The Story Behind Groundbreaking FanDuel

FanDuel has grown from a team of 5 co-founders to a team that comprises 79 employees across 3 offices both sides of the Atlantic, and is now paying out over $10 million every week. That’s what they say. Daily fantasy sports has become a real phenomenon in the last couple of years. Six, to be more exact. In this article, like we’d like to present you the story behind FanDuel. The complete history of DraftKings (including scandals, where they operate, etc) is on another page of 777spinslot.

If you’re an old player, you probably know that there is a huge issue that season-long fantasy leagues have. When your team is decimated early on because of bad decisions and injuries, the season is over before it even starts. What if you were actually able to get a do-over? Is there any reset button you can push? Can you just hit control-alt-delete and start over?

Thanks to FanDuel.com, your fantasy football or basketball season is not over after a bad week. This company is the leader in one-day sports games and one-week fantasy football. Established in 2009, the 5 co-founders managed to elevate the company to success. In 2014 it was paying $10m in prize money every week.

FanDuel allows you to draft a team in a few minutes using a salary-cap system, replacing the typical snake-style draft. This process saves the players time and one does not have to commit to an entire season. This can be contributed as a factor to the overwhelming success.

What exactly is FanDuel?

FanDuel is the largest daily fantasy sports company in the industry (in terms of payouts). As we already stated, the model features season-long FS leagues compressed into a paid and/or free daily, and sometimes weekly, game of skill. In November 2015, two major U.S. states – Nevada and New York – adopted a new law according to which fantasy sports is a game of chance, not a game of skill, therefore it can be considered gambling.

What’s more interesting – FanDuel is actually a UK company. FanDuel is one of the largest companiesin the Fantasy Sports market. The company, based in Edinburgh, is practically unheard of in the United Kingdom but is a household name among sports fans in the United States and Canada. The industry of daily fantasy sports has literally skyrocketed in the last couple of years, as shown in the following graph.

History and Background

FanDuel was started by a company called Hubdub. In July, 2009, using $1.2m in venture capital funding from Scottish Enterprise and Pentech Ventures, the 5 co-founders created a new phenomenon. In 2010, FanDuel successfully held its first Championship – the FFFC. All in all, the event comprised ten users who won entry into the event by succeeding in a qualifying league during the NFL season. The first place received $25,000 and the total was roughly $40,000.

FanDuel managed to pay out over $500 million in winnings in 2014, and took in $50 million in fees. In 2015, the company paid out more than $1 billion, and that means around $100 million in revenue. FanDuel now has a $1.2 billion valuation using the multiple techniques analysts apply to the industry. FanDuel currently covers about 70% of the daily fantasy market and has the most cash, which allows it to offer the largest payouts with the cheapest fees involved. Competitor DraftKings, which has raised about $85 million, covers the rest of 30%.

Back in 2013, FanDuel made an announcement that it had managed to close Series C funding round with $11 million. The round incorported investor Comcast Ventures, as well as previous investors such as Piton Capital, Bullpen Capital, Richard Koch, and Pentech Ventures.

In September 2014, FanDuel received a staggering $70m in Series D funding. We need to mention that the funding came from Shamrock Capital Advisors with participation from KKR and NBC Sports Ventures. Investors like Bullpen Capital, Comcast Ventures, Pentech Ventures also participated.

In November, 2014, FanDuel revealed an important partnership contract with the NBA. The association gained an equity stake in FanDuel and would be promoting FanDuel in its games. As of 2016 FanDuel has partnered with over 17 NFL teams and 15 NBA teams.

July, 2015 marked the moment when FanDuel’s CEO announced a Series E funding round of a whopping $275 million leading the company to be valued at over $1 billion. Shortly after announcing this fund raise, the company bought sports analytics company numberFire.

The FanDuel/DraftKings Scandal in 2015

Problems with legalization are everywhere in the world, but the U.S. is very strict when it comes to this. When the UIGE Act was signed in 2006, the lawmakers specified that fantasy sports are not considered gambling, but rather ‘skill based’ games. At the time, Arizona, Nevada, Louisiana, Montana, Washington, and Iowa developed their own unique laws with restrictive requirements, while the other 44 states chose to apply the government decision.

DraftKings started in 2012. FanDuel launched its operations in 2009. Both fantasy sports companies raised millions of dollars in funding throughout their short history, and are now valued at more than $1 billion.

At the end of September, 2015, Ethan Haskell, a DraftKings employee accidentally uploaded team ownership info on DraftKing’s blog. The users who possessed such information had an immense competitive advantage, as daily fantasy games means choosing the right players that you can win with. It’s all about injuries, psychology, salaries.

FanDuel’s Sunday Millions contest ended on October 4th, and the 2nd place was won by Haskell, the employee who previously had access to the week’s line-ups. DraftKings denied that Ethan Haskell managed to access such data before FanDuel’s lineups locked, but it looks extremely suspicious.

The following day both DFS companies restricted their employees from taking part to fantasy sports on competitors’ websites.

An FBI investigation began on October 13th into whether daily fantasy sports is a type of gambling, thus violating the law.

Shortly after, the Nevada Gaming Control (NGC) ruled that DFS is gambling. The newly-born industry was hit, since most U.S. states consider this insitution as some kind of trendsetter when it comes to gambling regulation.

DFS market quickly fumbled and one month later New York ruled DF illegal.

Where is FanDuel Operating?

44 states allow DFS, thus FanDuel is completely legal there. FanDuel has operations in Canada as well and has a strong base of players there.

Most players are active in Canada and North America.

One month ago, in February, 2016 DraftKings penetrated a big market overseas – the UK. Even though FanDuel is a UK-based company, it took them 6 years to apply for a license in the United Kingdom. FanDuel’s designs on tapping the international industry have not been a secret lately, but the news about UK is truly hard evidence of the company’s attempt to move past the Canadian and U.S. markets — the only two countries where FanDuel is currently active.

In the UK, FanDuel wants to focus on soccer, and not on the United States and Canada variety that made FanDuel successful. The game offering will comprise English PL and UEFA CL.

How Does FanDuel Work?

When you want to play on FanDuel’s website, you can join a FS contest. People play on weekends the most, but you’ll always find at least 6,000 users online. You can choose a tournament, a 50/50 game, or a Head 2 Head. The offerings are incredibly diverse and most contests vary much in prize money. It can get up to $2,000,000 guaranteed prize pools, or you can choose to gor for battles with low payouts.

In a nutshell, how does FanDuel work:

Choose a contest
Pick your team
Score the most points and win

Why is FanDuel Legal

In the US and Canada you must be over 18 to play season-long or daily fantasy games, and you must live in state that has not banned FS.

DFS is also completely illegal or murky legal territory in Arizona, Iowa, Washington, Montana, and Louisiana. FanDuel also operates in Canada and has applied for a UK license in November, 2015. FanDuel actually allows players to win money on random sports events, and the United States government does not consider it a form of gambling.

Why is it still legal? The government labels betting on sports as a game of chance, while the UIGE Act of 2006 labels season-long and DFS as a game of skill.