How Sports Betting TV for FanDuel and BetMGM Generates $20 Million a Year for This New Jersey Startup

In 2016, former venture capital investor Jeremy Stein won $1 million playing fantasy basketball. Then he won another $1 million playing fantasy football. Dumb luck? Hardly: Stein, 37, had spent years developing algorithms to predict the outcome of games. In 2017, he used them to co-found SportsGrid , a sports betting media company--CNBC meets SportsCenter. Clutch timing, too: A year later, sports wagering became legal in the U.S. Though Stein is now CEO of a company that has 37 employees and generated $20 million in revenue last year, SportsGrid's run has hardly been a Cinderella story. And the next move of the Holmdel, New Jersey, company may be its trickiest: expanding out of the $60 billion U.S. commercial gambling industry to win even bigger business. --As told to Graham Winfrey

When I stopped playing daily fantasy sports full time, I formed an esports analytics company called Nxtake; I had a lot of assets in predictive technology. Earlier that year, I had met Lou Maione, who ran a media company called the Fantasy Sports Network. Lou had a lot of assets in content production and distribution, and we started having conversations about putting some of our assets together. He had this idea that sports gambling would become legal within two to three years. In September 2017, Lou and I merged our companies to create SportsGrid. We said, "We'll do some generic sports and fantasy sports, but we'll prep for when sports gambling becomes legal."

Sports is simply data. We take all of the data points out there and make a signal from the noise. Then we feed that information in real time to our on-air talent. We can produce 18 hours of live, original video content on a daily basis. At a certain point, we realized the sports wagering operators like FanDuel and BetMGM needed an engagement tool. What we tell them is, "Think of us as an out-of-the-box media strategy at a very low cost. You can take over our channel and reach millions of people on a monthly basis."?We call that media-as-a-service. That's how we make our money, by selling sponsorship packages. We're also the No. 1 free ad-supported TV sports channel.

Media is a very unsexy business that trades at really shitty multiples, and investors didn't believe in our business model. There was a good year and a half when it was pretty touch and go. We would make payroll for our roughly 15 employees, and then there would be a two-to-three-day reprieve when we could relax. And then we'd say, "Oh, shit, we have another payroll coming up." Our bank account went down to $5.46. It was pretty miserable.

In May 2018, I was in Costa Rica with my wife, and all of a sudden my phone got insanely hot. Paspa, the Professional and Amateur Sports Protection Act, had been repealed. Sports betting in the U.S. would be legal on a state-by-state basis. Everyone I knew was trying to get ahold of me. Read More...

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