Walt Disney buys $250m stake in DraftKings

Daily fantasy sports (DFS) operator DraftKings is believed to have secured a $250m (£168m) investment from the Walt Disney Co in return for a 20% stake in the Boston-based firm.

The $250m investment would be the largest amount of capital raised by DraftKings to date, having secured $41m led by The Raine Group last year, and is believed to value to operator at close to $1bn.

The Wall Street Journal reports that under the terms of the deal, DraftKings will guarantee to spend more than $500m on advertising through Disney subsidiary ESPN’s media platforms over the next three years.

Market rivals FanDuel will be able to continue to advertise on ESPN’s platforms, but will not be offered the premium positions given to DraftKings.

The news comes as DraftKings and FanDuel continue to go toe-to-toe over player signups as they look to bolster their monopoly on the daily market – they have a 30% and 65% share respectively.

The raised capital is being used to fund each operators marketing war chest, with both spending millions on TV and radio adverts, print media, and sponsorship deals.

Partnering with athletes and sports franchises has been a key element of both operator’s strategies, and earlier this month DraftKings extended its deal with the Major League Baseball.

The reports come just days after Amaya Gaming CEO David Baazov revealed plans to enter the DFS sector before the start of the baseball season in September.

Baazov remained coy on how Amaya would enter the space – through acquisition, white label or building a platform in-house – but eGR understand the gaming giant has been in takeover talks with at least one DFS operator.

Eilers Research estimates the market could be worth more than $2.6bn a year by 2020, but for the time being FanDuel and DraftKings remain unprofitable as they continue to spend big on marketing and product development.