Specifically, Fox noted that “based on information concerning DraftKings’ current valuation in a recent financing transaction, the Company determined that a portion of its investment in DraftKings was impaired and recorded a loss of approximately $95 million…”
While “a recent fundraising transaction” alludes to possible new fundraising by DraftKings, the company has not announced any new funding, and declined to comment on the markdown.
Although Fox didn’t elaborate further on their reasoning, it’s safe to assume that the markdown is related to all of the daily fantasy sports regulatory drama that has been occurring over the past few months.
As different U.S states deliberate the legality of DFS, there is understandably some apprehension about the future growth potential of the industry.
While most Attorneys General are waiting for state or federal legislatures to provide a definitely answer on the legality of DFS, some have decided to take matters into their own hands and initiate litigation with the companies.
The most notable example is in New York, where Attorney General Eric T. Schneiderman is locked in a legal battle with FanDuel and DraftKings.
Ultimately, further mark downs of DFS companies like FanDuel and DraftKings will be determined by the final legality of the service in the United States, and their success at expanding abroad.