Fantasy sports dates back to the 1960s when a Harvard

University sociologist and his col-leagues launched a “baseball semi-nar” and kept rosters that earned them points based on professional players’ actual batting averages and entire season stats. During the latter part of the 20th century, par-ticipation in these fantasy games in which players “draft” their own team and then compete against other fantasy teams based on the actual stats from professional play-ers steadily grew.

In 2009, entrepreneurs dis-covered that younger fans weren’t interested in playing for an entire season and the daily fantasy sports industry was launched.

Today, according to the Fan-tasy Sports Trade Association, an estimated 42 million people in the United States and Canada play fantasy sports. Participants can play from anywhere—except the five states where it’s illegal—and draft their own team of players who score fantasy points according to the sites’ rules and restrictions. Contests typically last only for a day, and players have to beat the

majority of the other players to win the game.

MGT Capital Investments is banking on the growing popularity of daily fantasy sports. The compa-ny operates social and real money gaming sites both online and in the mobile space, and is actively build-ing out its gaming portfolio. Earlier this year, through its wholly-owned subsidiary, MGT Sports, Inc., the company acquired DraftDay.com, the third-largest fantasy sports wa-gering platform. “As the No. 3 site DraftDay is the primary competitor to the top two daily fantasy sports websites,” says Robert Traversa, chief financial officer. “Our market cap is just around $6M. As inves-tors realize we are the only public company in this space, and repre-sent the best opportunity to invest in a growing industry in its infancy, we expect to see more accurate valuations including an appreciat-ing stock price.”

The company’s other subsid-iaries are MGT Studios, Inc. and MGT Gaming, Inc. MGT Studios, Inc. is an online and mobile game developer that operates MGTPlay.com, a game of skill platform in

partnership with M2P Entertain-ment GmbH and also plans to release a social slot machine app called SlotChamp. MGT Gam-ing, Inc. holds certain intellectual property patents relating to casino slot machines.

“I feel very fortunate to be at the forefront of an exciting and rapidly growing industry that has grown 14 times over the past two years in terms of customer buy-ins,” says Traversa.

Opportunist: Can you tell us a little about your background?

Robert Traversa: Leslie, I would first like to thank you for this opportunity to introduce you to our company—MGT Capital Investments Inc., which is listed on the NYSE MKT under the ticker symbol MGT. I’m an accountant and CPA by training and I began my career on the audit staff of Price Waterhouse in 1987, then joined Bankers Trust as a financial analyst in their Investment Man-agement Division from 1990 to 1994. Probably the most relevant aspect to my background is I grew up on Wall Street. Prior to join-

Interview with Robert Traversa

Robert Traversa, Chief Financial Officer of MGT Capital Investments, Inc. (NYSE MKT: MGT), talks with Opportunist’s Managing Editor Leslie Stone

about his company’s position in the lucrative daily fantasy sports gaming industry.

mgtci.comdraftday.com

dailyfantasylegend.com

ing MGT in March 2011, I was a senior vice president at Neuberger Berman LLC, a large international money management firm catering to individuals and institutions. I joined Neuberger Berman in 1994, and was most recently a senior member of an investment team within the Private Asset Management Divi-sion. My earlier career at Neuberger encompassed positions supporting management, operations and tech-nology.

Opportunist: How did you become involved with MGT?

Robert Traversa: The key to my involvement with MGT comes from my experience at Neuber-ger Berman—that is where I met Rob Ladd, MGT’s CEO. Rob and I were both with Neu-berger for 15 years, and our paths crossed for 10 of those. We knew each other on a profes-sional level and we maintained our professional connec-tion after he left in 2002 to launch his own hedge fund LaddCap Value Advisors. I was watching from a distance.

In the fall 2010, Rob Ladd through a PIPE investment took a position in MGT; the company was in the med-tech arena seeking FDA approval for virtual colonoscopy software, which was ultimately achieved. I saw his investment in MGT come across the news. When Rob and I had lunch to catch up, I mentioned that I was considering a job offer running a family office. He suggested that I give some thought to joining the management team at MGT.

After conversations over a couple of months I decided to test

the waters on the public side ver-sus sitting on the analytical side. I joined the company in March 2011 and became CFO in May of that year. It’s been a great experience ever since! The company moved away from med-tech and made an investment in some gaming patents in mid-2012. Once in this space, we saw the opportunity to enter the legal skilled based gaming space and made the entry into daily fantasy sports. The daily fantasy sports space has received significant investor interest on the private side and to the best of my knowledge, we are the only public company in the space.

Opportunist: What is your role in the company?

Robert Traversa: As CFO, I am responsible for all accounting and SEC filings, specifically the Quarterly and Annual Reports on Form 10-Q and 10-K; however, my involvement extends beyond that role and I am involved in all aspects to facilitate growing the company. I am involved in discussions with po-tential partners and any investment that we are considering becoming involved in.

Opportunist: How exactly does MGT acquire, develop and mon-etize assets in the online and mobile gaming space?

Robert Traversa: How we

acquire assets is the very nature of being a public company. It allows us to be selective when thinking about affiliations, ventures and/or acquisitions. We have some of the best tech talent and that allows us to vet potential technology platforms we are considering working with. Our mission is to create a skilled-based real money and social gaming platform in the online and mobile space. That has been the theme and what drives us in everything we do. In April of this year, we acquired DraftDay.com, now the third-largest daily fantasy platform.

As a company we had always admired the DraftDay platform when we were looking at oppor-tunities within the daily fantasy sports space. So it was fortuitous we were able to acquire the asset at the time and price that we did. In terms of how we acquired it, we did thorough due diligence and I believe the DraftDay soft-ware platform is the best and on par with the top players in the industry. It was acquired with the

express purpose of improving our fantasy sports offering.

Opportunist: Did you make any improvements to DraftDay?

Robert Traversa: Yes, utiliz-ing our internal technical talent, we restructured the platform through a series of upgrades and updates. We focused on enhancing the platform by introducing a B2B offering in addition to our B2C business; we created new marketing paths that offer improved user engagement, as well as a larger overhaul of the product dubbed ‘My Lineup,’ which reduced the steps to entering con-tests and managing large slates of teams by a user.

We view DraftDay as our crown jewel in our portfolio of assets. The

daily fantasy sector is re-ceiving a significant amount of interest and some of the investments over this past summer into our top two competitors by VCs and other private companies were in excess of $100 million. There is also interest from the sports leagues and potential B2B partners figuring out how to monetize this space. Every-thing we have done to date facilitates DraftDay moving in that direction.

As a complement, we launched the first daily fantasy platform on social media—Daily Fantasy Legend—which currently exists for users to play on Facebook.

Opportunist: Please tell us about the game and how it will reach the Facebook audience.

Robert Traversa: Traditional daily fantasy sports (DFS), while still young, is a game platform where most users are not afforded opportunities to communicate with their competitors. Some sites, like our own DraftDay.com, facilitated some community-building objec-tives through chatrooms and leader boards; however, Daily Fantasy Legend is the definitive next level of that effort. Through custom leagues, friend invite features and achievements, to name a few, the platform is able to introduce gam-ers to the exciting world of daily fantasy sports. Facebook was the perfect place to launch, offering the user acquisition channels and social tie-ins necessary to both acquire users at low cost but also obtain viral status. In addition, unlike real-money DFS, we can reach a wider audience that includes those aged 13 and up, as well as those not ready to commit to backing their drafted teams with a cash commit-ment. Their comfort and familiarity

with our product style and features will also make our real-money of-ferings more compelling to them if they decide to transition to real-money play.

Opportunist: Please tell us about your recent joint venture with VegasInsider.com and your partner-ship with FanWars.com.

Robert Traversa: As men-tioned earlier we were on the path adding a B2B strategy to our product offering. After the Draft-Day acquisition, VegasInsider and FanWars were part of that B2B strategy. We recognized that we had the infrastructure and these partners add value through their online traf-

fic and facilitate acquiring new users through their respective channels.

Opportunist: How does someone play with virtual money versus real money on your sites?

Robert Traversa: To play on our virtual money platform as opposed to our real money offering, you are awarded a daily bonus

of fantasy cash. Just like on our real cash site, though obviously without the ability to withdraw it, you use these virtual funds to cover entry fees and enter our tournaments. At this point, the experience is identi-cal between real money and virtual money properties, where you draft your athletes, manage your rosters, and compete in exciting tourna-ments—but again the virtual money site awards fantasy cash instead of real money. Some of these tourna-ments have larger stakes and require larger buy-ins, so on both properties you can add funds to your account. On our virtual money site, however, you do this by purchasing small bundles of fantasy cash.

One compelling difference with our virtual money site, aside from the economic model, is the social tie-ins. You can rise up in the ranks on the leader boards, share your achievements with friends on Facebook, and ultimately achieve fantasy sports legendary status, all without having to commit more than your time.

Opportunist: How is daily fantasy sports protected (by safe harbor) under the 2006 Unlawful Internet Gambling Enforcement Act?

Robert Traversa: On Sep-tember 30, 2006, the United States Congress passed the Unlawful

“The fact that the top two players

above us are valued in the hundreds of millions while our market cap is just

over $6M is one of the most compelling parts of our story.”

—Robert Traversa

Internet Gambling Enforcement Act of 2006 (‘UIGEA’). The criminal provisions of UIGEA provide that no person engaged in the business of betting or wagering may knowingly accept directly or indirectly virtually any type of payment from a player in unlawful internet gambling (i.e., bets that are unlawful under other state or federal laws). The company has been advised by counsel that fantasy sports are exempt from the definition of unlawful internet gambling pro-vided that: (i) They are not based on the current membership of an actual sports team or on the score, point spread or performance of teams; (ii) all prizes and awards are established and made known before the start of the contest and (iii) winning out-comes are based on the skill of the participants and predominately by accumulated statistics of individual performance of athletes, but not solely on a single performance of an athlete.

In addition, as part of our on-boarding process we use a third-party service to validate the age and location of the user. We currently do not offer the product in five states and use leading gaming counsel to stay current within this evolving landscape. I feel this is one of the key differentiating factors and as a public company, I’m most focused on ensur-ing a fun, safe and fair experience for all players.

Opportunist: Please tell us about FantasySportsLive.com, your on-line portal for fantasy sports news and commentary and the audience it serves.

Robert Traversa: Fantasy-SportsLive.com is our Daily Fantasy Sports destination content site. We employ expert, community-recog-nized writers from the Daily Fantasy Sports field who provide commentary and strategy tips for readers. The

audience is a mix of seasoned pro-fessionals looking to maintain their edge and potential players learning about Daily Fantasy Sports and being encouraged to try DraftDay.com.

Opportunist: How do MGT’s various fantasy sports holdings stand out from those of competitors in the Internet and mobile gaming space?

Robert Traversa: I think in our B2B offering and we offer a broader style of games than some of our competitors and one of the unique features is we are the only operator to offer social fantasy on Facebook.

Opportunist: Are there any other developments you can tell us about?

Robert Traversa: We are constantly improving the site and the product offering to increase the overall user experience and stand out within the competitive space. For example, I can give you something we are looking to introduce in early 2015: a way for players to deposit cash on the site rather than using traditional methods of cash or credit cards. And, of course, we will con-tinue to add B2B partners to facilitate acquiring new users to the site.

Opportunist: Is there anything you would like to share with potential investors?

Robert Traversa: The fact that the top two players above us are val-ued in the hundreds of millions while our market cap is just over $6M is one of the most compelling parts of our story. As investors begin to real-ize we are the only publicly traded company in the space, I would like to see the difference in the valuations narrow to something more realistic as it relates to our stock.

We also see interest in the space with international, non-U.S. gaming

companies that potentially may use daily fantasy as a toehold into the U.S. markets. I also believe we repre-sent the lowest cost of entry into this space with a battle tested platform.

Opportunist: What are your goals for the company in 2015?

Robert Traversa: We will focus on customer acquisition and acquir-ing new users to the platform. Further develop our Daily Fantasy Legend fantasy sports game on Facebook and expand our B2B offering. We are actively working on these all day, every day, and I think we have made tremendous strides since beginning this endeavor.

Opportunist: Where would you like to see MGT in five years?

Robert Traversa: I cannot predict the future, but I think the company is a competing player in daily fantasy sports. I would not be surprised if we saw some consolida-tion in the industry and DraftDay became part of a larger story. Right now, I think the future is exciting and that is what makes it exciting for me to come to work every day.

Leslie Stone is an award-winning writer, editor with more than two decades of experience covering business, finance, real estate and lifestyle issues for newspapers, maga-zines and online pub-lications. Originally from Virginia, she currently resides between Florida and Michigan. Fol-low Leslie on Twitter: @lescstone.

Reprinted from Opportunist magazinewww.opportunistmagazine.com