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DraftKing Raises $300 Million with Fox Sports as Top Investor

August 5, 2015

The fantasy sports industry is booming and now more than ever, leading companies of online sports fantasy are starting to step up to the plate. What was once seen as a low-key hobby, fantasy sports have quickly evolved into a multi-million dollar business.

DraftKings, one of the top daily fantasy sports companies, has raised $300 million from a group of investors that includes Fox Sports and three major sports leagues.

Winning support from the leagues — Major League Baseball, the National Hockey League and Major League Soccer — “is an incredible milestone for us,” said Jason Robins, chief executive of DraftKings.

Robins said a key focus in the next couple of years will be expanding DraftKings’ customer base outside the US, in part by adding sports like rugby and cricket that are popular with overseas fans. Equally important, DraftKings wants to build the global audience for sports like baseball and American football, which are not widely watched outside the US.

In parallel with the equity investment, Fox Sports and DraftKings have a separate commercial deal in which DraftKings plans to spend $250 million advertising on Fox Sports and other Fox platforms. And according to The New York Times, DraftKings will provide Fox Sports with approximately 11% in equity.

With the new funding, DraftKings is now valued at more than $1.2 billion according to multiple sources. The announcement comes at an interesting time, as rival company FanDuel raised $275 million just two weeks prior. FanDuel’s important investors include NBC Sports Ventures and the National Basketball Association.  DraftKings’ new round of fundraising adds the National Hockey League, Major League Soccer, and Madison Square Garden to a mix of previous investors that also includes Major League Baseball. One party that is interestingly absent from the fantasy sport deal is the NFL; however, it is thought that the league is holding out for a more lucrative deal.

The explosive growth of fantasy sports may come from the fact that fans receive the ability to feel a special rooting interest in a team of players they selected. It has become a way for people to engage and feel more connected to sports than they ever have. One thing’s for sure, fantasy sports has really become an American phenomenon.

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