Exclusive Q&A With Fliff CEO: We Weren’t Rooting Against Prop 27 in CA

The resounding failure of Prop 27 in California would seemingly have sent the founders of the Fliff social sports betting and sweepstakes app into a high-five loop.

Voter rejection of a proposal to make mobile and online sports betting in California legal would, in theory, have stopped a movement that could have lured away a significant portion of Fliff’s user base looking to leverage its sports betting opinions with real money.

Not necessarily so, Fliff co-founder Matt Ricci told California Casinos in an exclusive interview.

The reason: Three of the company’s biggest states in terms of customer base are New York, New Jersey, and Pennsylvania, which represent three of the most lucrative legal sports betting markets in the US.

The takeaway, he said from his office in Philadelphia, is that free-to-play customers appear to be different customers than traditional sports bettors. And platforms like his are more than just gateways.

With no high fives happening whatsoever, California Casinos de-briefed with Ricci on Prop 27’s past and Fliff’s future.

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What’s your analysis of Prop 27 and how it impacts Fliff?

MATT RICCI: I wasn’t really thinking a ton about it. A lot of people, I think, thought that for our business it would really be an advantage for (it) to not pass. Maybe it’s a little bit counterintuitive, but we generally kind of benefit from the halo effect of sports betting going live in different states and there being more awareness around it, and then us just bringing a differentiated product to the market that fits a different type of consumer.

We saw that in New York and Pennsylvania and Jersey. They are three of our top states, even in spite of the fact that they’re the most mature and developed markets.

I didn’t really think that (Prop 27) would pass, but I was definitely surprised by just kind of how stark the margins were. I know from people there, it seemed like people were just getting tired of seeing all the ads and that contributed to it.

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New York the Case Study for Free-to-Play Staying Power

How did Fliff ride out the wave of New York’s mobile sports betting launch in January?

MATT RICCI: We did see an initial dip actually in our New York users in January. And I think we can kind of attribute it to all the crazy bonusing. There was definitely a shift with people going to using those sites and apps. But then what we saw was, after that initial dip, there was a huge resurgence in our New York users.

I think a lot of it is, it’s just different. Having the free-to-play aspect of the product really is something that resonates with a lot of people that are more into more traditional mobile gaming, a different type of audience that doesn’t necessarily want to have to spend their money.

They just want to enjoy the games played for fun. And so I think we benefit from the fact that people in states like New York, there’s a lot of buzz and conversation around sports betting. And so for the type of people that would use Fliff, it’s a lot of people that really just want to be part of the conversation of sports betting. They want to be able to not necessarily spend a lot of money. They just want to be able to some skin in the game or picks that they’ve made that they can then be part of the conversation with their friends.

And I think that market of people is actually bigger than we realized when we started off.

When we started, it was part of our initial thesis: There’s going to be all these people that are going to be new to sports betting and intimidated by getting involved, reluctant to go in and deposit money into DraftKings and FanDuel and the market leaders and be looking for an easier on-boarding, a lower-stakes way to play. So I think that’s just the way that we’ve seen our user base develop. It’s not really people that are using it just as an alternative to sports betting, because maybe their state doesn’t have it.

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How does Fliff make money?

MATT RICCI: It’s a premium model. So we have different cohorts of users, which is, I think, probably pretty similar to social casino in that sense, where we give people a small amount of coins every time they run out. There’s a daily bonus and things like that, so they’re always able to claim a smaller quantity. A thousand coins is the minimum.

But then we get people that also purchase them either when they run out or when they want to buy more coins. So what that’s done is it creates different levels.

The users kind of think about the value of the coins as having some associated monetary value. For example, we get a lot of people that share their slips on Discord and Twitter, which I think also helps the organic growth.

So when someone posts a slip with a 10,000-(coin) pick that they’ve made and they won 100,000 or something, the only people that really know the value of that are the people that actually use the app. So when other people are seeing it, they don’t know what the coins are worth. They don’t really have a way to kind of draw a parallel to that versus the people that use the app.

They know that they can buy that amount of coins for say, $10. So they basically equate it with that monetary value and it works really well for the users that are much lower-scale, small-stakes players. Because some person that bets $1 on DraftKings and wins $10, they’re not going to post that on social media because then people are going to be like, ‘Oh, well, you only bet a dollar?’ The person that posts a slip of 10,000 coins and wins 30,000 obfuscates the actual dollar value.

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Is it a small percentage of players buying most of the coins?

MATT RICCI: No. The majority of users are purely free-to-play.

A lot of them don’t spend any money at all. But then we have different segments where some people only buy the dollar packs of coins. The most common is in the $5-10 range. That’s the ones that we’re most selling. And then from there, it’s basically a bell curve so that the $20 and $50 and a $100 coins are the longer tail. I wouldn’t say it’s a small number.

It’s definitely not like a small subset that drives a large percentage of the revenue.

What’s the origin of the company name?

MATT RICCI: It’s funny. When we were starting, we didn’t want to name it with anything that was just like ‘bet’ or ‘play’ or the typical kinds of sports betting apps. The priorities were not to have a typical kind of sports betting name, and then also we wanted a name that was simple and memorable and that we thought also, people could use in different ways.

So what we started to do was look at other currencies and slang forms of people talking about money and other ways people were referring to money. And that was kind of the direction we were thinking.

And then, I came across this short film that was written by one of the writers of South Park, and there was a guy in the film and he was at the bar and he was tossing out money at the bar and calling it ‘fliff.’

And I was like, that just fits sort of the mentality. It’s what we’re trying to go after, being able to play and have fun on a lower-stakes, much lower-stakes basis and just giving people that option to have the freedom to play and the competitive gaming and that stuff like that. It kind of stuck, so we kind of went with it.

Do you want Fliff to become a real-money sportsbook eventually?

MATT RICCI: If you had asked me that like a year ago, I think we were thinking maybe use this model and then roll it into (a sportsbook). But I think we’re not thinking as much about that now because we’re just seeing that it’s just a different type of audience for the most part — that it’s really people that, for a sportsbook, are going to be much lower-value type of users. And so I don’t think the business model and the economics really work out if we were to just try to convert those people into real-money betting.

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