Top Podcasts
NFTLA Live Twitter Space: A Fireside Chat w/ @DraftKings On The Future Of NFTs, By NFT LA Live & Howl Labs
As fast as things are going on now, what does the future hold for NFTs? The growth of the Web3 space has been phenomenal in the last couple of years. Industry thought leaders are positive that even more incredible developments are yet to come. Among these optimists is Matt Kalish of DraftKings. In this fireside chat at the NFTLA Live Twitter Space, Matt tells us why DraftKings decided to enter the NFT space and what the fantasy sports contest and sports betting company has in store for us in the future. Matt also shares his views on what the future if NFTs will look like, emphasizing the key role of players who are consistently working on projects no matter what the market looks like. Tune in for more!
Listen to the podcast here
NFTLA Live Twitter Space: A Fireside Chat w/ @DraftKings On The Future Of NFTs, By NFT LA Live & Howl Labs
Welcome to another episode and another session of these Twitter Spaces by NFT LA Live. Along with me, I have the pleasure of having our usual cohost, the NFTs Zach Sekar. How are you guys doing?
What’s up?
Let’s go. Let’s get down to business because we are joined by none less than Matt Kalish. How are you doing, Matt?
What’s going on, gentlemen?
Everything’s fine.
DraftKings in the house. Get my fantasy team ready to lose. Let’s go.
You never know what’s going to happen in fantasy.
It’s the sad truth but I like to pretend like I know what’s going on and that this is a game of skill and I’m the most skilled. Facts. You’re here to help me win my league, Matt. That’s it.
I got the tips. I’m here for it.
Zach, are you playing fantasy?
I’m not.
Zach’s on the bench.
I got benched again. I already knew I would’ve come in last. I didn’t even bother.
It’s okay. I don’t make it every year to do my fantasy. This is my first time in this league so I felt the need to stand out. This is a very apropos conversation to be having. I got to make sure my DraftKings sets me up for success so I can win my prize pool.
You can’t be one-dimensional. You got to have multiple ways to earn. Nothing is so easy in the bear market.
I’m a multi-risk platform. Let’s go. For all my fellow geeks out in the audience, what’s up?
Danny, let’s kick it off. Let’s get into some questions. I got so much on my mind.
Let’s start at the beginning and tackle why we’re all here and why did DraftKings decide to enter the NFT space. Matt, tell us.
Mainly aside from having a few ideas we wanted to pursue, we’ll get into Reignmakers and that whole game in a minute but it was a cultural movement that during COVID, when everybody’s on lockdown, a ton of interesting hobbies became very big. The hobbies of our typical customer at DraftKings. People were filling time and especially when sports got locked down and there were no traditional outlets for people who were playing fantasy sports betting. All that live content was gone and I quickly observed a bunch of things picking up steam, things as day trading, crypto and collecting sports cards. A bunch of these alt investments or hobbies became prominent. Even after sports returned in late 2020, it continued to pick up steam. You saw if you picked any of these markets like sports cards.
Crypto and NFT had immense growth from the end of 2020 into 2021. By the very start of 2021, it became pretty hard to ignore. It was coming up. I spent a ton of time with our customers. It came up in every conversation. That’s what people were doing. Some were playing more in the physical sports space but I was also starting to hear more about things like NBA Top Shots or some of these projects like CryptoPunks, which were some of the early pioneers around ways to apply NFT technology to our collectibles.
For DraftKings, given our platform is all digital and online, the vast bulk of the company is through our apps. People engage through digital means, not physical. Stuff like sports cards in and of itself never was bigger or compatible enough with what we do. When we started to notice a lot of our audience and attention going toward digital collectibles, also considering all the potential around how NFT tech could apply to things like the gameplay in addition to collecting, it went deep. We’re starting to study the space and figure out what is it exactly to expect from DraftKings as it relates to blockchain or NFT tech to our business.
It was early 2021 through the middle of the year that we were thinking, studying and learning. By the latter part of 2021, we launched our marketplace including NFT props and exchange for peer-to-peer trading NFTs. Come closer to the end of the year, early 2022, that’s when our vision around Reignmakers came to market, which is like a blockchain NFT-driven fantasy sports game.
That’s super interesting and it’s fascinating to think about how sports have evolved from the collecting standpoint because anybody who’s a big fan of any sporting event loves collecting moments, memorabilia or trading cards. It is imbued value with that sentimental value of I remember that moment and that becomes meaningful to me, those players and things like that.
We’re talking about when people are looking at stepping in and doing something competitive. There’s a lot of sentiment that goes into the players and the history of those players, what big plays they’ve made in the past and how we allocate our attention to those individuals. It’s fascinating that blockchain technology is leading us on this path where we can do a lot more than what we’ve historically been able to do by way of capturing those moments and then creating value where people can tap into that and use those as reward systems for other people. I’m excited to have somebody as big as DraftKings thinking about this and involving themselves in the space. What’s your experience been so far? Are you currently hoarding all the Bored Apes? Is that what’s happening?
I have my bag of NFTs, some pretty sick ones. There were pretty nice wins in the bag and also some things that didn’t go so well. I’m sure, like anyone who is in the mix, picking up stuff from drops, there are a lot of things in there that are like a graveyard of NFTs and there’s some pretty decent stuff. I have something in the range of 1,500 total NFTs in my wallet and I make my wallet public. Anyone can look. It’s something that I’ve labeled my wallet. I want to make sure everything’s transparent.
I also make a good amount of content. I have a podcast that I do with Gary Vaynerchuk called Props & Drops. I do tweets and Instagram. I try to be pretty open with it because it’s a cool space and hobby. I try to remind everybody that I have no idea what I’m doing from a moneymaking standpoint. It’s a hobby that I do for fun, assuming I’m going to lose all the money I put in.
Please understand that if you’re ever looking at any of my blockchain transactions. I’ve collected tons of different projects. CryptoPunks was the number one biggest win. Over the years, I’ve probably bought and sold 50 or 60 different punks. I currently have 4 or 5. Punks are something very close to me. I don’t know. I got in the mix some stuff like Veefriends. I like projects where there’s actual operation and the team over the course of time that’s going to exist and works on the project.
Some of the ones that I took shots on were in addition to stuff like Veefriends, like Cool Cats or Bored Apes. I’m down to one Bored Ape. I never wanted to have 1 bag but I had 4 at one point. I’ve been dabbling in everything, trying to feel it out and getting a sense of where everything’s headed and what projects I want to move into. The thing I always forget to do is sell things that are down because it doesn’t feel good to sell things that are down. I find myself bag-holding a bunch of projects.
I’ve got you beat there. I’m holding 20,000-plus NFTs. Consider yourself lucky if you didn’t get it earlier because you’d be an NFT hoarder, not a collector. That’s what I consider myself at this point. It’s in the namesake. I’m the same as you. I keep my wallet open and accessible so everyone can see my shame. You’re naming legit projects. In my opinion, you made some pretty good calls right there early so keep at it. You’re crushing the game, it sounds like.
I was expecting you to name sports-related things or somehow your wheelhouse. You’re looking at projects you think are interesting or maybe even that draft thing. Let’s talk about a partnership. Is it important that they’re directly related to sports?
I don’t believe that from the standpoint of DraftKings as a brand. The sports connection’s pretty undeniable and that’s the bulk of the way people think of DraftKings. The interest of people playing on DraftKings is broader than that. Some examples are stuff like trading stocks. Everybody’s into that as a risk-reward game, even if you’re not a professional investor. A lot of our audience prefers speculating, taking some shots on things that they believe in. One thing that often surprises people is if I get to my physical collection, stuff that I have in my office, I collect sports and TCGs. I have probably 80% TCG and 20% sports cards. It’s a mix that I don’t even know why. I tend to like gameplay.
The Future Of NFTs: The sports connection is pretty undeniable and that’s the bulk of the way people think of DraftKings. But the interest of people playing on DraftKings is definitely broader than that.
When I was talking about Reignmakers and applying gameplay to NFT, I always found it hard to not gravitate towards utility. When you’re collecting like Magic: The Gathering or Flesh and Blood or Pokémon, there’s an actual game there. Yes, the collectible value is undeniable but also this idea that it’s an actual game that has been adopted that people are playing actively. It’s something that I always thought enhanced the appeal of TCGs. I found myself gravitating a little bit more towards whatever like MetaZoo and that kind of stuff over sports as an overall balance. That shaped my opinions and I don’t think I’m alone, either. A lot of people think that way.
That’s how I got in. TCGs were the first area where I was like, “This makes so much sense.” I remember the IRL version of Pokémon and going out and trying to find somebody to sit down and play a game with you versus going and hoarding packs of it. It’s so much sense that we have this great thing called the internet where we can go on and find people to match up with and own those digital collectibles as trading cards and be able to have some level of utility of gameplay. There is the collector component to it but there’s also this action that you can take with it that gives it that enhanced value. That’s cool.
Even stuff sports cards, I find myself even if I hold them, I’ll typically putting them up for risk on bets or something, side props on weekly fantasy leagues or something with my friends. It’s cool. It’s nice to admire but I like having something to do with it. I’m always very actively trading and stuff too. All my sports cards or whatever I have, I’m always checking the market. Even if it doesn’t have utility in and of itself, I view my sports cards as I’m actively trading in the market.
Are you guys looking at employing that at some point where we’re going to have a digital trading card that becomes the default prize? Do you see that as the future reward for digital participation? NFTs are a viable option for a lot of companies to find ways to reward participation in their platform.
In the game we put together for Reignmakers football, we did a partnership with the NFOPA so that we could offer real player IP in the NFTs. The core way the game works is you buy packs and break them. It consists of different players. Depending on your luck breaking the pack, you can get a basic pack where maybe it doesn’t even return the value to something that’s multiples of the value.
There’s this concept of scarcity where the NFTs have everything from the core, which is the most populated tier, to what we call Reignmaker. There are only eight of every player in the Reignmaker tier for the whole season. You can have that experience. People enjoy so much breaking packs, trying to pull something scarce. There’s a secondary marketplace where people can list things for sale or buy cards from other players.
The essence of the game is you use your collection to compete in fantasy contests that pay $1 million plus per week in pricing. This season in the Reignmaker football league, we’ve paid over $13 million in cash pricing with no fee. It’s people using their collection. The only cost is buying the NFTs. By competing with your NFTs and using them in fantasy run-ups, you’re competing for all of these millions of dollars in pricing as well. There are things like leaderboards, collection achievements and lots of things. There are lots of ways that you earn using your collection.
As we look ahead in future years as well, the ability to keep competing for more cards from the current season and persistence of some utility year in and year out of your collection. We’ve tried to merge all of these different worlds. I feel a lot of the customers and people who jumped in right away had to say, “This is the merger of everything I liked between fantasy, collecting sports cards, trading NFTs or trading sports cards, opening packs.” It combined everything into one experience. That was the v1, that’s our day one product that over the course of years will keep improving and making it better. It’s a bright future and intersects a lot of super interesting hobbies and interests that people have.
If anybody’s reading and they don’t know what we’re talking about, Reignmakers, DraftKings and those packs are approachable too. I’m on the website looking through. You have different tiers and options. Simulating the digital pack is such a smart idea. Top Shot put it out very early and you guys are iterating on that and smart because it does simulate something familiar to those collectors. Zach, did you want to jump in? You had a question you wanted to ask as well.
First, maybe an observation. Listening to Matt talk, you’re doing stuff that you find fun. It’s like you get to play with all the stuff that you’d be doing anyway and building cool projects and games out of it in that world and trying to bring in a lot of new people who aren’t already crypto junkies. I can’t think of a better way than to give them a place to have fun. Along those lines, we’ve been seeing some companies, bigger, not Web3 brands entering and avoiding the use of the word NFT. Do you think that terminology is already on its way out?
I don’t think it’s on the way out. In the short-term, there are some negative connotations with people that aren’t invested in the space or haven’t put in the work. The connotations are any NFT is a scam or there’s no inherent value to digital assets. If you’re talking to anyone new to NFT or someone skeptical, the types of things that you’ll hear are like, “It sounds like some scam, rug pull or Ponzi.”
Only through getting exposure to the space do you realize it’s like anything else. Jason Tatum, RPA rookie, it’s one of his best cards. It’s my favorite card I own. The thing is like plastic cardboard worth $0.04. It’s not the value is the physical products it’s made from. It’s collectability, which is driven by demand. It’s like anything that people want to own that’s scarce, that is coveted, has demand and is collectible and therefore, there’s a market for it.
Once people realize digital and physical, there’s a very limited difference. As long as you gravitate towards quality projects which have an audience that has demand, a legitimate purpose and team behind them and utility, even in some cases, just the art in and of itself has demand. As long as you’re in that situation, there’s no distinction between NFT and physical. That’s the piece for mainstream collectors and fantasy players. As more people appreciate that, INFT will be a fine word. Short-term, it’s a little tough and in certain cases, I’ve noticed companies moving away from digital cards. They’ll call it things that aren’t NFT, for sure.
It’s the friction points too, making it easy to access. Speaking in terminology that people understand. It’s the stuff on your website being priced in USD that is smart. Creating those on-ramps where people can understand where these marketplaces exist and what their legitimacy of them helps with the ecosystem. It seems you guys are doing all the right moves. We talked a little bit about people what constitutes somebody you would want to partner with? Have you been on the hunt at this point? What kind of partnerships are you looking to secure over the next year or quarter? Is this scenario you guys want to keep expanding in? Is it other blockchain projects? Are there other Web2 projects?
It’s the combo of everything because the view that I and everyone working on Reignmakers have is that it intersects a bunch of areas of people’s interests, including NFTs but also other categories like physical sports cards. Collaborations that are meaningful to our audience from any of those spaces are something that we’re interested in. In Web3, we’ve worked with Veefriends and Steve Aoki. We’ve done stuff with Deadfellaz where they’ve zombified a bunch of football players. It’s the same utility as any other card but it’s the zombie version of Kyler Murray and Chase Claypool. We could turn all the injured people into zombies but I don’t know if they would sign off on that.
Sorry, Los Angeles but the LA Chargers have a devastated team of injuries so they’d probably be the horde if I’m going to lay the blame on anybody.
If it’s collectible, interesting and there’s a good community behind something we’re in. We want to partner with quality organizations, teams or communities that we believe are in it for the duration that has a serious operation and they’re building. I don’t mean that it’s a meme to be we’re building but what I mean is a company that exists and is trying to make progress build and years from now. Something I always look for is a real organization behind something.
We got to get experimental and a little bit weird with it but you’re right, there needs to be some foundation of understanding we have a trajectory, we know where we’re heading and we’re rallying the right people on this path. You named some great names. I got to work with Aoki on some projects and Aoki is everywhere. Gary Vee, same thing.
I love what Gary says too about it being very much a show me, don’t tell me the world. It’s not about going and convincing people what NFT projects can do. It’s about showing them and them experiencing the value. You don’t have to sit there and explain how the internet works. Mom, dad and everybody else is going to get on board because it’s awesome. Doing cool shit is the mantra.
I’ve always been afraid to give tips or anything. It’s one of these spaces where the rules of the road are still being figured out a little bit.
We’re experimenting. The rules of the road are still being written. That’s the problem.
DraftKings is a very regulated company. Even personally, I have gambling licenses in twenty states. I send my high school diploma to whatever, you name it, Tennessee or something. I send everything, bank statements, credit cards, this, that, whatever for suitability gambling licenses, company, every aspect of what we do. A big part of our culture is to innovate. However, understand that you exist in a world that is regulated. Consumer protection is at the forefront. Things have to be done the right way. If people put money in and get money out, that needs to be quick, seamless, automatic and something that you can trust.
Slow is smooth. Smooth is fast.
The old tortoise and hare analogy, maybe.
It’s corny but there is some merit to that.
I have five now. I have a zombie.
It’s this weird PR campaign not to sell.
I don’t have to imagine.
I’m a Ravens fan but it feels the Bills need it.