Draftking Gets $250M Investment From Walt Disney Co. (NYSE:DIS)

Walt Disney Co. (NYSE:DIS), according to industry reports, is contemplating owning a chunk of a popular fantasy sports business. DraftKings Inc, the popular online sports company, valued at $900 million, is likely to receive $250 million from Walt Disney Co.

The move is promoted by the growing popularity of fantasy sports. Media companies, with their digital expertise, appear to be the right channel for the fantasy sports gaming industry to grow. Recent success by Comcast Corporation owned subsidiary FanDuel Inc, arguably the largest of the fantasy sports company’s, proves Walt Disney Co.’s moves are strategic.

In a major detour from industry standards, DraftKings Inc., allows fans to play the online fantasy sports with real money. The Boston-based company allows gamers to play on a per-game basis over the long term entire season management options.

With DIS funding DraftKings, the sports company will now have the spending power of upwards of $500 million and more for advertising on premier sports platforms like ESPN. This will be in direct competition with FanDuel advertisements on the same platform. However, with Disney-backing, DraftKings will garner ‘premium positions,’ as FanDuel is not likely to have the same spending power on advertisements under current agreements.

Fantasy sports revolve around fantasy leagues, where gamers pick players from ‘mock drafts’ and chart their performance for the season. Thus far it is possible for gamers to indulge in fantasy sports on Yahoo, CBS and ESPN. However, with FanDuel and DraftKings there are major changes, as both allow real-cash for play.

Therefore, the revenue generated by fantasy sports, such as DraftKings or FanDuel, are not dependent on advertising. Instead, the massive stream of revenue generated has attracted the well-heeled media companies, such as Walt Disney Co. (NYSE:DIS), to make forays into real-money fantasy sports. Thus far, neither of the two, DraftKings or FanDuel is considered ‘online gambling.’  Walt Disney backed Draftkings claims that it is a ‘game of skill’ and is legal as per the laws of the U.S. and Canada.

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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