FANTASY TAKES FLIGHT
Major players, including Fox Sports and NHL, invest $300 million in daily fantasy sports firm DraftKings,
NEW YORK— Daily fantasy sports company DraftKings Inc. raised $300 million (U.S.) in Series D financing led by Fox Sports, fuelling its competition with FanDuel to lure new customers.
Major League Baseball, the National Hockey League, Major League Soccer, Madison Square Garden Co. and Legends Hospitality also invested in the round, which will help DraftKings build out its web and mobile products and launch internationally, the Boston-based company said in a news release.
Previous DraftKings investors Atlas Venture, DST Global, GGV Capital, the Kraft Group, the Raine Group and Wellington Management Co. also joined in the latest round.
“We’ll work with DraftKings to develop ideas and create content to drive deeper engagement with sports fans across multiple platforms, including our national, local, and digital properties,” Eric Shanks, president and chief operating officer of 21st Century Fox Inc.’s Fox Sports, said in a statement.
The company, founded in 2012, has now raised $426 million (U.S.), the New York Times said, citing DraftKings chief executive officer Jason-Robins. Fox Sports will pay about $150 million for an 11 per cent stake in DraftKings, the Times said, citing a person briefed on the terms of the transaction.
The company will spend an estimated $250 million over a few years to advertise on Fox networks, though the non-exclusive deal will allow Fox to accept ads from FanDuel as well, the newspaper said.
In daily fantasy, legal in most states because of a 2006 federal law that declared it a game of skill, players draft teams of real-life athletes and compete based on the statistical performance of those athletes.
DraftKings said that it expects to award well over $1 billion in prizes this year, up from about $300 million in 2014.
Based on reported revenue, New York-based FanDuel held 63 per cent of the daily fantasy market in 2014, while No. 2 DraftKings had 33 per cent, according to Eilers Research.
With much of FanDuel’s revenue coming September to January from the National Football League, DraftKings might hold a marketleading position based on 2015 revenue. FanDuel closed a $275-million round of financing two weeks ago.