Fanduel, one of the two major players in the growing daily fantasy sports industry, has raised $275m in its latest funding round, which values the company “well north of $1b.”
The round was led by existing investor Kohlberg Kravis Roberts (KKR) along with new investors Google Capital and Time Warner Investments. Existing investors NBC Sports Ventures, Comcast Ventures Shamrock Capital, Bullpen Capital, Pentech Ventures, and Piton Capital were also involved.
Fanduel Chief Executive Nigel Eccles told The New York Times that although the company has raised $70m in round of funding last year, the company still attracts potential backers.
“KKR, one of the biggest alternative investment firms on Wall Street, expressed interest in leading a new round of financing, and the investment round came together quickly,” said Eccles.
“We think it’s one of the most valuable kinds of media today,” said Ted Oberwager of KKR. Oberwager told the newspaper that daily fantasy sports is believed to be one of the most valuable kinds of media today, as it offers some of the highest levels of engagement.
FanDuel has now raised $363m since 2009 to expand its global presence and bring in new users.
Fanduel garnered $622m in entry fees in 2014 with revenues of up to $57m, while rival DraftKings took in $304m in entry fees and generated revenue of $40m.
Fanduel plans to give away more than $2b in prize money in 2015, compared to $564m last year.
The legal landscape of daily fantasy sports has been the subject of an ongoing debate, both at the state and federal levels, as most believe that the growing industry is a form of gambling.
“You put up of something of value, cash, to win something of value, cash,” said William Hill CEO Joe Asher. “It’s the classic definition of gambling.”
Nevada Gaming Control Board Chairman A.G. Burnett said that gaming licensees need to do an analysis on the legal ramifications before stepping into the DFS arena.
“It’s something we may have to look at in terms of it being legal under Nevada gaming law,” Burnett added.
Fantasy sports, including daily fantasy sports, is generally considered a game of skill and therefore not considered gambling. However, some states, such as Arizona, Montana, Louisiana, Iowa and Washington, either use a more restrictive test of whether a game is one of skill or have specific laws outlawing paid fantasy sports.