There are reports from the Wall Street Journal that Walt Disney is making a $250-million bet on DraftKings, a Boston-based fantasy sports start-up that lets users play with real money at stake on a per-game basis.
In return for the investment, DraftKings has agreed to spend more than $500 million on advertising with ESPN, Disney’s 24-hour sports network, the report added. Disney’s investment would raise DraftKing’s value to about $900 million.
Rival company, FanDuel Inc., currently holds the biggest player pools in the fantasy sports online world, and the option for them to advertise on ESPN stays open minus the premium spots allotted to DraftKings.
DraftKings and FanDuel are different in that people can play for cash. That gives such services a potentially lucrative revenue stream that advertising-supported web sites don’t have, and explains why media giants are interested in getting a cut of the action.
According to their website, DraftKings “offer Daily and Weekly Fantasy Sports contests for cash prizes in all of the five major sports (MLB, NHL, NFL, NBA and PGA) as well as college football and basketball. Our rapid-fire contests are a much shorter duration than the traditional season-long leagues and require no team management after the draft. Our salary cap draft format takes just minutes to complete, unlike the hours-long snake drafts in traditional leagues. We offer new contests every day of the season, and our winners are crowned nightly. Payouts happen immediately after the games – no more waiting until the end of the season to collect winnings!”
According to their website, “THE LEADER IN ONE-DAY FANTASY SPORTS Our mission is to transform sports with one-day fantasy sports games. We’re passionate about the huge advantages the daily format has for players, with unbeatable game selection, fast game play, huge prizes and turbo-charged excitement. FanDuel has grown to be the market leader in the one-day fantasy sports industry. It now pays out over $10 million in prize money every week.”
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