CEO Special: Matt King – An entrepreneur’s eye
The Fanatics brand has been recognizable across sports for a number of years, predominantly building its name as one of the most popular providers and producers of sports merchandise for supporters of all professional and collegiate teams
Under the guidance of Betting and Gaming CEO Matt King, however, Fanatics has grown to establish itself as a major player not only in clothing and apparel, but in the sports betting industry as well. Having been the leader behind strategies that helped FanDuel become an industry giant, King joined Fanatics with the hope of reclaiming an entrepreneurial interest that has been a driving factor throughout his career.
He tells Gaming America: “For me, it was an exciting and unique opportunity because, one, it allowed me to go back to entrepreneurial roots and then, two, it was really the best company to realize my original idea of how to create a digital sports platform,” King explained. The North Carolina State graduate spent years building experience in a variety of fields, before ultimately discovering a calling in the sports business. His journey has taken him across numerous industries, slowly accumulating the knowledge that has allowed the Fanatics Sportsbook to expand across 22 states at the time of writing and nearly 95% of the addressable markets in the US.
From an early age, King has had an eye for growing businesses from the ground up, even though his childhood may never have raised an interest in sports specifically. Through roles that brought him in front of mentors that helped him flourish into the executive he is today, King’s story doesn’t just involve how he came to join the Fanatics family, but also how the sports betting industry has evolved into the goliath it stands as today.
Where to begin
Having entered college as a mechanical engineering and economics major at North Carolina State, King quickly discovered his interest in the field was waning, but the experience was something he could build upon to find a new path. He finished school at North Carolina State and went to work for McKinsey and Company in Chicago in the consulting firm’s analyst program. “That was a standard tour of duty at the time, handling everything from farm equipment to insurance for my clients. There was lots of great learning, though I also realized I didn’t quite love being a consultant and found an opportunity to join the operating group at KKR as they were building that out.”
King joined Kohlberg Kravis Roberts (KKR) with the chance to help build the investment firm’s business line and assist in a number of operational issues. He also grew the company’s business development platform, which now stands as one of the largest in the world. King spent the next 11 years continuing his work with KKR’s portfolio, establishing his presence in the industry and working in glimpses with various sectors of sports and the business behind it.It was those brief run-ins, however, that eventually brought him to FanDuel’s doorstep while the operator was still in its early stages of development. “We had done some work in sports, but I found myself really intrigued by the business of sports. In 2014, I had a belief consumers were going to begin expecting sports to be delivered in the same streaming perspectives they’ve seen with all these other categories.”
The call to battle
King joined the FanDuel team as CFO and began to execute a strategy that would align with his beliefs that the operator could play a role in what he foresaw as a disruption in sports betting. While his plans would prove highly successful, it also led to some pushback from those who oversaw the regulation of sports betting in significant markets.
“I was introduced to the FanDuel guys when it was still small, only 50 people and $20m in revenue. We thought we had an opportunity to play an interesting role in that disruption that could be coming to the sports industry. I loved the business and so I jumped at the opportunity to be CFO. During my time as CFO, we experienced a hyper growth from $20m in revenue to $120m as well as large capital raises. Then, obviously there was the big DFS war of 2015 that ultimately led to regulatory scrutiny. I played a role with FanDuel and the rest of the team, navigating the regulatory crisis and standing up to the lobbying apparatus.”
In November of 2015, New York Attorney General Eric Schneiderman filed an injunction against both DraftKings and FanDuel, alleging the operators constituted online sports wagering and were therefore illegal under state law. Scheiderman’s argument rested on the notion that wagering money on outcomes players have no control over, such as sports games, had been outlawed in New York since 1894.
On December 11 2015, New York Supreme Court Justice Manuel Mendez decided to grant Schneiderman’s request and effectively forced daily fantasy sports (DFS) operators like FanDuel out of the state. Later that day, though, an appellate court granted a “stay of the injunction,” returning DFS to the same standing it had been in just hours prior to Mendez’s ruling.
After the stay was issued, King and the rest of the FanDuel team he had gone to war with indicated that it would be re-entering the New York market after departing in the wake of the cease-and-desist letters issued by Schneiderman. The company had won the battle, and King began to look towards a transaction that could have changed the sports betting industry as consumers currently understand it today. On November 18, 2016, FanDuel and DraftKings announced their intent to merge in a deal that would’ve given the duo control of the vast majority of the DFS market.
After the merger was signed while King was CFO, King later departed FanDuel for personal reasons, but would return one year later after an opportunity to serve an even larger role within the company came forward; by this time the merger was called off. “Once the merger got signed, I actually left for a year, more for personal reasons than anything else. When my wife and I moved back to Chicago, I took a brief sojourn into the exciting world of commercial insurance. But I really missed the sports industry and, frankly, felt like the job was unfinished. I had the opportunity to come back after the merger with DraftKings broke down to be the CEO of FanDuel.”
The Federal Trade Commission (FTC) had taken notice of the same market share statistics that many in the sports betting industry had seen, as well, and therefore sought a preliminary injunction to block the proposed merger. The transaction was terminated shortly after the FTC became involved, but a ruling that would soon follow paved the way for a sports betting boom. As FanDuel’s new CEO, King was ready to take command of the company that would quickly begin to expand as the industry around it grew exponentially.
“I had a lot of excitement about where I thought we could take the business. Sports betting wasn’t really on the horizon when I took the job, but shortly after I got back to FanDuel, the Supreme Court heard the PASPA case, and it became apparent that sports betting might be an industry in the US. You looked at it and you said the sports betting industry could be 100 times bigger than the DFS business could ever be. So, my plan in the first year as CEO was really about creating a strategy that allowed FanDuel to be a top player in sports betting. My view was we really needed to make sure we had the best product in the market, and that took us to the deal with Flutter which we did in 2018.”
Execution and growth
In May 2018, Paddy Power Betfair, which rebranded to Flutter Entertainment (Flutter, the industry giant we all know today) just over a year later, announced its intent to acquire FanDuel as part of an effort To bolster the company’s assets in the US following the overturning of the Professional and Amateur Sports Protection Act (PASPA). As part of the acquisition, Flutter paid $158m and merged its existing operations in the US into FanDuel, to form the FanDuel Group.
“From there, we took a great brand and a really strong team, combined it with the assets Flutter had in the US along with its global risk and trading, and aggressively pushed FanDuel into becoming the number one player in sports by a significant margin.”Days after the merger was completed, FanDuel opened its first branded sportsbook at the Meadowlands Racetrack in New Jersey. In March 2019, a FanDuel Sportsbook opened at Valley Forge Casino Resort in Pennsylvania, too. King also began leading the operator during the expansion of its online offering into a number of different states. In December 2020, Flutter announced that it had increased its stake in
FanDuel Group to 95% in a $4.1bn cash-and-stock deal. Heading into 2021, FanDuel was rapidly becoming one of the biggest sports betting operators in the US and King had felt accomplished in that he completed the mission he had originally set out to oversee. The job was finished; by the fourth quarter of 2021, FanDuel would report a market share of around 40%, maintaining the hold it has among the industry ever since. While his leadership had taken the operator to heights only King had possibly believed were imaginable, his interest in entrepreneurship led him to meet with one of the most recognizable figures in the sports business.
Finding Fanatics – and Michael Rubin
“After that, Michael Rubin approached me about potentially building a gaming business under the Fanatics brand. For me, it was an exciting and unique opportunity because, one, it allowed me to go back to entrepreneurial roots and then, two, it was really the best company to realize my original idea of how to create a digital sports platform. Michael is the consummate entrepreneur.
The great thing about him is he weighs in and gets engaged, too. He can add a lot of value, but otherwise he lets me run and build the business, which has just been an amazing experience. The assets that exist in the Fanatics ecosystem really are unparalleled. What I say to a lot of people is there’s no good idea I’ve had where we haven’t had the assets, the resources and the connections.”
While his time with FanDuel was a self-described “crash course” in how to run a digital business, a new sense of direction had entered King’s life as he found a chance to build something from the ground up and be a zero to 100 entrepreneur. Now he was able to take the lessons learned from FanDuel’s growth and apply them to Fanatics’ newest venture.
“I think the big thing I learned at FanDuel, or the big philosophy I adopted, is there’s a real risk in digital businesses that you can become over-reliant on optimisations and find yourself not doing enough to innovate or transform the business. We did a lot of things right; we made a lot of mistakes, and I learned a lot about scaling companies in that way. A lot of people say that’s what is great about a digital business: I can beta test everything or I can have facts and data everywhere, but fundamentally if you think about the biggest opportunities or breakout product ideas or business models, you can’t really estimate what it’s worth on a piece of paper.”
King began to find ways to tie the already popular Fanatics brand into the industry he had become ingrained in. In his attempts to build out the digital sports platform he’d been envisioning since his time with FanDuel, King also wanted to offer something that would change how fans could experience sports. “In an age of disruption in sports, how do you create a digital property that sits at the center of what sports fans do and makes the fan experience better? Fanatics is the company that’s best positioned to do that from a brand perspective, league relationships and from a player-based perspective.”
The plan was to use the Fanatics ecosystem to connect its existing consumers with the possibility of being able to experience sports differently within the same platform. In a rapidly expanding industry, King’s experience would end up paying dividends for Fanatics Betting and Gaming in finding a healthy balance. “In a world where you can’t estimate what something’s worth, oftentimes, organizations default to focusing on things they can quantify. As an aggregate organization, you end up investing less in things that can really transform your business. “So one of the things I learned is to create an organizational framework that allows space and encourages the risk-taking that’s necessary to work on something that could be transformational, while also still running and constantly improving the business day to day. Ultimately, again, the best businesses are ones that have a healthy balance between investing in marketing and investing in the brand, and other sectors that are harder to measure.”
Perfecting the product
As King slowly learned how to balance what had made Fanatics into a popular global sports brand, he found a way to connect those existing users to his sector of the company. Indeed, he came to realize that the database Fanatics had already generated would be the way in which he could improve the experience of any Fanatics customer. Turning their purchases into rewards and keeping them within the Fanatics family of businesses became a loyalty program that expands with the consumer base the company continues to accumulate. It is perhaps not dissimilar to FanDuel and DraftKings’ original model of turning fantasy players into sports bettors.
“What we’ve built together are features such as the identity layer, how you log in and access the Fanatics ecosystem. We have a common loyalty currency called Fan Cash. Those have to work across the whole ecosystem because that’s what the fans are going to expect. I think we’ve found a pretty good balance between ‘how do you, from a business operations and organizational perspective, recruit the best and create the best entrepreneurial environments where they can continue pushing their own businesses forward?’ Where we’ve really differentiated is our loyalty and rewards program. If you look at the ability to earn up to 10% back in Fan Cash on every bet you make, the experiences we can deliver to our users that nobody else can, they’re truly differentiated.”
Now, King had the product he could say he had built from zero to 100 and, in a short time, Fanatics Betting and Gaming would grow to address nearly every possible market in the US. Market share in the sports betting industry continues to be dominated by DraftKings and FanDuel, but King worries less about chasing the two operators and instead focuses on nurturing the product he and Rubin are still perfecting to this day. In terms of how he believes Fanatics Betting and Gaming is faring against the two companies, King chooses to point out how his product has risen to join the very best of what the industry currently offers. He also looks at how Fanatics offers advantages that companies such as DraftKings and FanDuel may not be able to bring to the table.
“From a product perspective, I think we’re in the big leagues, so to speak. I think from a size perspective, we’re still relatively small, but our view in our ethos is all about capital efficiency. Slow and steady wins the race in our mind. We can speak to sports fans as a sports brand, whereas the other operators in the category must speak as what they are, gaming brands. That allows us a different relationship with our users than some of the other brands in the market will have.”
Regarding the competition Fanatics has seen depart the US market, such as Kindred, 888/Evoke, Fox Bet, Fubo and more, King continues to emphasize what companies need to put attention towards if competing with the likes of FanDuel and DraftKings is to ever become possible. “To try to compete against FanDuel and DraftKings with an inferior product …I would argue no one to date has been able to do that. That’s been the thing that has evolved over time because, in the early days of the market, a not-as-good product could still take share because people would spend a lot of money on marketing or bonus. But as the market has matured, we’re in a world where you really need to have a product that’s on par with FanDuel and DraftKings.
“The common through line for a lot of the exits is they didn’t have a product that was at parity with FanDuel and DraftKings, and then they spent a lot of money trying to have the marketing overcome that. I’d say the other thing is ultimately that this is a big market. It’s a massive opportunity, but it takes a lot of capital to really make a play. So, I think the people that tried to do it on the edges, or on a relatively modest budget, it’s just really hard.”
King chose to focus on building a product sports fan could use to create a unique experience in various sectors of the sports industry, and the payoff has been incredible expansion within only a 13-month timeframe. The Fanatic’s sportsbook is now in 22 states at the time of writing, and Fanatics Betting and Gaming has expanded to offer Fanatics Casino as well. In what was an incredibly rapid rollout, King and his team went to work and executed a growth strategy that has made Fanatics into a company that can create a better experience for sports fans in a multitude of ways.
Where to next, captain?
In May of 2023, Fanatics made its first major transaction in the sports betting industry, announcing a $225m acquisition of PointsBet US and its operations within the country (leaving Canada and Australia to remain with PointsBet). The acquisition would take its time in reaching the final stages, but Fanatics managed to complete the deal by April 2024, and began sorting its new additions in sports betting, personnel and iGaming, without having to change the identity King had formed in short order.
“With PointsBet, that created a unique opportunity for us to not change our strategy. It just bought assets that helped us accelerate our plan.” Fanatics was, and currently still is, undergoing continued expansion that will assist in building the relationships King believes are necessary to create a recognizable footprint across all sports. Product, loyalty and experience, these are the keys King has kept with him ever since joining Fanatics in 2021 and defines the growth Fanatics Betting and Gaming has seen since birth. Keeping an eye on improvement could be what sets Fanatics Betting and Gaming apart for as long as King is at the helm.
“The feedback we’ve gotten from users has been amazingly positive. They love what we’re doing with the product. They love what we’re doing with the loyalty proposition. And so, we’re never going to have some moment where we decide to spend hundreds of millions of dollars in marketing in one campaign, like a lot of the competition has. This is simply about building the best product and best customer experience, then slowly, over time, grow as a business. We’re in this for the long game. This is a 10-year build in our mind, and we’re only about three years in.”
While being only three years into a 10-year plan may not seem as if the journey is anywhere near complete, many operators could become complacent with the expansion King has overseen in the past number of months. Fanatics, however, continues to look towards the ample opportunity that still lies within the sports betting industry, and the motivation to grow its brand remains at where it stood from day one. It’s a position competitors like ESPN Bet will most likely share, too.“Sitting here today, though, the core thesis is actually the exact same. What we thought would work is working, and I’m more convinced than ever that we have a massive, unique opportunity to build a digital sports platform that spans everything a sports fan does and makes their experience easier and better. For me, it’s super encouraging that, three years in, we’re still just as passionate as we were on the day we started it.”
King may not have grown up a true sports fan, but his first love in business is something that many different sports franchises can relate to. Just as many teams build foundations that lead to reaching the pinnacle of its respective sport, King eventually came to find his foundation and the right people that led him to success. Any winning formula has the correct balance and combination of support, experience and strategy. For King, he has managed to find all three with his Fanatics family and will look to always pursue the dream he’s had since the first stages of his career.You looked at it and you said the sports betting industry could be 100 times bigger than the DFS business could ever be. In an age of disruption in sports, how do you create a digital property that sits at the center of what sports fans do and makes their experience better?
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