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DraftKings

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DraftKings Inc.
Company typePublic
Nasdaq: DKNG (Class A)
Industry
Founded2012; 12 years ago (2012) in Boston, Massachusetts, U.S.[1]
Founders
  • Jason Robins
  • Matt Kalish
  • Paul Liberman
Headquarters
Boston, Massachusetts
,
U.S.
Key people
  • Jason Robins (CEO)
  • Paul Liberman (COO)
  • Matt Kalish (CRO)
Number of employees
869 (December 31, 2019)
Websitedraftkings.com

DraftKings is an American daily fantasy sports contest and sports betting provider. The company allows users to enter daily and weekly fantasy sports–related contests and win money based on individual player and team performances in five major American sports (MLB, the NHL, the NFL, the NBA and the PGA), Premier League and UEFA Champions League soccer, NASCAR auto racing, Canadian Football League, the XFL, Mixed martial arts (MMA) and Tennis.

In August 2018, DraftKings launched DraftKings Sportsbook in New Jersey becoming the first legal mobile sports betting operator in the state.[2] Since launching in New Jersey, DraftKings has opened mobile sports betting operations in Indiana, Pennsylvania, West Virginia and opened in New Hampshire December 30, 2019 after reaching contract with the New Hampshire Lottery.[3][4] Retail sports betting is available in Iowa, Mississippi and New York.[5] DraftKings Sportsbook mobile and retail sports betting products allow bettors in each state engage in betting for most major U.S. and international sports.

As of April 2016, the majority of U.S. states consider fantasy sports (including daily fantasy sports) a game of skill and not gambling.[6] In November 2016, FanDuel and DraftKings, the two largest companies in the daily fantasy sports industry, reached an agreement to merge. However the merger was terminated in July 2017 due to it being blocked by the Federal Trade Commission as the combined company would have controlled a 90 percent market share. As of July 2017, DraftKings has eight million users.[7][8]

In April 2020, DraftKings became a publicly traded company through a reverse merger with a special-purpose acquisition company.[9]

History

DraftKings was established in 2012 by Jason Robins, Matthew Kalish, and Paul Liberman, former Vistaprint employees.[10] The company initially operated out of Liberman's house.[10] The company's first product was a one-on-one baseball competition, launched to coincide with Major League Baseball's opening day in 2012.[10]

In July 2012, the company announced its first outside funding, a $1.4 million investment from Ryan Moore at Cambridge-based venture firm Accomplice, along with other investors.[11]

In April 2013, Major League Baseball invested an undisclosed amount in DraftKings, becoming the first US professional sports organization to invest in daily fantasy sports, after a successful presentation by CEO Jason Robins to MLB Advanced Media, the league's technology and media wing. The investment was not disclosed at the time.[12]

In November 2013, the company received $24 million of Series B funding from a group of investors including Redpoint Ventures, Accomplice, BDS Venture Fund, GGV Capital and Jordan Mendell.[11]

In February 2014, it was reported that the company awarded $50 million in prizes in 2013 to players in weekly fantasy football, daily fantasy baseball, daily fantasy basketball and daily fantasy hockey. The company also reported 50,000 active daily users and as many as one million registered players.[1]

In July 2014, when the company was the second largest company in the daily fantasy sports industry, it announced the acquisition of the third largest company, rival DraftStreet, owned at the time by New York media company IAC.[13] The acquisition reportedly increased DraftKings' user base by 50%.[14] The company announced it would keep the DraftStreet NY office open and retain some employees.[13]

In August 2014, the company announced $41 million in funding from a variety of investors, including The Raine Group, as well as existing investors Redpoint Ventures, GGV Capital, and Accomplice.[15] The company also announced that it was acquiring the assets of Somerville, MA, competitor StarStreet.[13]

In November 2014, DraftKings reached a two-year deal to become the official daily fantasy sports service of the National Hockey League. The deal included sponsorships of video features and other content across the NHL's digital outlets, co-branded free games with fan-oriented prizes, and in-venue ad placements during marquee NHL events. Yahoo! Sports remained the league's official season-length fantasy sports provider.[16][17]

In April 2015, DraftKings reached a similar deal with Major League Baseball.[18] The agreement allowed DraftKings to offer co-branded MLB daily fantasy games and extend its relationships with individual MLB clubs to offer in-stadium fantasy-related experiences.[18] The company also announced it had received $304 million in users' entry fees in 2014.[18]

In July 2015, DraftKings entered into a three-year advertising deal with ESPN Inc. valued at $250 million. This deal included "integration" of the service within ESPN's television and digital content, and having exclusivity in advertising DFS services on its networks beginning in January 2016.[19][20]

Also in July 2015, DraftKings announced a round of funding totaling $300 million, led by Fox Sports, along with the Kraft Group, owners of the New England Patriots, and Boston financial giant Wellington Management.[21] The agreement included a condition stating that DraftKings would spend $250 million on advertising with Fox Sports over the next three years.[14] Due to the acquisition of 21st Century Fox by Disney in March 2019, Fox's stake is now owned by The Walt Disney Company.[22]

In August 2015, DraftKings announced that it had been granted a license by the Gambling Commission to operate pool wagering services in the United Kingdom, and that it planned to open an office in London. The company also hired Jeffrey Haas, a veteran of the online poker industry, to serve as Chief International Officer to lead the company's international expansion.[23] DraftKings officially launched in the UK on February 5, 2016 with daily fantasy soccer. As part of the launch, DraftKings enhanced its handling of soccer on the platform to appeal to the local audience.[24] The following year, DraftKings was subsequently awarded a controlled skill games license in Malta, which would allow the service to expand into any European Union country that allows gambling services to operate under licensing from another EU country, such as Germany.[25]

In February 2016, ESPN backed out of its advertising deal with DraftKings due to the legal uncertainties surrounding the service.[26][27]

On November 18, 2016, DraftKings and FanDuel announced an intent to merge. The combined company would serve over 5 million users.[28] On June 19, 2017, the Federal Trade Commission (FTC) announced that it would seek a preliminary injunction to block the then-proposed merger. The FTC felt that the proposed transaction would give the combined company 90% of the U.S. DFS market, which it considered to be a monopoly position.[29] On July 13, 2017, the merger was officially called off due to the threat of litigation.[8] At this time DraftKings CEO Jason Robins also announced the company was approaching 8 million users.[30][31]

In September 2017, DraftKings and FanDuel each paid $1.3 million to settle with the Massachusetts Attorney General's office over allegations of unfair and deceptive practices by the companies prior to 2016.[32]

In August 2018, DraftKings launched its first legal online sportsbook in New Jersey. It is the first online sportsbook in the USA outside of Nevada, and only accepts players in New Jersey.[33] Since launching in New Jersey, DraftKings has opened sports betting operations in New York, West Virginia, Indiana, Iowa, and Mississippi. DraftKings Sportsbook mobile and retail sports betting products allow bettors in each state engage in betting for most major U.S. and international sports.[34]

In April 2020, DraftKings completed a reverse merger valued at $3.3 billion that made it a publicly traded company. The merger involved Diamond Eagle Acquisition Corp., a special-purpose acquisition company that went public in May 2019, as well as SBTech Global Ltd., a Europe-based company providing technology solutions for sports betting businesses. The combined company keeps both DraftKings' name and its executive management. On April 24, 2020, the company's shares started trading on the Nasdaq stock exchange under the ticker symbol "DKNG".[9][35][36]

Sports betting

DraftKings Sportsbook launched in New Jersey on August 1, 2018, making it the first company to offer legal, mobile and online sports betting after the overturn of Professional and Amateur Sports Protection Act (PASPA).[2] DraftKings has since launched mobile operations in West Virginia, Indiana, and Pennsylvania.[37][38][39][40]

DraftKings also offers retail sports betting in partnership with casinos throughout the country. Locations include the DraftKings Sportsbook at Resorts in New Jersey, DraftKings at Scarlet Pearl Sportsbook in Mississippi, DraftKings Sportsbook at Wild Rose in multiple locations throughout Iowa, DraftKings Sportsbook at del Lago in New York, and DraftKings Sportsbook at The Meadows in Pennsylvania.[41][42][43][44][45]

Customers are able to place a variety of bets, including live in-game betting, odds boosts, prop bets, pools, futures bets, and market specials for most major U.S. and international sports.

Fantasy sports contests

DraftKings offers a variety of fantasy sports contests for players at a range of different skill levels.[46] Contests include beginner contests for novice players, "Step" contests where players win tickets at different levels to advance to the next level, "Multipliers" (also known as "Boosters"), which allow players to quickly boost their entry fee by earning higher scores, three-man leagues, "50/50" contests, where players win by finishing in the top half of their league, "Head to Head" contests, where two players face each other,[47] and "Guaranteed Prize Pools" (GPPs), tournaments where a smaller number of players can win larger amounts.[48]

Players can use the DraftKings website, or manage their fantasy games using a mobile app that supports iOS or Android.[49] DraftKings offers weekly or daily fantasy sports contests for 13 sports, including: NFL, MLB, NBA, NHL, Golf, Men and Women's Soccer, Tennis, CFL, NASCAR, MMA, eSports and XFL.[50]

Partnering agreements

Major League Baseball (MLB) has an investment stake in the company and is a partner.[51] The company had an exclusive $250M advertising contract with the American sports network ESPN,[19] and a $250M non-exclusive advertising deal with 21st Century Fox's Fox Sports unit.[52]

In addition to MLB, ESPN and Fox, as of July 2015, DraftKings also had partnership agreements with the National Football League, media property Bleacher Report, two sport promotional bodies (NASCAR and UFC), two venues (Madison Square Garden and Staples Center), five NFL teams, eight NBA teams, twenty-five MLB teams, seven NHL teams, and the New York Liberty of the WNBA.[19]

In November 2017, DraftKings announced that it had acquired digital rights to EuroLeague basketball games in Canada and the United States. The company planned to, beginning in 2018, stream games to those who participate in associated DFS contests with an entry fee of $3 or more, and offer one free streaming game per-week. DraftKings CEO Jason Robins stated that he was aiming for the service to become a "one-stop shop" for fantasy players, so they would not have to "hop around to necessarily five or six different places to consume the game content". He envisioned that major sports leagues could reach similar partnerships in the future.[53][54]

Vince McMahon owns an unspecified minority stake in DraftKings. As such, it is the official fantasy sports platform for the XFL and will also host the league's exclusive sports betting platform if legal circumstances allow it.[55]

In September 2019, the National Football League (NFL) announced an official partnership with DraftKings, becoming the first daily fantasy sports platform to enter a formal relationship with the league.[56]

Controversy

On October 5, 2015, a New York Times article indicated that an employee at DraftKings admitted to inadvertently releasing data before the start of week three's NFL football games. That same employee had won $350,000 on rival fantasy site FanDuel the same week. An internal review concluded the employee obtained the data after lineups were locked and couldn't have used that data for an unfair advantage.[57] Both DraftKings and FanDuel released statements saying that "Nothing is more important... than the integrity of the games we offer to our customers," and they would work with the entire fantasy sports industry "so that fans everywhere can continue to enjoy and trust the games they love."[58] The following day, New York Attorney General Eric Schneiderman opened an inquiry into DraftKings and FanDuel, asking each site for a range of internal data and details on how they prevent fraud.[59] ESPN announced on October 6 that they would no longer be running segments sponsored by DraftKings, though paid DraftKings advertisements would continue.[59]

References

  1. ^ a b "The Super Bowl of Startups: Interview with DraftKings CEO Jason Robins". redpoint.com. February 5, 2014. Archived from the original on May 3, 2015. Retrieved July 20, 2015.
  2. ^ a b "DraftKings launches mobile sports betting in New Jersey". Reuters. August 1, 2018. Retrieved October 30, 2019.
  3. ^ "Sports betting approved in New Hampshire for next year". APnews. November 25, 2019. Retrieved December 17, 2019.
  4. ^ "When Will DraftKings Open in New Hampshire?". BonusFinder. December 17, 2019. Retrieved December 17, 2019.
  5. ^ Bonesteel, Matt. "NCAA athletes aren't allowed to play fantasy sports for money, even though it's legal". The Washington Post. September 22, 2015. Retrieved September 29, 2015.
  6. ^ Hobson, Will. "Daily fantasy sites DraftKings, FanDuel reach agreement to merge". The Washington Post. November 18, 2016. Retrieved November 18, 2016.
  7. ^ a b Tepper, Fitz. "DraftKings and FanDuel will no longer merge". TechCrunch. July 13, 2017. Retrieved August 3, 2017.
  8. ^ a b Roberts, Daniel (April 24, 2020). "DraftKings completes merger that makes it a public company, starts trading Friday". Yahoo! Finance. Retrieved April 24, 2020.
  9. ^ a b c "Two local companies, StarStreet and DraftKings, prepare to launch new fantasy sports sites". boston.com. February 27, 2012. Retrieved July 21, 2015.
  10. ^ a b "Crunchbase: DraftKings Funding Rounds". crunchbase.com. July 19, 2012. Retrieved July 21, 2015.
  11. ^ "Daily fantasy sports Web sites find riches in Internet gaming law loophole". washingtonpost.com. March 27, 2015. Retrieved July 21, 2015.
  12. ^ a b c "DraftKings Raises Another $41M And Acquires Daily Fantasy Sports Competitor StarStreet". techcrunch.com. August 25, 2014. Retrieved July 21, 2015.
  13. ^ a b "DraftKings acquires DraftStreet, combining major daily fantasy platforms". betaboston.com. July 14, 2014. Retrieved July 21, 2015.
  14. ^ "DraftKings raises $41 million, acquires Cambridge competitor StarStreet". betaboston.com. August 25, 2014. Retrieved July 21, 2015.
  15. ^ "NHL Signs Two-Year Deal With DraftKings As Rise Of Daily Fantasy Games Continues". Sports Business Journal. Retrieved June 20, 2017.
  16. ^ "NHL Does Multi-Year Exclusive Deal With DraftKings". Forbes. November 10, 2014. Retrieved July 21, 2015.
  17. ^ a b c "DraftKings And Major League Baseball Extend Exclusive Partnership". forbes.com. April 2, 2015. Retrieved July 21, 2015.
  18. ^ a b c "DraftKings Will Pay ESPN $250 Million for Ads Over the Next Two Years". recode.net. July 20, 2015. Retrieved July 20, 2015.
  19. ^ "ESPN Teams with DraftKings as Exclusive Daily Fantasy-Sports Partner". Variety. Retrieved September 20, 2015.
  20. ^ "DraftKings raises $300m in frenzied fantasy sports land-grab". betaboston.com. July 26, 2015. Retrieved July 29, 2015.
  21. ^ "Disney, ESPN Now Own Piece Of DraftKings Sportsbook After Fox Deal". Legal Sports Report. May 20, 2019. Retrieved May 20, 2019.
  22. ^ Woodward, Curt. "DraftKings heading to UK, hires gambling-industry veteran to lead expansion". BetaBoston. Retrieved July 13, 2017.
  23. ^ Bock, Pauline. "DraftKings on why the UK is ready for one-day fantasy sport". Wired UK. Retrieved July 13, 2017.
  24. ^ Tepper, Fitz. "DraftKings has received a Malta gaming license, paving the way for European expansion". TechCrunch. Retrieved July 13, 2017.
  25. ^ "Fox Marks Down $160M Investment in DraftKings By About 60%". Sports Business Journal. February 10, 2016. Retrieved March 29, 2016.
  26. ^ "ESPN ends DraftKings deal". Las Vegas Review-Journal. February 10, 2016. Retrieved March 29, 2016.
  27. ^ "DraftKings and FanDuel Agree to Merge". The Wall Street Journal. Retrieved November 18, 2016.
  28. ^ "The FTC is attempting to block the DraftKings-Fanduel merger". TechCrunch. Oath. Retrieved June 19, 2017.
  29. ^ Schiffer, Alex. Federal judge orders temporary stop to DraftKings, FanDuel merger. The Washington Post. June 21, 2017. Retrieved August 3, 2017.
  30. ^ Spangler, Todd (July 13, 2017). "DraftKings, FanDuel Scrap Merger Plans After FTC Opposition". Variety. Retrieved July 13, 2017.
  31. ^ "DraftKings, FanDuel settle with Massachusetts for $1.3M apiece". ESPN. September 7, 2017.
  32. ^ "DraftKings Sportsbook App Goes Fully Live For NJ Online Sports Betting". Legal Sports Report. August 6, 2018. Retrieved August 14, 2018.
  33. ^ "DraftKings Sportsbook Gets OK To Take Online Bets in Indiana Tomorrow". Legal Sports Report. October 2, 2019. Retrieved October 30, 2019.
  34. ^ Rosen, Andy (April 23, 2020). "DraftKings set to go public on Friday". The Boston Globe. Retrieved April 24, 2020.
  35. ^ "DraftKings Closes Business Combination and Will Begin Trading on the Nasdaq Stock Exchange". DraftKings. April 23, 2020. Retrieved April 24, 2020.
  36. ^ "Wild Rose to unveil DraftKings sportsbook today | News, Sports, Jobs – Messenger News". Retrieved October 30, 2019.
  37. ^ "DraftKings, Rush Street Interactive launch Indiana's first online sportsbooks". Indianapolis Star. Retrieved October 30, 2019.
  38. ^ "DraftKings Sportsbook app arrives in West Virginia". WV MetroNews. August 28, 2019. Retrieved October 30, 2019.
  39. ^ Kohler, Katie (October 30, 2019). "DraftKings Sportsbook Set To Go Live in PA On Nov. 4". Play Pennsylvania. Retrieved November 3, 2019.
  40. ^ Spector, Joseph. "DraftKings to partner with del Lago Casino for sports betting". Rochester Democrat and Chronicle. Retrieved October 31, 2019.
  41. ^ Writer, DAVID DANZIS Staff. "Resorts, DraftKings open new sportsbook". Press of Atlantic City. Retrieved October 31, 2019.
  42. ^ "Wild Rose to unveil DraftKings sportsbook today | News, Sports, Jobs – Messenger News". Retrieved October 31, 2019.
  43. ^ Elliott, David. "Sports book opens at Scarlet Pearl". WLOX. Retrieved October 31, 2019.
  44. ^ Maykuth, Andrew (October 2, 2019). "DraftKings aims to play in Pennsylvania's booming online sports-betting market". The Philadelphia Inquirer. Retrieved October 28, 2019.
  45. ^ "DraftKings Review – Lineup Optimizer". lineupoptimizerreview.com. Retrieved November 14, 2019.{{cite web}}: CS1 maint: url-status (link)
  46. ^ "DraftKings Review – Complete Breakdown". dfsstrategy.com.
  47. ^ "DraftKings Strategy Guide – The Basics". rotogrinders.com. Retrieved July 21, 2015.
  48. ^ "Rotogrinders Industry Forum". rotogrinders.com. Retrieved July 21, 2015.
  49. ^ "DraftKings FAQ's".{{cite web}}: CS1 maint: url-status (link)
  50. ^ "FanDuel and DraftKings, Leaders in Daily Fantasy Sports, Are Quickly Gaining Clout". NY Times. July 13, 2015. Retrieved July 20, 2015.
  51. ^ "DraftKings Raises $300 Million, Promises to Spend Much of It With Fox Sports". recode.net. July 26, 2015. Archived from the original on October 12, 2015. Retrieved July 29, 2015.
  52. ^ "DraftKings looking at the possibility of live streaming sports". Awful Announcing. February 6, 2018. Retrieved February 7, 2018.
  53. ^ "DraftKings Adds Actual Sports With EuroLeague Basketball Deal". Bloomberg.com. November 7, 2017. Retrieved February 7, 2018.
  54. ^ Rachuk, Stephen (February 2, 2019). A quick recap of Oliver Luck on radio row. Retrieved February 6, 2019.
  55. ^ "NFL makes DraftKings first official daily fantasy partner". September 26, 2019.
  56. ^ "How the Daily Fantasy Sports Industry Turns Fans into Suckers – 1/6/16". nytimes.com. January 6, 2016. Retrieved January 6, 2016.
  57. ^ "DRAFTKINGS STATEMENT – 10/5/15". playbook.draftkings.com. October 5, 2015. Retrieved October 6, 2015.
  58. ^ a b Drape, Joe; Williams, Jacqueline (October 6, 2015). "New York Attorney General Opens Inquiry into Fantasy Sports Sites". nytimes.com. New York Times. Retrieved October 6, 2015.
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