Zima Red ep 131: Dan Nissanoff - Game of Silks: Bringing Thoroughbred Horse Racing To Web3
Primer: In this Zima Red episode, we have Dan Nissanoff, a serial entrepreneur. Games of Silks, a fantasy horse racing game that mirrors the US Thoroughbred Horse Racing Industry, is his 5th venture. Find out why the horse racing industry is booming and how he is innovating the sector with the introduction of NFTs here.
Background
Went to NYU for law
Worked for a large law firm specializing in corporate bankruptcy. Wanted to learn about the mistakes companies make
When the internet came out in the mid 90s, he left law to become an internet entrepreneur
In 1994, he started Partminer, a B2B exchange on the internet for the semiconductor industry
After Partminer was sold to a private equity firm, he started Portero, a luxury goods exchange
Wrote a book called Futureshop that is about consumerism and how the internet is changing how we consumed
His 3rd company was called Make Meaning, a family entertainment concept that connects families together with crafts (e.g. making cakes, soap, candles, etc.)
His 4th company was called The Crown League, a Web3 fantasy football concept. As the SEC did not provide regulatory guidance on security token offerings, he sold the business to NFL Hall of Fame
A year ago, he launched his 5th company called Game of Silks
The Crown League
Why Did They Focus On Broadcast Stability?
Content is critical to the success of professional sports
They are able to overlay their own commentary over live games
“If I can feed you content in real time, that's specific about your team, it brings it to life in a real way, and creates incredible engagement and incredible entertainment value for the constituents that are playing the game.”
- Dan Nissanoff
Game Of Silks
The US Thoroughbred Horse Racing Industry
They are bringing the US thoroughbred horse racing industry from the real world into the Metaverse
In the US, there are 20,000 horses that are born each year that are qualified to race
These horses are sold at one year old at an average price of $60,000
Once a horse is bought, the buyer has to care for it and train it to race at a cost of $50,000 a year
There are 30,000 races each year
Races attract over 50 million people that bet over $11 billion on the races
The tracks entice horse owners to race by giving away 10% of the betting money to the owners of the winning horses
The 2022 Kentucky Derby
Everybody thought the two favourites were going to come in the first and second place
Rich Strike, a dark horse, came out of nowhere and won first place
“When I step away, and I look at the impact of this on the horse racing industry, it's going to be massive. You're talking about a horse that was bought a year ago for $30,000 that came in to win the biggest race in the country.”
- Dan Nissanoff
This shined a spotlight on the horse racing industry that anyone could win
Rich Strike won ~ $2 million prize in the derby
If it wins a few more races, it can go on to breed
It can breed up to 200 or more horses a year, with each horse generating $100,000
How Game Of Silks Work
Game of Silks is tokenizing every horse that’s born in the US into an NFT and tracking every data point around their lifecycle
The value of the NFT tracks the value of the underlying horse
People can share ownership of their horses
Players can develop farms in their Metaverse and use those farms to generate income by allowing other horse owners to stake their horses to your farm
When people stake their horses in your farm, everyone shares in the prize pool of the winnings of all horses in the farm
To enter the game, you need to purchase a Silks avatar
They will be building every major US race track in their metaverse
Users will be able to place bets
Why Did They Want To Mirror The Physical World?
A lot of games out there are using fictional horses/bloodlines
Those games are PvP betting games that use an algorithm to determine who’s going to win, animate the race, and pay out to the top 3 places
They wanted to leverage the massive amount of data and content that already exists in the real world
“When you open up the sports pages and you read articles about horse racing, you're reading about us, because we don't have to recreate that content. And that content is as relevant to our community as it is to the rest of the world.”
- Dan Nissanoff
Why Do They Focus Only On The US Horse Racing Scene?
Want to be hyper-focused early on to prove their concept before building additional verticals
Their lead investor, Tropical Racing, has deep ties with the US horse racing industry
Have 30,000 people in their community. Half of which are international
Massive interest for horse racing internationally
How Is Revenue Generated?
In the real world, gambling drives the prize purses
They are structured as a DAO. Every asset that’s sold on the platform goes into the treasury
Have multiple income streams:
Horses
Land
Avatars
Secondary market transactions
2 tokens in their economy:
Governance token
Transactional token
Both tokens are non-inflationary
When your horse win races or its offsprings are sold, you will receive transactional tokens as rewards
These transactional tokens can be used to buy in-game assets, bet on races, or be exchanged for their governance tokens
By year 7, they predict they will equal the amount of money paid out by the real industry in prize money
Syndications And Farms
Introduced syndication and farms to create an entry point for everybody
Players can take less risk through a syndicate
Horses can be fractionalized and sold off
Horse racing is a high-risk game:
You can buy a horse that’s never been trained well enough to race
You can buy a horse that races but never wins
In the real world, people buy multiple horses/syndicate their horses to diversify their risk
The Metaverse Race Tracks
Building an immersive 3D experience
Their minimum viable product will allow players to trade their horses, assemble syndication groups, develop farms, etc. Will happen in 5 months’ time
Started their game with 1 year old horses. Will take another year for them to begin racing
3 ways to watch your horse race:
Live feed of the actual race
The actual race in the metaverse simulcast
Actually going down to the race track itself
Helping race tracks build their tracks in the metaverse
The race tracks in the Metaverse are owned by their corresponding real life race tracks
Provides interfaces that allows people to bet in crypto
Will push their community to the race tracks
The DAO receives an affiliate marketing fee for every bet that’s made
Issues Around IP
Operates under federal and state guidelines of fantasy sports
In horse racing, horses are not trademarked because ownership is temporary
What Other Subsectors Within NFTs Excite Him?
Love supply chain applications of NFTs
He was in the luxury goods space before. Authenticity and provenance are very important
Single Favourite NFT
Was one of the original minters of a Clone X
One of his Silks’ avatar
Most Controversial Thought On Web3
The onboarding process to crypto/NFTs is clunky and unsafe
Web3 has the promise to change our world with an order of magnitude of 10 times the impact of the internet
The disintermediated will fight back
“I can tell you having built multiple companies that threatened major industries, when you create fear in an 800 pound gorilla, they don't act very nicely.”
- Dan Nissanoff
If He’s Not Allowed To Work On Game Of Silks
He will create a Web3 company that enables people to fractionalize their home to the public
NFT Ecosystem In 3 Years
Web3 gaming will create a whole new category of entertainment, changing how we define gambling, investing, and gaming
Mainstream will eventually hit a tipping point and begin to accept digital art
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