Online fantasy sports site DraftKings has scored $41 million in venture capital funding from the Raine Group LLC, a New York-based firm that invests in sports and lifestyle companies and other investors that include Redpoint Ventures, GGV Capital and Atlas Venture. The deal is an indication that corporate America is becoming increasingly attracted to the appeal and potential of a fantasy sports-based online betting platform.
DraftKings was founded in 2012 and has become a major player in the world of fantasy sports. According to the Fantasy Sports Trade Association, DraftKings has around 41 million players in the US and Canada, all of whom use the site to play fantasy sports games for money. To date, DraftKings has raised around $76 million in venture funding.
Horizon Partners Managing Director Sandy Kory told The Street that DraftKing’s business model is big enough that it has the potential of attracting interest from media platforms like ESPN and Yahoo Inc., two titans of the fantasy sports world. Sources close to the online publication also said that DraftKing’s capital raising has been on the ‘high side for a digital media company’, a testament to its compelling product. DraftKings has become a leading provider in daily fantasy sports, offering a large swath of free and paid contests in multiple game types. It also has featured tournaments with big money payouts and has daily fantasy leagues for the NFL, the NBA, Major League Baseball, the NHL, college football, college basketball, and golf.
In the same statement announcing its new VC funding, DraftKings also announced that it had acquired fantasy sports startup StarStreet, less than two months after it bought out DraftStreet from IAC/Interactive Corp. DraftKings spokeswoman Femi Wasserman declined to provide financial details of the transaction, opting only to say that the DraftStreet acquisition back in July cost the company more. Wasserman explained that the StarStreet acquisition is different from the DraftStreet deal. The former was more about acquiring products whereas the latter was about combining the two companies together.
Wasserman also refused to rule out the possibility of an initial public offering (IPO) in the future even though that discussion is currently being tabled in favor of pursuing organic growth within the company.