Cable sports giant Walt Disney-ESPN is investing 0 million in fantasy sports betting giant DraftKings.
DraftKings, one of the two largest such sites in the country, will see its value boosted to $900 million, according to The Wall Street Journal, in part through prime advertising space on ESPN’s internet properties. In turn, DraftKings has committed to use the investment to ramp up its marketing spend with ESPN to more than $500 million.
The deal, however, doesn’t freeze out FanDuel, the other leading fantasy sports operator, which can continue to advertise with ESPN although not from the premium positions available to DraftKings.
Fantasy sports betting currently is exempt from U.S. laws banning financial transactions with online gambling companies, and operators portray their activity as skill-based and therefore outside the accepted definitions of gambling.
But it’s just as lucrative as the real thing. DraftKings says players spent about $300 million on the fees required to play online, quick-turnaround games on its site last year. The company says it will pay out a total of $1 billion in prize money this year.
Not surprisingly, the major U.S. sports leagues have come calling, and both DraftKings and FanDuel have scooped up investments from cable giants such as Comcast and leading private-equity players, among them Raine Group, Redpoint Ventures, GGV Capital and Atlas Venture.
