The negative media onslaught over daily fantasy sports must be costing operators a fortune in legal fees, as DraftKings has reportedly gone looking for another $200m in venture capital.
On Thursday, Boston Business Journal technology editor Sara Castellanos reported that the Boston-based DraftKings was “quietly raising” an additional $200m in investor funding, suggesting that the data leak controversy hasn’t dimmed the company’s appeal in the eyes of deep-pocketed speculators.
While the round hasn’t officially closed, the extra scratch would bring total VC investment in DraftKings to around $630m, according to research firm PitchBook. That would put DraftKings’ valuation somewhere in the $2b range, having already achieved so-called ‘unicorn’ status following its $300m funding round this summer.
Castellanos reported that DraftKings CEO Jason Robins gave a keynote speech at an awards ceremony in Boston on Wednesday at which he claimed his company had raised over $500m to date, higher than the $426m the company has previously cited. A DraftKings spokesman later said the company hadn’t raised more money than it had disclosed following this summer’s funding round.
DRAFTKINGS STAFF PLAYING “INTRA-COMPANY” GAMES FOLLOWING BAN
Robins endured a Q&A session on Thursday at the Sports Business Journal’s annual Sports Media & Technology conference in New York, during which he revealed that his company’s UK-facing site would launch in December. The UK site has added to DraftKings’ recent woes, as the company was required to obtain a UK Gambling Commission license, which tended to undercut Robins’ ‘DFS isn’t gambling’ mantra.
Robins also revealed that he was prepared to lose some DraftKings staffers now that they were banned from playing on rival DFS sites but Robins said media reports of DFS employees “raking in a ton of money” playing DFS were overblown. Robins said playing DFS was “mostly a hobby and a passion” for staffers and that “the impact to their compensation overall to how much money they make is quite minimal.”
While acknowledging the necessity of the employee ban, Robins nonetheless believes it could negatively impact the product DraftKings offers its customers. Robins said people with intimate knowledge of the material “design better products and better experiences” and this task would be “harder to do when you’re not actually playing around with the product yourself.”
However, Robins hoped to minimize any staffing losses through the introduction of “intra-company” fantasy competitions that “give away interesting prizes.” Robins didn’t offer specifics on what ‘interesting’ entailed, but said that “if we can make the private games more exciting, that solves the problem” of employees not being able to get their DFS fix.
