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The Fantasy Sports Trade Association estimate that during 2015, 56.8 million US individuals spent an average of $465 on fantasy sports participation. From player deposits alone, this puts the size of the industry in the US at $26.4 billion. Look at some of the leading players in the space, and their lists of corporate investors are full of household name brands. Twenty-First Century Fox Inc (Nasdaq: FOX), the NHL, MLB and Kraft Foods Group Inc (Nasdaq: KHC) all hold sizeable stakes in DraftKings. Alphabet Inc (Nasdaq: GOOGL) (via its Google Capital arm), comcast Corporation (Nasdaq: CMCSA) and NBC Sports Ventures are all invested in FanDuel.
Public exposure to the space is limited. There is an indirect exposure available through any one of the above mentioned publicly listed companies. However, the size of the companies in question, and the broad scope of their operations, mean the impact of growth in the fantasy sports space on their market capitalization is likely to be muted.
A development in the space has just flagged up an alternative opportunity – one that affords a direct exposure to daily fantasy sports, the fastest-growing subsector of fantasy sports in the US. Moreover, the exposure in question is shifting its business model to bring it in line with the current, privately held, leaders in the space.
The company in question is DraftDay Fantasy Sports Inc (Nasdaq: DDAY). DraftDay operates the daily fantasy sports platform draftday.com, which has grown to become one of the largest players in the daily fantasy sports space, just behind DraftKings and FanDuel. It's publicly traded, and owned by billionaire media mogul Robert F.X. Sillerman – a man renowned in the media and technology space for picking up cheap, valuable assets in high-growth industries and carrying them through to value realization. He did it with a host of radio stations in the 1980s. He did it again with a live music production company in the 1990s. Over the last decade, he's worked to achieve the same in the electronic dance music space, and it now looks as though his plan is to replicate this strategy in daily fantasy sports.
