The story of FanDuel so far
Since launching in July 2009, FanDuel has expanded into one of the biggest sports betting and iGaming operators in the entirety of North America. Its growth story is incredibly fascinating, given that its product was originally conceived to focus firmly on daily fantasy sports.
Back in the summer of 2009, FanDuel was unveiled by its founders Nigel and Lesley Eccles, Tom Griffiths, Chris Stafford, and Rob Jones. The product was a diversification from Hubdub, a previous news prediction platform. The founders secured over $1m from venture capitalists including Scottish Enterprise. Hubdub was hugely reliant on advertising revenues and the global recession of 2008 put paid to their initial concept.
One of the founders, Chris Stafford, said that FanDuel was conceived when they “saw a small window” of opportunity to develop a daily fantasy sports platform for US sports. Stafford described the North American sports market as “a fantastic place to scale”. Stafford operated as chief technology officer, primed with designing and building a platform that could cope with user demand and provide a stiff challenge to DraftKings – another popular DFS product stateside.
If you are unfamiliar with the concept of DFS, these platforms enable sports enthusiasts to enter “contests” that take place within a day or even hours as opposed to an entire season. DFS contestants create their own teams from a pool of major league sports stars and can place wagers on their team’s performance, attempting to win money by outperforming other users.
Following a string of acquisitions, including sports analytics firm numberFire and app development studio Kotikan, FanDuel set about launching a mobile app for its DFS product. FanDuel then began to encounter some issues with state legislature across the US, with some states calling into question whether DFS was a game of skill or outright gambling.
FanDuel nearly merged with its fierce rivals DraftKings
FanDuel also considered a merger with DraftKings back in 2016. The merger would have created a unified platform capable of serving five million-plus DFS users across North America. 12 months later, the Federal Trade Commission (FTC) blocked the proposals with a preliminary injunction, citing competition issues. The merger would have created a product capable of monopolizing 90% of the DFS scene. Consequently, the merger was terminated. The firm was then sued by the Massachusetts Attorney General’s office regarding its “deceptive” and “unfair” practices up to 2016. The firm agreed to a $1.3m settlement.
Its founders were more focused on the ongoing court case regarding the legality of prohibiting sports betting in the US. When the PASPA ruling was deemed unconstitutional, effectively legalizing sports betting in the States, FanDuel was sold to Paddy Power Betfair – now known as Flutter Entertainment – within a matter of weeks. However, the sale caused controversy among the product’s founders, including Stafford. Paddy Power Betfair committed $158m in cash and its US assets to the deal, securing a 61% stake in FanDuel.
However, as part of the sale, preferential shareholders were paid first, with no funds remaining to pay the product’s founders or indeed the employees that had invested into FanDuel in the early days. Stafford and the rest of the platform’s founders filed a lawsuit to retrieve their share value. Last year, Flutter Entertainment upped its stake in FanDuel Group from 61% to 95%, paying $4.1 billion in a stock-plus-cash arrangement.
Just as it did when pivoting away from Hubdub in its earliest days, FanDuel pivoted more recently too. Given the legalization of online sports betting in some US states, FanDuel opted to develop its very own online sportsbook product. In states like Michigan, where its Lawful Sports Betting Act approved online and offline sports betting, FanDuel has become a leading portal for sports betting in Michigan, due largely to its appealing promotions for new customers such as risk-free wagers. The site also details how FanDuel’s platform works effectively on mobile platforms, which ensures it’s accessible to a wide audience.
Simplicity has been the buzzword for FanDuel’s growth. Despite the emergence of two clear FanDuel products – Fantasy and Sportsbook – users only need to set up one account to use both platforms. Of course, depending on the legislation in your home state, there may be restrictions on where and how you can log in with your FanDuel credentials.
What does the future hold for FanDuel?
FanDuel’s former chief executive Matt King was at the helm of the platform for four years before he decided to leave earlier this year. His replacement is Amy Howe, who was promoted from interim CEO to full-time CEO at the start of October. Howe oversaw the modernization of Ticketmaster’s ticketing platform, and she has been tasked with steering FanDuel through its next “critical phase of growth”, according to Flutter Entertainment’s chief executive Peter Jackson.
Jackson and FanDuel intimated that their plans to float FanDuel after a recent period of sustained growth could be delayed by the departure of King. However, Amy Howe brings stability to the platform which should ensure the next chapter of FanDuel’s growth curve isn’t far away.