A new frontier in asset custody may be holding the cash of fantasy sports leagues.
Bancorp Bank Payment Solutions Group, a unit of Bancorp Inc. of Wilmington, Del., announced Monday that it is working with a Minneapolis start-up called LeagueSafe LLC to provide payment services to the commissioners of these fantasy leagues.
Paul Charchian, the founder of LeagueSafe, said he began the online payment service to address the frustrations of the organizers of fantasy sports leagues.
These groups typically include 10 to 12 participants, who may put in $100 apiece to compete for a season, Mr. Charchian said. "They're getting cash from some guys, they're getting checks from some guys, and some guys just don't pay. It's a big hassle."
Similar issues can arise at the end of the season when it comes time to give the championship award to the winner, Mr. Charchian said, noting that football, the most popular fantasy sport, poses particular problems. "It's right after Christmas, and a lot of times the commissioner has spent the money."
LeagueSafe functions as a secure vault to hold the players' funds during the season, but is not involved in the management of the fantasy leagues, Mr. Charchian said.
Mr. Charchian used to be in the fantasy sports business. He founded the periodical Fantasy Football Weekly in 1993, and as the Internet developed he co-founded the Web site Fanball.com.
LeagueSafe began its "soft launch" in March for the baseball season, Mr. Charchian said. "We started a more aggressive push this fall for football."
LeagueSafe estimates that 29.9 million fantasy football players spend $4.5 billion a year to participate in the leagues. Mr. Charchian said his company so far has taken in "single-digit millions" for processing.
Most of that money flows back out at the end of the season, when the league commissioner gives the champions their winnings, using a LeagueSafe prepaid card. LeagueSafe earns interest on the deposits it holds, and it also sells customized cards on which commissioners can put custom artwork.
LeagueSafe also uses U.S. Bancorp of Minneapolis for some depositary and automated clearing house work, but it chose Bancorp Bank Payment Solutions, whose parent has assets of $1.7 billion, because "they specialize in card loading," Mr. Charchian said. "This is at the heart of what they do. We wanted a specialist. And they understand fantasy sports."
