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20 Things You Didn't Know About DraftKings

Fantasy sports contests have become a big thing in the past decade. Daily and weekly contests allow you to use your skills in predicting both individual players as well as team performance for MLB, NBA, PGA, NHL, and NFL games. They've also added Nascar auto racing, Mixed Martial Arts, Canadian Football League, Premier League and UEFA Champions League soccer, Tennis and Arena Football League to the sports you can bet on and actually win money. Draft Kings is a provider for these contests and we were interested in knowing more about this phenomenal company and we discovered 20 interesting facts that you probably don't know about Draft Kings but should.

1. Most states don't consider betting on fantasy sports gambling

It's true that betting on the outcome of any game is considered to be gambling, but most of the states in America do not view it as such. It's largely to be considered a game of skill and is legal in many of the individual states throughout the nation. It's always a good idea to check with your respective state to find out if it's one of them before you start placing your wagers through. This is something that each individual state has the power to rule upon. Some states have created specific laws governing fantasy sports betting and a few states have even prohibited the act and determined it to be illegal.

2. The FTC blocked a DraftKings merger with FanDuel

DraftKings and FanDuel are the two biggest providers for daily fantasy sports within the industry. In 2016, these massive companies struck a deal to merge. They were not allowed to follow through with their agreement because the Federal Trade Commission blocked the deal in July of 2017. There was a concern that it would violate anti-trust laws because if the two companies joined forces as one, they would control 90 percent of the market share within the industry, so the deal had to be canceled.

3. DraftKings was the second fantasy sports provider on the scene

Before DraftKings was officially launched in 2012, there was already another provider on the scene. FanDuel was the first major fantasy sports provider and it was established three years earlier in 2009. Even though it followed the pioneer of companies in the industry, it quickly rose to become a major contender for fantasy sports betting and now has over 8 million participating members. DraftKings is the only major competition for FanDuel.

4. DraftKings was created by a group of Vistaprint employees

Here's a fun fact about DraftKings that we bet you didn't know. It was founded by three men in 2012 who all used to work for Vistaprint. Jason Robins, Paul Liberman, and Matthew Kalish are responsible for the development of DraftKings and they all worked for the same company. When DraftKings first started operations it was small and it was run from Liberman's house. It just so happened that the first product that they offered was a one on one baseball contest and it launched on MLB's opening day for the 2012 season.

5. DraftKings started out small but investors saw it as a good deal

It wasn't long before outside investors saw the potential for great profit in DraftKings. The founders were very happy when Ryan Moore at Accomplice in Cambridge led the first round of outside funding along with other investors. They raised a total of $1.4 million to help get DraftKings on its feet so it could become more firmly established within the industry. At this time, it was still a single product operation offering just Major League Baseball. The following April, in 2013, Major League Baseball also made an investment in DraftKings and this set a precedent because it was the first time in history that a US professional sports organization had ever made an investment in fantasy sports. The amount of the investment was not disclosed.

6. Investors continued to pour millions into DraftKings

The first round of funding for DraftKings, which was started out of the home of one of the founders was well on its way to becoming a multimillion dollar company. After the first round of funding, more investors saw it as a lucrative business and millions more began to pour in. Redpoint Ventures, along with GGV Capital, Jordan Mendell, BDS Venture Fund, Accomplice and others raised another $24 million in round B funding in November of 2013.

7. DraftKings became a phenomenon in 2014

In less than 2 years after DraftKings was established, it had earned a solid reputation among fantasy sports enthusiasts. With solid financial backing, the company was in a position to add football, basketball, and hockey to the products that they supported for online speculators to bet on. The winnings were great for fans and users of the service and by February of 2014, DraftKings had awarded prizes in the amount of $50 million. They had attracted a total of a million registered players throughout the country and they were firmly established within the fantasy sports industry.

8. DraftKings commenced acquisitions in 2014

With the company on firm financial footing, DraftKings owners knew that they were ready to begin expansion. The first acquisition that they made was the third largest company in sports fantasy. At this time, DraftKings was the second largest with FanDuel still firmly in the lead. DraftKings acquired DraftStreet which was a New York Media Company IAC. This acquisition increased the user base for fifty percent and they decided to keep the New York office for DraftStreet open and they also kept some of the employees of its new subsidiary company on board to run the operation.

9. More investors wanted in in August of 2014

2014 was a year of rapid growth and expansion for DraftKings. There were yet more investors who wanted in on the action. Some of its previous investors decided that they wanted to put more into the company such as GGV Capital, Accomplice, and Redpoint Ventures. A new investment group jumped on the bandwagon with the Raine Group along with current investors adding yet another $41 million into the DraftKings coffers. DraftKings also purchased yet another competitor and acquired the assets of StarStreet of Somerville, MA.

10. The NHL signed on with DraftKings in 2014

It was an exciting year for the DraftKings company. In November, the National Hockey League entered into an agreement with DraftKings that allowed the company to become their official daily fantasy sports service with a two-year agreement. It was a good deal for both sides because as a part of the agreement, DraftKings and the NHL threw in sponsorships of video features as well as other content that would be advertised across digital outlets of the NHL as well as fan-oriented prizes, in-venue ad placements during marquee NHL events and co-branded free games.

11. DraftKings added Major League Baseball in 2015

Those of you who are registered users and came on board when DraftKings was already fully loaded with a variety of sports betting options probably don't remember the days when there were just a few products offered by the company. They began adding new sports on a consistent basis and in April of 2015, they struck a deal with Major League Baseball that was similar to the agreement that was made with the National Hockey League. This would propel the company into even greater heights of popularity with fans. It seemed that DraftKings was everywhere you looked and it was now offering MLB fans opportunities that they had not previously had. DraftKings brought in another $304 million for MLB related users fees alone in 2014.

12. They went big with ESPN

One of the next big breaks that DraftKings had come its way was a three-year advertising contract with ESPN Inc. This was big for the company and it included integration of DraftKing's services with the digital content as well as television advertisement with ESPN. They gained exclusivity in the advertising of fantasy sports services on the network which commenced in January of 2016. Sports fans who hadn't yet heard of DraftKings would now have full exposure to the services. This advertising deal was valued at an estimated $250 million.

13. DraftKings got another big round of investor funding in 2015

With DraftKings becoming a sensation with their offerings of a variety of fantasy sports contests for fans, it was clear that they were as safe a bet as you could find within the industry. More big names joined the investors on board with DraftKings in July of 2015. Yet another round of funding that included investments from huge corporations that was led by Fox Sports also included owners of the New England Patriots, Wellington Management and the Kraft Group. Fox Sports struck a deal with DraftKings for spending a total of $250 million in advertising with their network in exchange for the round of funding that brought in a whopping $300 million. The deal secured $50 million over the agreed upon advertising budget allocated to Fox Sports, which only helped to increase the rankings of DraftKings and they could do it over a three year period.

14. The Gambling Commission granted DraftKings a license for foreign transactions

This was yet another huge boost for DraftKings. In August of 2015, they were approved and licensed by the Gambling Commission to begin wagering services within the United Kingdom. They brought Jeffrey Haas onboard as a veteran of online poker to be their Chief International Officer as DraftKings went international. The UK operation officially launched in February of 2016, offering a soccer platform which was what the local audience was the most interested in at the time. They also became licensed to operate in Malta and gained access to the provision of games for audiences within any country within the European Union that allowed online gambling.

15. Draftkings and ESPN had a legal issue

There wasn't a problem between ESPN and DraftKings when ESPN suddenly backed out of their advertising deal with DraftKings. There were other things that came up in February of 2016, which caused ESPN to end their agreement with the company. There were uncertainties at that time about the legality of the service. ESPN thought it better to be safe than sorry until the issues had been resolved.

16. DraftKings and FanDuel had to settle legal issues

The Massachusetts Attorney General's office claimed that there had been allegations of what they referred to as "unfair and deceptive practices" conducted by both of the fantasy sports giants. A suit was filed against each in 2016. Whether the allegations were founded in fact or not, each agreed to settle to end the situation. Both DraftKings and FanDuel settled with the AG's office for $1.3 million each to put the suit to rest. The settlement concluded in 2017.

17. DraftKings offers contests for players of all skill levels

If you're new to fantasy sports and online sports betting, there are contests that are made just for beginners. Granted, this is a hobby that requires a fair amount of skill, but everyone has to start out somewhere and build their talents. DraftKings offers contests that allow you to start at easier levels and increase your skills, advancing to the next step. This takes some of the anxiety out of getting involved for first-timers. There are also contests that are designed for intermediate users as well as for the more advanced veterans of fantasy sports contests. There's a little something for everyone, but you have to be at least 18 years of age to register as a user.

18. DraftKings has optimized for smartphones

You don't have to be near your PC to enter contests and stay on top of your favorite fantasy league games. DraftKings has kept up with the times and has ensured that their services are fully optimized for mobile users. They offer a mobile app that is supported by either iOS or Android. They recognized the need for focusing on mobile users as a part of their growth strategy. Now you don't have to be tied to a PC or laptop to stay on top of the game.

19. DraftKings has had some legal controversies

There has been an ongoing controversy over the legality of sports betting through fantasy sports games since the company was first launched and even before. While it's not considered gambling, but rather a game of skill in most of the states in the Union, a few have taken exception, including Iowa, Louisiana, Montana, Arizona, and Washington State. At the federal level though, fantasy sports has received an exemption from the Unlawful Internet Gambling Enforcement Act of 2006. any kind of fantasy sports games or educational games is exempt from the law, making them at least legal at the federal level.

20. Nevada banned fantasy sports for self-preservation

It makes sense that the state of Nevada along with its casinos banned daily fantasy sports activities. They did this because it cuts into their share of the gambling pie. In 2015, the Nevada Gaming Control Board banned all DraftKings and FanDuel operations within the state.

Garrett Parker

Written by Garrett Parker

Garrett by trade is a personal finance freelance writer and journalist. With over 10 years experience he's covered businesses, CEOs, and investments. However he does like to take on other topics involving some of his personal interests like automobiles, future technologies, and anything else that could change the world.

Read more posts by Garrett Parker

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