Within the last week and a half, $111 million in venture capital has been pumped into two fantasy sports companies. That $111 million is about $65 million more than all of 2013's investment in the space, not to mention the highest amount for any one year. Single-day fantasy league sites DraftKings, which raised $41 million last week, and FanDuel, which raised $70 million earlier this week, both operate as gambling websites, with users paying entry fees as low as $1 and up to $1,000+ per entry. Rather than 10 or more friends partaking in a season-long league, as is traditional, the one-day leagues can have thousands of entrants and boast weekly payouts in the tens of millions. DraftKings, for example, guarantees over $200 million in prizes. FanDuel, launched in 2009, projects $40 million in revenue for 2014 and has mentioned plans of a possible IPO in the next two to three years.
But why the hefty backing of DraftKings and FanDuel now? The Fantasy Sports Trade Association has calculated at least 41 million fantasy sports players in North America alone, and monetizing such a huge potential audience with a well-designed platform could reap rich rewards. With most fantasy sites focused on American professional sports leagues thus far, there are plenty of opportunities for worldwide expansion into other sports and leagues.
Click here to explore VC backing of other fantasy sports companies.