Fantasy sports is a rapidly growing industry, and the leading segment is one-day/week fantasy gaming. Users participate for one day of a league’s games, with a new draft after each game-day. The NBA, recognizing the recent growth of this segment, has partnered with leading one-day fantasy sports website FanDuel.
Launched in 2009, FanDuel generates revenue by charging users small entry fees to compete in head-to-head or multi-player matchups, with winners receiving cash prizes. The company is on pace to surpass $600 million in participation charges, of which $540 million will be paid back to participants.
With the NBA partnership — which includes an equity purchase in the company — FanDuel is likely to generate even greater profits by season’s end. The partnership includes FanDuel links across all of the NBA’s digital platforms including NBA.com, NBA TV and its mobile apps. In exchange, FanDuel will run a series of free daily contests throughout the remainder of this season. Players are eligible to win non-cash prizes in these contests such as regular season tickets, NBA memorabilia and unique fan experiences.
The NBA’s equity purchase comes on the heels of the site’s $70 million capital raise managed by Shamrock Capital Advisors and NBC Sports Ventures. NBA executive Sal La Rocca will join the company’s board. The site has tripled in size each of the past few years, according to CEO Nigel Eccles, and intends to continue growing at that rate. He expects FanDuel to pay out over $1 billion in prizes in 2015, and with this new deal, that doesn’t seem out of reach.