Daily fantasy sports is becoming an increasingly competitive business, as big players such as Yahoo and Amaya have either joined or are planning to enter the market that is currently dominated by FanDuel and DraftKings.
But while these new competitors are sure to be formidable, the old guard is certainly well-funded in their attempt to hold on to their positions.
DraftKings has now gone through a fourth round of funding, raising another $300 million in financing.
This Series D round of funding is a massive influx of cash for the daily fantasy site, which has now raised about $426 million throughout the life of the business.
Fox Sports is Largest Investor
The biggest investor is Fox Sports, which will buy in for about $150 million in exchange for a reported 11 percent ownership of DraftKings, according to the New York Times.
Other investors in this round of financing include three major North American sports leagues: Major League Baseball, the National Hockey League, and Major League Soccer.
In addition, financing was also received by both Legends Hospitality, which is a joint venture between the New York Yankees and Dallas Cowboys, and the Madison Square Garden Company, which owns not only the venue that shares its name but the teams that play there: the New York Knicks and New York Rangers.
The Fox Sports deal will see DraftKings agree to advertise heavily over Fox’s many networks, spending an estimated $250 million over the next few years.
However, there would be no exclusivity in that agreement, meaning that Fox might also run ads for FanDuel or other daily fantasy sites as well.
DraftKings Strikes Ad Deals with Sports Networks
That deal is similar to one that was agreed to between DraftKings and ESPN last week.
In that agreement, which came after Disney decided not to invest $250 million into the site in exchange for a 27 percent ownership stake, DraftKings agreed to commit to $250 million in ad spending over the next two years in exchange for becoming the exclusive daily fantasy sports partner of ESPN.
For the networks, daily fantasy products have an obvious appeal: they keep viewers much more engaged in sporting events from start to finish.
“It drives deeper fan engagement,” said Eric Shanks, president of Fox Sports. “The more you play, the more you watch. It’s a virtuous cycle.”
And what will DraftKings do with all this new cash? Along with the massive advertising outlays, the site may look to expand its reach beyond American borders.
DraftKings CEO Jason Robins says that the company plans to expand first to the UK and then throughout Europe and Asia, while also adding social media features to help differentiate the product from its competition.
DraftKings isn’t the only site to generate lots of new funding this year.
FanDuel recently announced $275 million in new investment itself, with Google, Comcast and Time Warner being among the biggest investors in what was the fifth round of funding for the site.
“There are a lot of great investors out there,” said Robins. “The investors we’ve targeted are somewhat different from FanDuel’s.”
The latest round of funding has both companies valued at more than $1 billion. DraftKings says it will award more than $1 billion in prizes in 2015, while FanDuel is hoping to exceed $2 billion.