and do the same for your friends – the platform correctly identifies its users’ favorite teams better than 80 percent of the time. And because it’s more fun to cheer against your friends than anyone else, Fanhood matches users with their contacts that are backing the competing team. This could be as bloodthirsty as UNC vs Duke, or as simple as a No. 1 versus No. 16 seed.

The idea is to stimulate trash talking and social betting (using in-game currency) via a lightweight and entertaining experience. With each victory and defeat, the results and current standings are published to the users’ wall feeds, making the stakes that much higher. Between games, friends can also play trivia games, complete polls, and enter other contests to keep the excitement going.

As part of its mass market strategy, Fanhood has done everything possible to make its games simple and accessible. There is no need to understand betting lingo, for example. Rather than telling participants “the line,” or the “over/under,” the stakes are stated clearly in plain English. For example, hovering the mouse cursor over a particular game reveals that if you bet X tokens and win, you get Y tokens back. Fanhood sets the odds in its games based on Las Vegas lines and its own discretion.

In its first four months, Fanhood attracted nearly 200,000 users, seeing 10 percent per week growth through the NFL playoffs. The average user has invited 32 percent of their friend graph to join the platform, averaging 52 invites per user, and 40 percent of all betting connections suggested by Fanhood are accepted by users.

What’s more interesting is the potential fan data that the company will being to generate at scale. The company calls these “fanalytics.” For example, how often do people bet against their favorite team, in order to win a pool. Also, how do fans of each NFL team show up during the college basketball season. Given the mass popularity of March Madness, this month’s campaign should draw a spike in engagement, but Fanhood is looking at a year-round opportunity including all major US pro and college sports, worldwide soccer leagues, the Olympics, and the World Cup. In the future, the concept could be extended to casual social betting around other contests like American Idol or the Bachelor.

Fanhood was created by former Yahoo head of engineering Brandon Ramsey along with several former Zynga and Slide executives to modernize the $3 bullion US fantasy and casual sports betting industry. The company has not yet disclosed any outside financing. The group of Silicon Valley veterans is not alone in seeing the opportunity in the space. FanDuel is likely the most notable competitor, having just raised $11 million from Comcast and others. But OHK Labs, BetHubb, Pickmoto, Gamblino, and others are targeting a similar space. Expect to see some sort of March Madness promotion from each.

There has been concern among some investors that fantasy sports will be deemed illegal. In fact, it’s under federal review in several states. But Fanhood is not offering cash rewards in exchange for correctly picking the winner of contests. Instead, it offers social rewards and relies on the pride and ego of its participants to ascribe value to each victory.

Entrepreneurs and VCs are looking for any opportunity to slice, dice, and monetize the online sports and casino betting categories. Most attention has been paid to the highly lucrative yet regulatorily challenging real money gambling category. Fanhood is tackling an equally large but less straightforward opportunity available in capturing the long tail of casual fans.

If Ramsey is correct, we will soon look back at its decision to launch a sweepstakes around March Madness as a company-making viral hack. That is unless he’s a Duke fan, in which case “Coach K” stands for karma, and Fanhood could be in trouble.