• by Gavin O'Malley  @mp_gavin, September 13, 2013

Can a mobile start-up succeed by letting users bet fake money on real sporting events, and real money on fake sporting events? Most oddsmakers would call it a long shot.

Doubling down on that bet, however, Blue Ox Entertainment is expanding into fantasy football with SideDraft -- a mobile app designed for users to enable them to bet real money on fantasy games and socialize with their friends by drafting and competing against each other.

The socially focused peer-to-peer sports network encourages users to participate in multiple drafts over the course of a single football season. How is Blue Ox’s new app legal?

"The United States government has determined in their wisdom that fantasy sports are a game of skill,” Jon Goldstein, Blue Ox co-founder and CEO, tells Online Media Daily. “Hence, they are considered legal on a Federal level."

Passed in 2006, the Unlawful Internet Gambling Enforcement Act essentially states that because fantasy sports are considered games of skill, they are not considered gambling. Due to current legislation, however, the app cannot be used in certain states, including Arizona, Illinois, Montana, Louisiana, Iowa and Vermont.

By most measures, Blue Ox’s new model remains a risky bet. “Usage numbers are low because there's been no marketing … efforts until now,” a company representative admitted. Fantasy sports, however, is huge. More than 23 million Americans are expected to play fantasy football in 2013, according to the Fantasy Sports Trade Association.

At the end of July -- the week before preseason -- consumption around “Fantasy Football” was nearly 80% the level of content consumption around the “NFL,” according to recent data from Kontera.

ESPN and Yahoo remain the only leagues believed to have over 5 million participants, according to Kontera.

In response, other networks continue to expand their fantasy offerings. CBS Interactive, for one, just expanded its roster of fantasy sports offerings with a new “predictive” gaming app for the 2013 football season.

SideDraft will accompany Blue Ox’s flagship app, SideBets, which lets users bet fake money on real sporting events. Late last year, Blue Ox said SideBets had so far handed more than 40,000 bets.