ScoreStreak Pauses Operations to Raise More Funds
On Tuesday, ScoreStreak announced that it has run into financial problems and will be suspending operations until they complete a new round of funding. A simple message on the ScoreStreak.com Twitter account stated that they would be ceasing services until they can raise more money.
Update: ScoreStreak is permanently closed. Find reputable dfs sites here.
ScoreStreak didn’t give any sort of timeline as to when they would be back in service, stating only that they need to raise more money to get things running again. In the meantime, there will be no more contests and new player signups will be halted. Everything is on pause until further notice.
The good news is that existing customers can still log in and withdraw funds as normal. Thankfully, ScoreStreak.com didn’t dip into player deposits to keep the service running. If you have cash on the site, you can log in and they’ll process your withdrawal in the normal 24 to 48 hour time frame.
It was just over a year ago that ScoreStreak won the FSTA Elevator Pitch contest to score $1.2 million in funding. It appears they’ve burned through the cash and are back on hard times. As nice as a seven figure cash injection is, it’s just a drop in the bucket compared to the multi-million dollar marketing budgets of today’s fantasy sports leaders.
On an FAQ page at the ScoreStreak.com website, they explained that things had been going well up until this week. New signups were increasing and guaranteed prize pools were growing larger. However, operating costs continue to exceed revenue and have now put ScoreStreak in poor financial shape.
The closure highlights one of the challenges DFS sites face going forward. Just last week, the always perceptive Steve Ruddock published a post highlighting some of the fundamental problems facing the industry. One of his big points was that to date, not a single fantasy site has yet turned a profit. Even DFS giants FanDuel and DraftKings remain reliant on cash infusions from big-money investors.
What are the odds of ScoreStreak making a return?
It’s anyone’s guess at this point. ScoreStreak clearly needs more cash to operate, but getting cash from new investors will be a tough sell. The site had planned on securing an additional $5 million in financing but an e-mail sent to customer stated that it has “taken longer than any of us have expected.”
If they had trouble securing financing when things appeared to be going well, it will surely be an even greater challenge now. The longer it takes to get that funding, the harder it will be for ScoreStreak to mount any kind of a comeback.
As Steve noted in the afore-mentioned post, it’s not getting any easier for startup DFS sites to attract funding when the industry is so dominated by much bigger players. Sites need to show some sort of competitive advantage to attract investors, but US law is quite explicit in how contests must be structured to avoid legal issues.
In its favor, ScoreStreak does have a unique contest format that isn’t based on a salary cap or snake draft. Players are allowed to draft anyone they want for each position without any concern at all over how much that player costs. If you want a team full of superstars, that’s your call.
The catch is that you have to assign a goal to each player you draft. These goals can be quite lofty and will challenge even the best athletes in the world. If your picks fail to make the grade, you don’t get points. For example, you could draft Peyton Manning and slot him for 4 touchdowns. You might get 14 points if he achieves his goal, but you get nothing if he comes up short.
So, the strategy in ScoreStreak isn’t so much balancing budgets but in choosing how you assign goals to individual players. You might want to go for easier goals and get the safe points (and risk losing to someone who chose loftier goals) or you might decide to go for broke and assign difficult goals to your players in the hopes of racking up more points than the competition.
It’s a shame to see ScoreStreak hit hard times because it does offer something unique and players on the big fantasy forums and fantasy sports subreddits seem to love ScoreStreak. Daily fantasy sports may be a booming industry, but it’s not an easy market for new entrants. Let’s hope ScoreStreak finds the money it needs and comes back stronger than ever.
Wes Burns has more than a decade’s worth of experience as a writer, researcher and analyst in the legal gambling industry and is co-founder of BettingUSA.com. As a former professional online poker player, Wes approaches his work from the viewpoint of players.
