Fantasy sports operator DraftKings announced Thursday that it has closed a $153 million round of funding with Revolution Growth, the venture capital firm co-founded by Ted Leonsis, owner of the Washington Wizards and Washington Capitals.
The round of funding was "oversubscribed" and includes new investors in the daily fantasy giant, DraftKings CEO Jason Robins said in a statement. The valuation for the funding was not revealed, and the paperwork to complete the deal will be filed in the coming days.
"Revolution Growth is a tremendous new partner for DraftKings, with an entrepreneurial outlook and spirit of innovation that meshes perfectly with the culture of our company," Robins said in the statement. "They also have deep expertise in sports, technology, and policy."
SportsBusiness Journal first reported DraftKings' deal with Revolution Growth.
It's unclear how big a stake Revolution Growth's investment has purchased in the privately held company. Industry research firm Eilers & Krejcik Gaming estimated the Revolution Growth funding was likely based on a valuation of around $1 billion.
DraftKings' valuation was estimated last year at almost $2 billion after a $300 million fundraising round in July 2015 but has since fallen considerably. In February, Fox, in a quarterly report, told investors it had marked down the value of its $160 million investment in DraftKings by about 60 percent.
"Online fantasy sports are just one of the many ways technology has disrupted the sports industry in recent years," Revolution Growth partner Steve Murray, who will join the DraftKings board of directors, said in a release. "Building a business is never easy, especially one that is leading the creation of a new marketplace, but Revolution has the expertise to help entrepreneurs execute on their ideas, especially where sports and policy intersect."
Last week, Outside the Lines reported on the daily fantasy industry's struggles since DraftKings and FanDuel blanketed airwaves a year ago with a $750 million advertising and marketing blitz.
In the story, which also appears in the current edition of ESPN The Magazine, reporter Don Van Natta Jr. detailed how the companies remain unprofitable, with valuations cut by more than half, according to some estimates. ESPN also reported that both companies owed millions to lobbyists, lawyers and others and that DraftKings has tried to renegotiate contracts with vendors and reduce affiliates' bonuses.
The signing of a daily fantasy bill in New York last month eased some potential investors' minds about the future of the young industry, ESPN reported.
"The reality is neither company was in a position to continue to operate without New York," said Jeremy Kudon, a lobbyist for the companies. "They both needed for this to happen. When I had spoken to investors, everyone agreed on its importance. It was less a financial thing and almost a psychological thing. They'd say, 'We won't believe this industry will survive unless New York happens.' How's that for pressure?"
A longtime lobbyist close to both companies told ESPN this week that a DraftKings-FanDuel merger is still likely.