Durham’s Fandex is bringing innovation to the digital sports community with a stock market-esque game of skill that also looks to NFTs for upcoming innovations.
When two students brought the idea of a synthetic sports stock exchange platform to Duke associate professor and sports-business veteran Ed Tiryakian, he was at first hesitant, as most sports betting was still illegal under a 1992 ban.
But when the Supreme Court struck down the law in 2018, Tiryakian and his co-founders saw an opportunity. The newfound legal ambiguity created room for Fandex to fill a niche in an industry that was already worth a hundred billion dollars and is experiencing dramatic growth.
“As we were formulating the business plan, gambling was not legal yet,” Tiryakian said. “And then in May of 2018, the Supreme Court famously said it’s not illegal—it’s not legal, but it’s not illegal. We sort of were at the right place at the right time.”
As the group began beta tests and talks with professional sports league representatives, they transitioned their business model from an exclusive pay-to-play with real dollar trades to an inclusive free-to-play.
Fandex’s model is contest-based. A complex algorithm determines the amount of games a team is supposed to win, and users predict if the team will perform better, worse or equally well as expected. Share prices then move based on a combination of both predictions.
“The uniqueness of Fandex is that we are the only synthetic sports stock exchange,” Tiryakian said. “And so you buy and sell shares, and free-to-play means we give you money on the beta play as you give us money.”
The current business model relies on partnerships with bigger sports industry players, like SportsGrid and FanDuel. A 2020 Fandex and PLZ Soccer collaboration for the European soccer knockout match had over 110,000 participants, Tiryakian said, and he expects larger numbers in upcoming contests.
Next up: NFTs
This summer Fandex closed on about $275K of seed funding, which has given it space to explore the reality of what a pay-to-play sports stock exchange would look like while maintaining its current free-to-play setup. Fandex’s next innovation, Tiryakian said, relies on NFT technology.
“That’s our next level, that’s sort of where we can take advantage of the NFT marketplace in a way that very few sports markets can,” Tiryakian said. “We’re a virtual stock exchange, and those are virtual stock certificates, digital in nature. So if we can have, say, the player sign them virtually, or include an audio message virtually, that’s the uniqueness of the product.”
Next steps for Fandex, Tiryakian said, include aspirations to partner with a larger, licensed online gambling provider, which would allow Fandex to transition from a free-to-play game of skill to a pay-to-play gambling experience. The Triangle’s unique combination of sports interest and tech prowess makes it the perfect space for Fandex to look toward these aspirations.
“We’re in an area that’s a hotbed of sports, and has very quietly turned into a nice hotbed of tech, but there’s not a lot of tech gaming,” Tiryakian. “We like this space, where we can be a pretty vibrant tech sports company in gaming in this area. We find a lot of resources available to us because of the space we’re in.”