DraftKings, one of the top players in the booming daily fantasy-sports business that lets users win cash prizes, has closed $150 million in funding led by venture-capital firm Revolution Growth.
Revolution Growth is led by AOL founder Steve Case, Donn Davis, former CEO of Exclusive Resorts; and Ted Leonsis, owner of the NHL’s Washington Capitals and the NBA’s Wizards. The funding comes right before the start of the NFL’s regular season, which historically is the biggest sport for fantasy sports, and suggests DraftKings has a big purse to spend on advertising the service.
Last year DraftKings raised $300 million in a round led by 21st Century Fox’s Fox Sports. Other investors in the Boston-based company include Major League Baseball; the National Hockey League; Major League Soccer; the Madison Square Garden Co.; Legends, a stadium concessionaire owned by the New York Yankees and Dallas Cowboys, Atlas Venture, DST Global, GGV Capital, the Kraft Group, the Raine Group and Wellington Management Co.
“Revolution Growth is a tremendous new partner for DraftKings, with an entrepreneurial outlook and spirit of innovation that meshes perfectly with the culture of our company,” DraftKings CEO and co-founder Jason Robins said in a statement. “They also have deep expertise in sports, technology, and policy.”
DraftKings, as well as its key rival FanDuel, insist that their contests do not represent gambling activity. But the companies have faced regulatory restrictions in numerous states. For example, both DraftKings and FanDuel were forced to suspend their paid fantasy-sports contests in New York earlier this year after a cease-and-desist order by the state’s attorney general; subsequently, the New York legislature passed a bill this month that legalizes daily fantasy-sports.
With the funding, Revolution Growth partner Steve Murray is joining DraftKings’ board. “Online fantasy sports are just one of the many ways technology has disrupted the sports industry in recent years,” Murray said in a prepared statement.
The fantasy-sports industry generated an estimated $26 billion in spending in North America last year. About 56.8 million people played fantasy sports in the U.S. and Canada in 2015, with average spending per player of $465, according to the Fantasy Sports Trade Association, an industry trade group.