Companies like Draftkings and Fanduel have exploded onto the market and become huge players in the daily fantasy sports world. By offering daily fantasy leagues based on salary caps and huge instant payouts, these businesses have raised huge amounts of capital and are in the midst of an advertising blitz not seen in recent years. Big name players like Disney and ESPN, Comcast and NBC Sports, are talking mega partnership deals which would push these firms into the billion dollar valuation category.
How did this happen so quickly and will it crash and burn?
For companies in any industry to go from startup to possible billion dollar valuation in less than five years is almost unheard of. The Daily Fantasy industry has two such rockets – Draftkings and Fanduel, essentially startups. The proliferation of mobile technology usage, the overwhelming popularity of the NFL, and a huge demand for fantasy leagues created a business opportunity. The objections caused by frustration and lengthy investment involved with traditional season-long leagues, and fantasy players dealing with injured players, complex rules, and players simply not having the time needed to research and play, was overcome by the creation of easy to use daily fantasy leagues. Technology then made it all possible.
Now, without investing much time or money, everyone can enjoy these games of challenge.
But why are they not considered illegal gambling? This simple question could be the third rail and lead to the eventual crash of these leagues. More and more states and attorneys are looking to prosecute and try to shut down these businesses.
But in the meantime, if you are a sports fan, be ready to sit through a massive blitz of advertising aimed directly at you. And get ready to watch these two rockets take off…
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