Unicorns 130/229 – DraftKings
Founders: Jason Robins, Matt Kalish, Paul Liberman
Key people: Jason Robins (CEO), Matt Kalish (CRO), Paul Liberman (COO)
Number of employees: ~500
DraftKings is a Boston, MA, daily fantasy sports contest provider. The company allows users to enter daily and weekly fantasy sports-related contests and win money based on individual player and team performances in five major American sports (MLB, the NHL, the NFL, the NBA and the PGA), Premier League and UEFA Champions League soccer, NASCAR auto racing, Canadian Football League, and Mixed Martial Arts (MMA).
As of April 2016 the majority of U.S. states consider fantasy sports (including daily fantasy sports) a game of skill and not gambling, although a number of states have prohibited or created specific laws making daily fantasy spots illegal. In November 2016 FanDuel and DraftKings, the two largest companies in the daily fantasy sports industry, reached an agreement to merge. DraftKings and FanDuel, combined, have about 5 million users.
DraftKings was established in 2012 by Jason Robins, Matthew Kalish, and Paul Liberman, former Vistaprint employees. The company initially operated out of Liberman’s house. The company’s first product was a one-on-one baseball competition, launched to coincide with Major League Baseball’s opening day in 2012.
In July 2012, the company announced its first outside funding, a $1.4 million investment from Ryan Moore at Accomplice in Cambridge, along with other investors.
In April 2013, Major League Baseball invested an undisclosed amount in DraftKings, becoming the first US professional sports organization to invest in daily fantasy sports, after a successful presentation by CEO Jason Robins to MLB Advanced Media, the league’s technology and media wing. The investment was not disclosed at the time.
In November 2013, the company received $24 million of Series B funding from a group of investors including Redpoint Ventures, Accomplice, BDS Venture Fund, GGV Capital and Jordan Mendell.
In February 2014, it was reported that the company awarded $50 million in prizes in 2013 to players in weekly fantasy football, daily fantasy baseball, daily fantasy basketball and daily fantasy hockey. The company also reported 50,000 active daily users and as many as one million registered players.
In July 2014, when the company was the second largest company in the daily fantasy sports industry, it announced the acquisition of the third largest company, rival DraftStreet, owned at the time by New York media company IAC. The acquisition reportedly increased DraftKings’ user base by 50%. The company announced it would keep the DraftStreet NY office open and retain some employees.
In August 2014, the company announced $41 million in funding from a variety of investors, including The Raine Group, as well as existing investors Redpoint Ventures, GGV Capital, and Accomplice. The company also announced that it was acquiring the assets of Somerville, MA, competitor StarStreet.
In November 2014, DraftKings announced an exclusive multi-year agreement with the National Hockey League. The deal gave DraftKings exclusive rights to use NHL-owned intellectual property and all of the NHL’s assets. The company would also get prominent placement on the NHL’s digital platforms, including NHL.com, NHL Mobile, the NHL Network and the NHL’s social media accounts.
In April 2015, DraftKings and Major League Baseball announced a multi-year deal making DraftKings the “Official Daily Fantasy Game” for the sport. The agreement allowed DraftKings to offer co-branded MLB daily fantasy games and extend its relationships with individual MLB clubs to offer in-stadium fantasy-related experiences. The company also announced it had received $304 million in users’ entry fees in 2014.
In July 2015, DraftKings entered into a three-year advertising deal with ESPN Inc. valued at $250 million. This deal includ es “integration” of the service within ESPN’s television and digital content and having exclusivity for advertising within the daily fantasy market on ESPN networks beginning in January 2016.
Also in July 2015, DraftKings announced a round of funding totaling $300 million, led by Fox Sports, along with the Kraft Group, owners of the New England Patriots, and Boston financial giant Wellington Management. The agreement includ ed an arrangement that DraftKings would spend $250 million on advertising with Fox Sports over the next three years.
In August 2015 DraftKings was granted a license to operate in the UK and after a delayed start, on February 5, 2016 DraftKings.co.uk officially launched as a mobile app for players in the UK to join and play.
In November 2016 [FanDuel] and DraftKings, the two largest companies in the daily fantasy sports industry, reached an agreement to merge. Pending approval by the Federal Trade Commission, the merger will close in late 2017. DraftKings and FanDuel, combined, have about 5 million users while an estimated 57 million people in North America play some type of fantasy sports.