Disney is investing a hefty $250 million in the fantasy sports startup DraftKings. The investment brings DraftKings’ value to $900 million and gives Disney 27 percent ownership of the company. DraftKings is one of the larger fantasy sports sites and focuses on prizes for NFL, NBA, and MLB competition.
The allure of investing in DraftKings and fantasy sports as a whole comes from the pool or cash pot element of participating it. Prior to fantasy sports moving online and becoming a social thing, it was participated in among friends, coworkers, or those in some sort of club or group. It still is, but with the internet it became wider spread.
Customers have become willing to invest in their fantasy teams or select players for fun, competition, or the chance to win an even larger pot of money. It allows for consistent, hands off gambling in that players run with their selected team of athletes and manage their rosters accordingly if say injury or suspension renders that athlete unable to play.
In the case of Disney and DraftKings, the deal will provide a great opportunity for cross promotion as well since Disney owns ESPN. DraftKings is also looking to put in $500 million in advertising on the mega sports network over the years and will get preferred billing when it comes advertising over its nearest competitors who are also running commercials in the ESPN family of sites and channels.