Billion-dollar fantasy sports startup DraftKings just blew $20 million in a week
DraftKings, a $1.2 billion, Boston-based startup, has raised $375 million in venture capital funding from investors like MLB's venture arm, Melo7 Tech partners, the NHL, and Redpoint Ventures.
DraftKings is a daily fantasy-sports site that lets its users bet real money on their teams.
You may have seen its ubiquitous TV advertisements telling you about how some of its members have cashed out crazy sums of money using DraftKings.
Since August 1, DraftKings has spent $81 million on 22,000 ad spots. By comparison, another billion-dollar fantasy sports startup, FanDuel, has spent $20 million on 7,500 advertisement airings since August 1, according to The Wall Street Journal.
Spending $20 million in a week does seem, from a business perspective, a bit crazy, though it may work out if DraftKings can acquire a ton of new customers. Indeed, DraftKings CEO Jason Robins told the WSJ that the advertising is working for the website- the company has added "hundreds of thousands of new users per day, growing from 3 million users to 4.5 million users" since the week before the NFL season started.
In addition, it sounds like the $20 million expense is an outlier for DraftKings. Since the NFL season just started, now is the time for DraftKings - and its rival company FanDuel - to seek out new users.
"This is not something that is year-round for us," Robins told the Journal. "It's a brief window where you can fish when the fish are biting."
We reached out to DraftKings to ask for comment and will update this story if we hear back.
You can read The Wall Street Journal's full story here.