DraftKings is in a growth phase, attempting to draw as many users as possible to its daily fantasy sports website, which in turn the company hopes will drive more sports fans to advertising partners that include ESPN and FOX Sports, according to CEO and co-founder Jason Robins.
The Boston-based startup this week raised a $300 million Series D round led by FOX Sports, a company with which it inked a separate partnership—one that reportedly guarantees DraftKings will spend around $250 million over the next three years on various Fox media outlets. DraftKings has a similar deal already with ESPN. Robins spoke with Xconomy about the deals and the business.
Xconomy: Do you remember when people started taking fantasy sports seriously as a business, rather than just keeping stats about athletes?
Jason Robins: There were two. One was the first conversation I had with Kenny Gersh and Bob Bowman of Major League Baseball Advanced Media. They’ve always been on the forefront of technology. They have always spotted new trends.
XC: And the other?
JR: When I met with Jonathan Kraft, who is the president of the Patriots and The Kraft Group, and who works with his father, Robert Kraft, on building out their businesses. Those two conversations happened in the last year and a half, two years at this point. Both those conversations were ones that really were eye-opening for us. We felt we were a tiny company at that point, and didn’t feel we’d be on the radar screen of these giant sports owners and teams.
XC: What was eye-opening about it?
JR: They were not only aware that fantasy sports is a big business, but they were familiar with the DraftKings brand. They understood the impact we were having on their own world and how we were creating even more popularity. It was something really unexpected to go into those conversations showing data to them. While it didn’t hurt to show the data, they understood our business and the impact it has on their business.
XC: What’s the impact?
JR: We have a huge impact on the function of their live content. When people play on DraftKings, we find that 80 percent of them consume more sports content. That really drives their business up in a big way. From the research we did, we asked how many of our customers started following new sports since they started using DraftKings. Almost half reported that they started following new sports that they previously never paid attention to. When you can have that kind of impact on the consumption of the media content, and all the sports teams and venues we partner with, they naturally take interest.
XC: Hence your recent advertising deals. It’s been pretty widely reported that you have a $250 million ad deal with FOX Sports in addition to the new round of venture funding. Is that right?
JR: We can’t comment on the amount or the specific terms. I can tell you that we do have a commercial partnership with Fox. We had one prior to the equity investment. After working with them for a year or two, we decided they were a partner we wanted to expand our relationship with. It goes beyond advertising. It’s going to call for integration into the actual sporting broadcast in a meaningful way, more so
