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DraftKings

DraftKings Inc.
Company typePublic
Industry
Founded2012; 12 years ago (2012)
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)
ProductsSportsBook, Online Casino, and Daily Fantasy Sports
Number of employees
3,400[2] (2021)
Websitedraftkings.com

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

DraftKings launched DraftKings Sportsbook in New Jersey.[3] Since launching in New Jersey, DraftKings has opened mobile sports betting operations in Connecticut, Indiana, Pennsylvania, West Virginia and New Hampshire on December 30, 2019 after reaching agreement with the New Hampshire Lottery.[4]

As of April 2016, the majority of U.S. states consider fantasy sports (including daily fantasy sports) a game of skill, rather than gambling.[5] 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-- blocked by the Federal Trade Commission to prevent potential monopoly, as the combined company would have controlled 90 percent of the market for daily fantasy sports. As of July 2017, DraftKings had eight million users.[6][7]

DraftKings became a publicly traded company through a reverse merger with SBTech, a Bulgarian technology company, and special-purpose acquisition company Diamond Eagle Acquisition Corp in April 2020.[8]

History

DraftKings was established in 2012 by Jason Robins, Matthew Kalish, and Paul Liberman, former Vistaprint employees.[9] The company initially operated out of Liberman's house.[9] The company's first product was a one-on-one baseball competition, launched to coincide with Major League Baseball's opening day in 2012.[9]

In April 2013, Major League Baseball invested in DraftKings, becoming the first US professional sports league to invest in daily fantasy sports. The investment was not disclosed at the time.[10]

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, it announced the acquisition of rival DraftStreet, owned at the time by IAC, the third largest player in the fantasy sports space.[11] The acquisition reportedly increased DraftKings' user base by 50%.[12] The company announced it would keep the DraftStreet NY office open and retain some employees.[11]

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.[13] The company also announced that it was acquiring the assets of Somerville, MA, competitor StarStreet.[11]

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.[14][15]

In April 2015, DraftKings reached a similar deal with Major League Baseball.[16] 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.[16] The company also announced it had received $304 million in users' entry fees in 2014.[16]

In July 2015, DraftKings entered into a three-year advertising deal with ESPN Inc. valued at $250 million.[17] 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.[18]

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.[19] The agreement included a condition stating that DraftKings would spend $250 million on advertising with Fox Sports over the next three years.[12] Due to the acquisition of 21st Century Fox by Disney in March 2019, Fox's stake is now owned by The Walt Disney Company.[20]

In August 2015, DraftKings announced that it had been granted a license by the Gambling Commission in the United Kingdom to operate pool wagering services 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.[21] 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.[22] 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.[23]

On October 5, 2015, an article in The New York Times 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.[24] 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."[25] 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.[26] ESPN announced on October 6 that they would no longer be running segments sponsored by DraftKings, though paid DraftKings advertisements would continue.[26]

In February 2016, ESPN backed out of its advertising deal with DraftKings due to the legal uncertainties surrounding the service.[27][28]

On May 2, 2016, Lawrence Wasden, the Idaho Attorney General, banned DraftKings and FanDuel from operating in the state calling them illegal gambling. [29] [30]

On November 18, 2016, DraftKings and FanDuel announced their intent to merge. The combined company would serve over five million users.[31] On June 19, 2017, the Federal Trade Commission (FTC) announced that it would seek a preliminary injunction to block the proposed merger. The FTC felt that the proposed transaction would give the combined company 90% of the U.S. DFS market, which is considered to be a monopoly position.[32] On July 13, 2017, the merger was officially called off due to the threat of litigation from the FTC.[7]

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.[33]

In 2021, Draftkings agreed to pay at least $50 million over a three-year period to distribute a sports and pop-culture podcast hosted by Dan Le Batard. The agreement marks the first major licensing deal struck by Meadowlark Media, founded by Le Batard. The podcast averages around 10 to 12 million downloads monthly.[34][35][36] As of July 2021, DraftKings reached a market capitalization of $20.64 billion.[37]

In December 2021, DraftKings was sued by Colossus Bets over patent infringement. Colossus claimed DraftKings infringed seven patents related to a cash-out feature in their sports betting and gaming products.[38]

DraftKings acquired sports betting broadcast company VSiN in March, 2021.[39] VSiN broadcasts betting news and trends across various platforms including radio, digital platforms, and television networks such as YouTube TV and iHeartRadio.[40]

In May 2022, DraftKings acquired Golden Nugget Online Gaming.[41] In February 2024, the company acquired lottery courier app Jackpocket for $750 million.[42]

Expansion into sports betting in the U.S.

In May 2018, the Professional and Amateur Sports Protection Act of 1992 was declared unconstitutional by the Supreme Court of the United States, allowing states outside of Nevada to legalize sports betting.[43] In August 2018, DraftKings launched its first legal online sportsbook in New Jersey.[44] Since launching in New Jersey, DraftKings has opened sports betting operations in New York, West Virginia, Indiana, Iowa, New Hampshire, Massachusetts and Mississippi.[45]

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".[46][47][48] Hindenburg Research later published a report alleging that SBTech, which accounted for around 25% of DraftKing's revenue at the SPAC consummation, has ties to organized crime in Bulgaria and illegal gambling around the world.[49]

In September 2020, retired NBA player Michael Jordan became an investor and board advisor at DraftKings.[50][51][52]

Despite setting record monthly highs for revenue and handle for Massachusetts sports betting in October 2023, DraftKings requested 178 bets to be voided with the Massachusetts Gaming Commission. The bets worth $4,182 account for a total liability of $575,436 from an NBA prop market error.[53]

On September 11, 2023, DraftKings issued an apology for a controversial promotion that used the 22nd anniversary of the September 11, 2001, terror attacks to encourage betting on games involving New York-based teams. The promotion, which was criticized for exploiting a national tragedy for business, was quickly removed following public backlash.[54]

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. ^ "DraftKings: Number of Employees 2019-2021 | DKNG".
  3. ^ "DraftKings launches mobile sports betting in New Jersey". Reuters. August 1, 2018. Retrieved October 30, 2019.
  4. ^ "Sports betting approved in New Hampshire for next year". APnews. November 25, 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. ^ "Latest SPAC: Insight into DraftKings' Listing".
  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. ^ "Daily fantasy sports Web sites find riches in Internet gaming law loophole". washingtonpost.com. March 27, 2015. Retrieved July 21, 2015.
  11. ^ a b c "DraftKings Raises Another $41M And Acquires Daily Fantasy Sports Competitor StarStreet". techcrunch.com. August 25, 2014. Retrieved July 21, 2015.
  12. ^ a b "DraftKings acquires DraftStreet, combining major daily fantasy platforms". betaboston.com. July 14, 2014. Retrieved July 21, 2015.
  13. ^ "DraftKings raises $41 million, acquires Cambridge competitor StarStreet". betaboston.com. August 25, 2014. Retrieved July 21, 2015.
  14. ^ "NHL Signs Two-Year Deal With DraftKings As Rise Of Daily Fantasy Games Continues". Sports Business Journal. November 10, 2014. Retrieved June 20, 2017.
  15. ^ "NHL Does Multi-Year Exclusive Deal With DraftKings". Forbes. November 10, 2014. Retrieved July 21, 2015.
  16. ^ a b c "DraftKings And Major League Baseball Extend Exclusive Partnership". forbes.com. April 2, 2015. Retrieved July 21, 2015.
  17. ^ Wagner, Kurt (July 20, 2015). "DraftKings Will Pay ESPN $250 Million for Ads Over the Next Two Years". Vox. Retrieved September 8, 2022.
  18. ^ "ESPN Teams with DraftKings as Exclusive Daily Fantasy-Sports Partner". Variety. June 24, 2015. Retrieved September 20, 2015.
  19. ^ "DraftKings raises $300m in frenzied fantasy sports land-grab". betaboston.com. July 26, 2015. Archived from the original on September 5, 2021. Retrieved July 29, 2015.
  20. ^ "Disney, ESPN Now Own Piece Of DraftKings Sportsbook After Fox Deal". Legal Sports Report. May 20, 2019. Retrieved May 20, 2019.
  21. ^ Woodward, Curt. "DraftKings heading to UK, hires gambling-industry veteran to lead expansion". BetaBoston. Retrieved July 13, 2017.
  22. ^ Bock, Pauline. "DraftKings on why the UK is ready for one-day fantasy sport". Wired UK. Retrieved July 13, 2017.
  23. ^ Tepper, Fitz (January 30, 2017). "DraftKings has received a Malta gaming license, paving the way for European expansion". TechCrunch. Retrieved July 13, 2017.
  24. ^ "How the Daily Fantasy Sports Industry Turns Fans into Suckers – 1/6/16". The New York Times. January 6, 2016. Retrieved January 6, 2016.
  25. ^ "DRAFTKINGS STATEMENT – 10/5/15". playbook.draftkings.com. October 5, 2015. Retrieved October 6, 2015.
  26. ^ a b Drape, Joe; Williams, Jacqueline (October 6, 2015). "New York Attorney General Opens Inquiry into Fantasy Sports Sites". The New York Times. Retrieved October 6, 2015.
  27. ^ "Fox Marks Down $160M Investment in DraftKings By About 60%". Sports Business Journal. February 10, 2016. Retrieved March 29, 2016.
  28. ^ "ESPN ends DraftKings deal". Las Vegas Review-Journal. February 10, 2016. Retrieved March 29, 2016.
  29. ^ "Which Daily Fantasy Sports Sites Allow Which States?". Legal Sports Report. Retrieved April 11, 2022.
  30. ^ Staff, KBOI News (May 2, 2016). "DraftKings, FanDuel now considered as illegal gambling, Idaho AG says". KBOI. Retrieved April 11, 2022.
  31. ^ Berzon, Alexandra. "DraftKings and FanDuel Agree to Merge". WSJ. Retrieved November 18, 2016.
  32. ^ "The FTC is attempting to block the DraftKings-Fanduel merger". TechCrunch. Oath. June 19, 2017. Retrieved June 19, 2017.
  33. ^ "DraftKings, FanDuel settle with Massachusetts for $1.3M apiece". ESPN. September 7, 2017.
  34. ^ Mullin, Benjamin (April 27, 2021). "DraftKings Buys Rights to Podcast by Former ESPN Host Dan Le Batard". The Wall Street Journal. ISSN 0099-9660. Retrieved April 29, 2021.
  35. ^ Cote, Greg. "Dan Le Batard Show lands a major new deal. 'We cashed a bet we made on ourselves'". Miami Herald. Archived from the original on April 27, 2021.
  36. ^ Marchand, Andrew (April 29, 2021). "What Dan Le Batard's $50M DraftKings deal means for sports media's future". New York Post. Retrieved April 29, 2021.
  37. ^ "DraftKings Market Capitalization". AssetDash. Archived from the original on July 9, 2021. Retrieved July 7, 2021.
  38. ^ O'Boyle, Daniel (December 2, 2021). "Colossus Bets sues DraftKings over cashout patent infringement". iGaming Business. Retrieved June 17, 2024.
  39. ^ Bumbaca, Chris. "Expanding into content space, DraftKings acquires sports betting broadcast company VSiN". USA TODAY. Retrieved February 23, 2024.
  40. ^ "About VSiN". VSiN. Retrieved February 23, 2024.
  41. ^ "DraftKings completes GNOG acquisition". iGaming Business. May 5, 2022. Retrieved May 5, 2022.
  42. ^ Glickman, Ben. "DraftKings to Buy Jackpocket for $750 Million". WSJ. Retrieved February 16, 2024.
  43. ^ Roettgers, Janko (May 23, 2018). "FanDuel Acquired by Paddy Power Betfair". Variety. Retrieved July 9, 2018.
  44. ^ "DraftKings Sportsbook App Goes Fully Live For NJ Online Sports Betting". Legal Sports Report. August 6, 2018. Retrieved August 14, 2018.
  45. ^ "DraftKings Sportsbook Gets OK To Take Online Bets in Indiana Tomorrow". Legal Sports Report. October 2, 2019. Retrieved October 30, 2019.
  46. ^ Roberts, Daniel (April 24, 2020). "DraftKings completes merger that makes it a public company, starts trading Friday". Yahoo! Finance. Retrieved April 24, 2020.
  47. ^ Rosen, Andy (April 23, 2020). "DraftKings set to go public on Friday". The Boston Globe. Retrieved April 24, 2020.
  48. ^ "DraftKings Closes Business Combination and Will Begin Trading on the Nasdaq Stock Exchange". DraftKings. April 23, 2020. Retrieved April 24, 2020.
  49. ^ "DraftKings: A $21 Billion SPAC Betting It Can Hide Its Black Market Operations". Hindenburg Research. June 15, 2021. Retrieved May 5, 2022.
  50. ^ Goldstein, Steve. "DraftKings jumps after addition of NBA legend Michael Jordan as investor and adviser". MarketWatch. Retrieved July 7, 2021.
  51. ^ Franck, Thomas (September 2, 2020). "DraftKings rallies 8% as Michael Jordan joins betting company as board advisor". CNBC. Retrieved July 7, 2021.
  52. ^ "Michael Jordan becomes investor, adviser to DraftKings". Yogonet.com. September 2020.
  53. ^ Kelley, Zachary (November 16, 2023). "DraftKings Begs for Voided Bets Despite Record-Setting Month". LegalSportsBetting.com. Retrieved November 18, 2023.
  54. ^ "DraftKings apologizes for sports betting offer referencing 9/11 terror attacks". AP News. September 11, 2023. Retrieved April 5, 2024.

External links

  • Official website
  • Business data for DraftKings:


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