DraftKings Raises $100 Million in Funding, while Minnesota Tackles DFS Regulation
Posted on: March 12, 2017, 02:00h.
Last updated on: March 10, 2017, 02:42h.
DraftKings has raised $100 million in a new round of funding, led by Eldridge Industries, the company owned by Los Angeles Dodgers part-owner Todd Boehly.
DraftKings Chief Executive Officer, Jason Robins, confirmed rumors of the funding to Bloomberg via email this week. He said his company had looked for a funding partner that could bring “additional depth” to the table. Eldridge Industries, he added, has a “deep bench of experts to help fuel DraftKings’ continuing growth as a sports entertainment company.”
It’s the first funding round DraftKings has undertaken since the announcement of its forthcoming merger with FanDuel and it comes at a time when both companies, neither of which has yet achieved profitability, are known to have cash flow problems.
Cash Flow Woe
Both have been forced to spend millions on lobbying and legal fees, defending their interests on multiple fronts across America.
It was reported late last year that the two companies were behind on payments to suppliers, as well as those lawyers and lobbyists, and FanDuel was forced to lay off 60 workers.
Consolidation would save on a lot of these costs, as well as all the cash spent on attempting to out-market one another, while offering a very similar service.
Meanwhile, in Minnesota…
Elsewhere on the DFS front, Minnesota lawmakers were debating legislation to regulate the contests this week.
State Representative Tony Albright’s bill would develop a framework of regulation in a state that reportedly has more fantasy players per capita than any other state. Estimates for DFS participants are 170,000 and about 1 million across all fantasy sports contests, in a state of 5.4 million people.
Despite this, it remains unclear whether fantasy sports are legal or not under state law.
Minnesota essentially prohibits wagering money on games of chance and sports betting. But a judgement on whether DFS is either of these has never been made.
“We all know people who play fantasy sports,” said Paul Charchian, president of daily fantasy sports finance management company LeagueSafe, who also hosts a fantasy sports radio show. “We play because it is fun and we can be a virtual (sports team) general manager.”
Time and Skill
He said a failing to pass the Albright bill would allow fantasy sports to continue as is, without regulation and the additional player protections.
Scott Ward, a Washington DC based attorney who represents fantasy FanDuel and DraftKings added that regulation “puts a guardrail around the industry.” He also noted that contests based on the performance of athletes are far more predictable than casino games.
“Most often when somebody tells me they don’t play fantasy sports the reason they give me is because they simply don’t have the time to do it,” he said. “And that’s because there’s an inherent understanding that it take time, it takes research, and it takes skill to play fantasy sports.”
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