The backstory of DraftKings and eSports
Last September, DraftKings launched a fantasy eSports platform, offering contests for League of Legends. Shortly thereafter, the DFS operator announced deals with several eSports teams – compLexityGaming, SK Gaming, CLOUD9, Counter Logic Gaming, Team SoloMid, and Mousesports.
Those deals appear to be over, according to the report at the Daily Dot:
But sources close to these teams tell the Daily Dot that DraftKings has dropped sponsorship from all six of these teams. The DraftKings logo has been removed from each teams’ jerseys and websites.
The reason for leaving esports teams behind isn’t clear. But sources suggest DraftKings has been hit with unexpected financial issues after running into legal problems in several states.
A DraftKings spokesperson offered this comment on eSports and the Daily Dot report:
“Our partnerships in the growing eSports field have been rewarding and we value our continued relationships with these businesses. We remain committed to offering exciting eSports DFS contests through the DraftKings platform and will continue to explore opportunities accordingly.”
Anecdotally, DraftKings used to show up as a sponsor on team sites like cloud9.gg, but no longer does. From CLOUD9’s “Partners” page in November:
And similarly at Mousesports. From January:
Money troubles for DraftKings?
The Daily Dot story mentions sources citing financial issues. In November, DraftKings reportedly had been asking to defer payments in some of its sponsorship deals.
DraftKings’ deals with professional sports franchises are presumably still active; it just announced deals last month with a trio of English Premier League teams as it entered the UK market with a gambling license acquired in 2015.
Legal Sports Report has no on-the-record insight into DraftKings’ finances and cash on hand beyond what has been reported elsewhere; the Boston Globe (paywall) recently reported that DraftKings raised $70 million. (That’s on top of a reported $600 million-plus raised by DraftKings over the course of numerous funding rounds.)
The larger market for fantasy eSports
While the fantasy eSports market looked to be on a path toward growth early in 2015, when a pair of sites — Vulcun and AlphaDraft launched — those expectations have been reined in with the legal uncertainty in the fantasy sports industry as a whole.
Vulcun stopped offering daily fantasy eSports contests with entry fees in January. AlphaDraft was acquired by FanDuel in September, but has not been leveraged beyond being a standalone site in the months since.
League of Legends contests at DraftKings have remained a very niche offering for the site, so far; the site has also not expanded its offerings to other popular eSports titles like Dota 2.
DraftKings and eSports, not meant to be?
When DraftKings and FanDuel made their forays into fantasy eSports just six months ago, they were doing so in a much different environment: the pre-DraftKings data leak world that existed before October.
Afterwards came increased media and governmental scrutiny that served to stunt high-velocity growth of the two sites; the negativity in the industry has recently been slowed by positive momentum for legislation in a variety of states.
In a different timeline, the major operators getting into fantasy eSports could have helped the vertical grow even more quickly than it did. As it is, it seems like eSports at the major DFS sites may have been a victim of bad timing, although the book on the endgame for fantasy eSports is far from written.
Photo by Jakob Wells CC BY 2.0