Disney-ESPN to invest $250 million in daily fantasy sports firm

You have to wonder whether young American entrepreneurs Paul Liberman, Jason Robins and Matt Kalish, the founders of daily fantasy sports betting site DraftKings, could have imagined how powerful their company would become when they put the project together just two years ago in Boston.

Today it’s one of the two top sites in a booming sector (Fanduel is the other one) vying for the top spot, and the news this week that Walt Disney-ESPN is to invest $250 million is likely to power the Boston operation into the lead.

Reporting on the investment, the Wall Street Journal observed that it will boost the value of the company to $900 million.

DraftKings has committed to use the investment to ramp up marketing spend to over $500 million on ESPN sites over the next few years as it continues to drive growth; a mutually beneficial deal for all involved.

Rival FanDuel can continue to advertise on ESPN internet properties but won’t have the premium positions afforded to DraftKings.

DSF firms are increasingly attracting the attention of large media corporates, with Comcast recently investing in Fanduel. The Raine Group, Redpoint Ventures, GGV Capital and Atlas Venture have invested in DraftKings in previous funding rounds.

DraftKings and Fanduel have even managed to set up agreements with some of the national sports leagues overseeing sports like basketball, hockey, football and baseball .

Fantasy sport enjoys carve-outs in laws banning financial transactions with online gambling companies, and operators portray their activity as skill-based and therefore outside the accepted definitions of gambling.

DraftKings recently revealed that online players spent about $300 million on the fees required to play online, quick-turnaround games on its site last year. The company’s website boasts that it will pay out a total of $1 billion in prize money this year.

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