Daily fantasy sports operator FanDuel isn’t subject to online betting laws in the US thanks to daily fantasy sports games being exempt under the carve out in the 2006 Unlawful Internet Gaming Enforcement Act. That means it’s virtually a license to print money in the US. However, FanDuel is 100% legal as it is classified as a game of skill not of chance.
FanDuel says its revenues hit 4x in the past 6 months with the company giving out over $10m in fantasy payouts in 2011 and it plans to pay out up to $4m per month for the baseball season.
Off the back of that success today the site has raised another $1.3m round of funding from existing investors, including Pentech and Piton Capital taking its total raised to date to $7m.
Paul Martino, an early investor in Zynga and Tribe, joins the FanDuel board as an Angel investor in this round. Martino is co-founder of Bullpen Capital and is known as a long-time investor in games startups, founding Tribe in 2003 with Mark Pincus, and investing in PayNearMe and TubeMogul.
Based in New York and Scotland (yes, really) FanDuel focuses solely on US sports, and since 2009 has offered a different take on the traditional fantasy sports game model.
Instead of games lasting the whole season, players play and win in as little as a day – think of it as “one-night stand” fantasy sports. In traditional fantasy sports leagues, league winners are only declared after the entire season ends and players often drop out as the season progresses. In FanDuel the leagues last one day (or the weekend in the case of football) and prizes are paid out immediately by the site as soon as games finish.
Competitors include DraftStreet and DraftKings.