With a new NFL season starting tomorrow, it’s good timing for daily fantasy sports operator FanDuel to close a $4 million Series B investment round led by venture capital firm Piton Capital. Existing investors Pentech Ventures and the Scottish Investment Bank. The company will use the majority of the funds on product development and hiring.
FanDuel’s growth is reflected in its payouts going up from $1.5 million last season to over $10 million in league winnings.The company has also just opened an office in New York, complementing existing offices in Edinburgh and San Francisco.
FanDuel, which focuses solely on US sports, offers 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.
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. In traditional fantasy sports leagues, league winners are only declared after the entire season ends and players often drop out as the season progresses.
The site is exempt from online betting laws in the US thanks to the fantasy sports carve out in the 2006 Unlawful Internet Gaming Enforcement Act; as stated, the only difference is that FanDuel-powered fantasy sports games only last a day (for baseball) or a week (for football).
The upshot is that FanDuel and its partners can generate revenue from taking a commission. A white-labeled version of the fantasy sports site is being used by the Philadelphia Inquirer’s Philly.com to bring social gaming to the newspaper.