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Valuations of FanDuel and DraftKings Likely Have Collapsed
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The great foe of dozens of “unicorns” are “down rounds,” in which investors drop the value of private companies as they try to raise new funds. That almost certainly has happened to FanDuel and DraftKings, which were once valued at $1 billion each.
In July 2015, FanDuel raised $275 million at a $1 billion valuation. The investors were among the most blue chip venture capitalists.
The round was led by KKR and included new investors Google Capital and Time Warner Investments with Turner Sports. Existing investors Shamrock Capital, NBC Sports Ventures, Comcast Ventures, Bullpen Capital, Pentech Ventures and Piton Capital were also involved.
After spending tens of millions of dollars on sports television ads and sponsorship, the two fantasy sports sites have disappeared from the media, except as the targets of their frustrated attempts to salvage their businesses.
The most damaging attacks to the two companies have come from states that claim the sites are not the home of innocent games but of hard core gambling. Online gambling is prohibited in some states. The first of these was New York Attorney General Eric Schneiderman’s aggressive move to ban the businesses from his state. Other attorneys general have followed, particularly in Texas and Hawaii. The list of states continues to grow.
Also undermining the two companies is the refusal of some large financial companies to be part of the payment systems FanDuel and DraftKings use to collect and payout money. According to Bloomberg:
Fantasy sports sites FanDuel Inc. and DraftKings Inc., already facing mounting legal and regulatory scrutiny, ran into more trouble when Citigroup Inc. said it was blocking transactions by New York state residents.
FanDuel and DraftKings were among the most promising large start-ups in recent years. If the sieges against them get worse, they may be worth very little — certainly not $1 billion.
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