A major shot has been fired in the battle between daily fantasy providers DraftKings and FanDuel. According to a report from the Sports Business Journal, ESPN has decided to back DraftKings, investing hundreds of millions into the company for up to a 20% ownership stake of the company. The Wall Street Journal reported the amount of ESPN’s investment at $250 million. DraftKings will sign a three-year advertising commitment with ESPN that the WSJ valued at $500 million, easily helping to recoup their initial investment.
Neither FanDuel nor DraftKings has turned a profit, though both are gaining plenty of steam in fantasy circles. The NFL, like ESPN was until today, remains affiliated with neither company, but ESPN’s alignment with DraftKings could end up forcing their hand. MLBAM and the NHL have both sided with DraftKings, while the NBA is closely affiliated with FanDuel, holding an equity position and a seat on the board.
ESPN was reportedly debating between each of the companies following presentations by both, and also considered launching a daily fantasy product of their own. DraftKings ended up winning out because of, among other reasons, its “less cluttered and confusing ownership structure”.
It doesn’t look like daily fantasy is going anywhere any time soon. I’m quite interested to see what FanDuel does after this round of funding is completed for DraftKings.