The Crypto Sports Market Is Promising

On April 5th, 1975, Satoshi Nakamoto was “born”. On January 9th, 2009, he released bitcoin, and, as a result, invented the cryptocurrency industry.

Flash forward to 2017 and DapperLabs launches the first NFT viral sensation, CryptoKitties, resulting in the company landing a partnership with the NBA in 2021 to launch NBA Top Shots.

Top Shots were so simple but so genius. Digital trading cards of NBA highlights captured the attention of hundreds of thousands of sports fans and speculators alike, with many willing to spend small fortunes to obtain the crypto GIFs. It didn’t take long for people to realize they could get rich off NFTs, and thus, the great NFT bull run of 2021 began.

Unfortunately, NFTs have been down-only since 2022, and it’s unclear when the non-fungible JPEG resurgence will be. But, despite the brutal amounts of money lost in NFTs over the last year, one sector of the market is still thriving: sport NFTs.

A Big Market

The sports (and esports) market is gigantic with projections for it to generate over $500 billion in revenue in 2022. This is due to two major tailwinds:

1. More people than ever are betting on sports. The sports betting market was already valued at $168 billion in 2021, and since then, it’s become even more commonplace. For context, 50 million Americans bet on the Super Bowl this year alone.

2. Fantasy sports are gaining in popularity, with the number of players in the USA and Canada doubling over the past decade. Similar to sports betting, fantasy sports increase interest and engagement in sports, teams, and players.

Thankfully for crypto, such a large market presents big opportunities to onboard new users.

The Web3 Sports Push

In the past, crypto brands focused their sporting attention on sponsorships. Who could forget the Crypto.com and FTX arenas?

Instead, like most segments of crypto, the industry is at its best when it doesn’t try to fit into legacy molds but instead does things in a new and innovative way.

Crypto companies such as Chiliz, Sorare, and Stake are doing just this, standing head and shoulders above the competition.

• Chiliz is the dominant fan token platform, and they have already onboarded major brands across soccer, basketball, combat sports, motorsports, and esports. Fan tokens are crypto tokens that give fans new ways to participate with their favorite team. This could be fan-led decisions, contests, or exclusive tickets and gear.

• Sorare is an NFT fantasy game. Instead of merely picking a player's name, you get to purchase digital playing card NFTs. These NFTs are often even more valuable than their physical counterparts, and Sorare has already partnered with over 300 brands, including a $150 million deal with the Premier League and a union with the NBA. If you want to dive deeper into Sorare, Page One has an excellent article.

• Stake is a crypto sports betting platform that is partnered with major UFC fighters, soccer players, race car drivers, and even Drake (who frequently places multi-million dollar bets on the platforms). So far the platform has been quite successful, netting $2.6 billion in revenue in 2022.

Beyond the mainstream partnerships, these platforms have done quite well in onboarding regular users, as Chiliz currently has a market cap greater than $700 million, Sorare has done more than 50,000 ETH in sales, and Stake had the aforementioned $2.6 billion in revenue in 2022.

Looking deeper, we can see that sports NFTs are among the most popular NFTs in existence. Sorare is far and away the most traded NFT over the last day, week, and month, while only Axie Infinity stands above Sorare and Top Shots all time.

The implication? Besides Axie, no NFT collection has done more to onboard new users than sports NFTs.

Looking Ahead

It’s still early days for the crypto <> sports industry. But, it’s clear the union is mutually beneficial:

• Sports is a huge market, appeals to a wide variety of people demographically, is popular irrespective of the broader economy, and is already being gamified through gambling and fantasy sports. This makes it a perfect tool to onboard new users to crypto.

• Crypto improves fan engagement, skews younger, and presents new ways to increase revenue. In other words, it’s tailor-made for sports teams and leagues looking to be ‘cool’ while simultaneously making more money.

For these reasons, we would not be surprised to see this industry grow exponentially in the coming years, especially if the rules around regulation become clearer.