The Walt Disney Company has invested $250 million in DraftKings, a Boston startup that lets folks bet real money on fantasy sports games, reports The Wall Street Journal. Included in the deal is a reciprocal commitment for DraftKings to advertise a little more than $500 million on ESPN (which Disney has 80% ownership of) over the next few years, which was a major attraction, says The Wall Street Journal.
Unlike traditional season-long fantasy leagues, the DraftKings website aligns a roster of players from many teams for just a single day or weekly game. This relatively new fantasy sports wave, called Daily Fantasy Sports, is a niche dominated by DraftKings’ rival FanDuel, which holds 65% of the Daily Fantasy Sports market share, according to Fantasy Sandbox, and received investment from Comcast Ventures, says Forbes. While FanDuel will still be allowed to advertise on ESPN, it won’t get the prominent advertising space that DraftKings will get as per the deal with Disney, according to The Wall Street Journal.
Fantasy leagues have been around for years, but it is players putting up real cash on games that has piqued companies’ interest. FanDuel had projected $40 million in revenue in 2014, says Fantasy Sandbox. And it is still unclear whether playing fantasy sports with real money constitutes gambling, though both DraftKings and FanDuel explicitly state on their websites that playing for money is 100% legal in the U.S. and Canada, citing that the Unlawful Internet Gaming Enforcement Act passed in 2006 expressly excepted fantasy sports because they are “games of skill.”