US-based daily fantasy sports platform DraftKings has secured $300m in a series D round led by Fox Sports, the sports broadcasting subsidiary of 21st Century Fox, Re/code reported yesterday.
The round also included US professional sports leagues Major League Baseball, National Hockey League and Major League Soccer, venture capital firms Atlas Venture and Raine Group, and Kraft Group, the conglomerate that owns American football team the New England Patriots.
DraftKings operates a fantasy sports game in which people can compete against each other weekly for cash prizes. It had previously raised approximately $75m from backers including Raine, Atlas, Redpoint Ventures, GGV Capital, BDS Ventures, Boston Seed Capital, Hub Angels and Angel Street Capital.
Fox Sports paid $150m for an 11% stake in DraftKings, which was valued at $1.2bn in the round. The deal also specifies that the company must buy about $250m in advertising on Fox Sports over the next three years, according to sources familiar with the agreement.
In addition to advertising, Fox Sports’ investment is strategic in that fantasy sports participation has been shown to increase viewership of sporting events.
The money-for-advertising deal is similar to the one DraftKings tentatively agreed with The Walt Disney Company, the entertainment conglomerate that owns sports broadcaster ESPN, in April this year. Disney was reportedly set to invest $250m at a $900m valuation.
The Disney agreement fell through two months later, allegedly because of Disney’s reluctance to associate itself too closely with a game perceived as a gambling brand. DraftKings did however agree a $250m advertising deal with ESPN nonetheless.
DraftKings will need the money to compete with its main rival in the fantasy sports market, FanDuel, which raised $275m at a $1bn+ valuation two weeks ago from investors including internet company Google Capital, and media corporates Time Warner, Turner Broadcasting, NBC and Comcast.
Jason Robins, DraftKings’ chief executive, told Re/code the company will spend the money on attracting new customers, part of which will involve expanding into the UK before the end of 2015.