Report: UFC, DraftKings Closing in on Fantasy Sports Deal

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UFC DraftKings

A report out today revealed that daily fantasy sports site DraftKings and the UFC, the world’s largest mixed martial arts organization, are close to striking a sponsorship deal.

The New York Business Journal’s Ben Fischer reported that the information came via Colin Neville, an executive with the venture capital firm The Raine Group and a board observer at DraftKings. Neville’s comments were made during a discussion hosted by the New York Venture Community: Sports group called “Let’s Talk About Fantasy Gaming.” Neville didn’t offer many details, according to Fischer, but did relay that “the deal would make DraftKings the daily fantasy provider of the UFC, indicating exclusivity.”

There is no official word on a deal from either DraftKings or the Ultimate Fighting Championship, so far.

DraftKings’ gambit

The deal, if it becomes reality, continues some aggressive moves and positive momentum for DraftKings as it attempts to find ways to cut into FanDuel’s stranglehold on marketshare in the daily fantasy sports industry:

In retrospect, it’s not hard to imagine that the January MMA contests were done as a trial run to show the UFC how MMA fantasy contests would work.

UFC back in iGaming space

The deal also brings the interests behind the UFC back into the online gaming market. The UFC’s owners, Frank and Lorenzo Fertitta, made a failed attempt to get into the market with Ultimate Gaming and Ultimate Poker. The sites had operated for more than a year in the regulated markets of New Jersey and Nevada until 2014. Ultimate Gaming pulled out of New Jersey in September and then shut down its operations in Nevada in November.

The Fertittas are also co-founders of the Station Casinos, and they obviously have an interest in finding a way to make money from online gaming. DFS might be a new avenue for that ambition.

The alternative sports model?

DraftKings is looking for ways to challenge FanDuel, and finding new revenue streams could be the best way to do that, without trying to go head-to-head and dollar-for-dollar with its rival. DraftKings currently has fantasy MMA, golf and soccer, all offerings that a player cannot find at FanDuel.

The UFC deal would help DraftKings create revenue in a DFS market that is new and relatively untapped. Plenty of people are willing to pay $50-$80 for a UFC pay-per-view, and it’s not a stretch to think a lot of those viewers could become interested in real-money fantasy MMA. After all, some of the uptick in the popularity of the NFL and the NBA is attributed to fantasy sports.

Can a big deal with the UFC help level the playing field in the DFS industry? On its own, probably not. But a sponsorship deal with the UFC will certainly increase DraftKings’ exposure and bring new fantasy players to the site. When coupled with a strategy not to rely on just the major team sports, it will be interesting to see what DraftKings’ next move might be.