The news was leaked during an interview with former NBA Commissioner David Stern, who is now an active investor in the DFS industry. Responding to a question about AlphaDraft’s recent funding round, Stern responded that he had participated in the round, but his investment made up only a small portion of the total.
He then gave his interviewer something of a scoop when he revealed that the eSports company had been acquired by FanDuel. A press release was quickly drawn up and distributed soon after, elaborating on the deal.
“FanDuel’s acquisition of AlphaDraft, the premier daily fantasy sports platform that seamlessly blends eSports, live streaming and fantasy sports contests, will bring the company’s employee base in-house to help create a one of its kind daily fantasy product specifically for eSports. This partnership marks the first time FanDuel will have a product for the eSports community.”
Unlike DraftKings’ eSports product, which is integrated directly into its main lobby, FanDuel will keep AlphaDraft as a separate entity.
FanDuel did not disclose how much it had spent to acquire the eSports site, but according to re/code, several sources say that AlphaDraft have been looking for suitors for some time and was asking for $25 million. According to insiders, the final price paid was less than that.
Access to a new demographic
In its press release, FanDuel estimated that over 200 million people around the globe watch eSports. Indeed, streaming sites like Twitch regularly broadcasts videogame tournaments, which often draw huge crowds and sells out stadiums. Anyone with an Internet connection can tune into Twitch and watch their favorite streamers play games like League of Legends, Counterstrike and Hearthstone.
Offering eSports daily fantasy opens up a whole new demographic to FanDuel. Those who enjoy watching videogame competitions are largely separate from the site’s traditional NFL-loving users. “This is sports for a new demographic, with very little crossover with what are considered traditional sports fans, and this acquisition gives us the ability to leverage the expertise of AlphaDraft’s team, while helping their efforts in customer acquisition and building awareness of this new industry. It’s a win-win,” said FanDuel CEO Nigel Eccles.
AlphaDraft has experienced a rapid rise since its launch in 2014. Last May, the company closed a $5 million round of funding from investors David Stern, Melo7 Tech Partners, Metamorphic Ventures, WME, Upfront Ventures, IDG Ventures, Greycroft Partners, Freestyle Capital, KEC, Amplify.