The companies were everywhere last summer: logos emblazoned in ballparks, on NBA floors, on NHL boards and in ESPN studios. They became the darlings of the major American sports leagues, media companies, dozens of professional teams and a deep bench of investors — from Comcast and Google to private equity firms and a pair of the NFL’s most influential owners, Jerry Jones and Robert Kraft.
But as quickly as it boomed, the industry bottomed. One year after their headiest moments, FanDuel and DraftKings are still not profitable. Both privately held companies’ valuations have been sliced — by more than half, according to some estimates. The companies have hemorrhaged tens of millions of dollars in legal and lobbying expenses. (DraftKings’ attorneys fees once ran as high as $1 million per week.) And the fog bank of the industry’s uncertain future has made it nearly impossible for either company to raise new money. (FanDuel’s auditors have raised “significant doubts” about the company’s future if more states do not declare daily fantasy sports legal.) Three federal grand juries — in Boston, New York and Tampa, Florida — have alerted one or both companies that they are under criminal investigation. A merger — once unthinkable to many — is on the table.
It has been, by any measure, a spectacular fall.
Check out the ESPN.com investigation: