FanDuel, a fantasy sports site with daily competitions and cash prize payouts, scored a $70 million venture funding round as it deepens its relationship with the major professional sports leagues and teams.
The Series D round, by far the largest since the company was founded in 2009, was led by Shamrock Capital Advisors, NBC Sports Ventures and investment firm KKR.
Fantasy sports is big business — 41 million people spend $1.7 billion each year on league fees alone in the U.S. and Canada, according to the Fantasy Sports Trade Association. FanDuel is one of a number of sites capitalizing on daily fantasy games, where people draft teams and play in competitions that expire by the end of the day. Another daily fantasy site, DraftKings, raised $41 million in funding last week.
Daily fantasy contests draw users with short attention spans and those with an “I’ll get ’em next time” mentality common in competitors, says FanDuel CEO Nigel Eccles. If your team has a bad day, don’t worry about it — you can select a new team tomorrow. If your best player gets injured, your season hasn’t been flushed down the tubes; you can draft someone different next week.
“I think for younger players the idea of waiting six months for the outcome for anything is far too long,” says Eccles. “So they really gravitate towards this idea of being able to play and win in one day.”
What keeps the games interesting — and contributes to investor interest in sites like FanDuel — is the money that changes hands during these fantasy competitions. FanDuel charges a small fee for its paid competitions (it also offers free contests), and can do so legally because they’re skill-based, says Eccles. It’s the same as paying money to enter a golf tournament, he explains. The site serves as a middleman, holding the cash before paying out prizes to the winners (and taking a small cut off the top, of course).
Eccles says FanDuel will pay out $400 million in prizes this year, and more than $1 billion in prizes in 2015. On Friday, FanDuel announced the World Fantasy Football Championships, a single-day competition with more than $10 million in prize money at stake. Eccles expects to have more than half a million users in 2014. Of those, 80 percent are paying customers.
“As you know if you’ve ever played in a free league, it kind of gets boring pretty quick,” he said.
Eccles has three areas of focus for the new funding: Push deeper into mobile after launching its app last month, add more live events and strike more partnerships. FanDuel currently partners with NBCUniversal* to promote the site across NBC’s properties, including fantasy sports news site Rotoworld. FanDuel also inked a partnership with the Orlando Magic earlier last month to add FanDuel promotions inside the Amway Center, the team’s basketball arena. Eccles expects to add other partnerships with leagues and teams in the next year, and a large portion of the funding will go toward making that happen, he says.
Eccles did not disclose FanDuel’s new valuation. Wednesday’s round brings the company’s total fundraising to $88 million since 2009.
* NBCUniversal is an investor in Revere Digital, Re/code’s parent company.
This article originally appeared on Recode.net.