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Fantasy Sports Giant DraftKings Gets Into the Wild World of Fantasy eSports

DraftKings is serious competition to dedicated fantasy eSports companies.
Image: DraftKings

DraftKings, currently the biggest fantasy sports site with over five million registered users, is poised to make fantasy eSports bigger than ever. The company recently announced that it will let its users take part in daily fantasy eSports competitions for cash prizes, just like its fantasy NFL, NBA, and MMA competitions.

Users will be able to draft League of Legends and Counter-Strike: Global Offensive teams comprised of real-life eSports players like Jordan "n0thing" Gilbert or Clinton "Fear" Loomis. Just like in fantasy football, say, those teams will then score points based on how the players perform in real life. So, pretty much the standard DraftKings model, just with eSports instead of football or basketball.

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DraftKings will open fantasy eSports competition on October 1 with the League of Legends World Championships. Participants will be able to play for free, or compete against others in cash prize leagues, including a $3 entry fee contest featuring $25,000 in prizes.

"eSports is huge globally, not just in the US."

DraftKings is far from the first company to allow users to play fantasy eSports for cash—Vulcun and AlphaDraft both launched fantasy eSports services this year—but DraftKings is the biggest, most established company to enter the space.

It's also the first company that comes from a background in traditional fantasy sports, as opposed to startups dedicated solely to fantasy eSports.

DraftKings co-founder and chief revenue officer Matthew Kalish told me that it spent more than six months building its eSports initiative. It also acquired lolstats.gg, a leading statistics provider for League of Legends, Dota 2, Counter-Strike, and other games. That team will provide the statistics that determine the results for DraftKing's eSports competitions, which is a first for the company.

The investment is part of DraftKings' greater effort to expand its business around the world. "eSports is huge globally, not just in the US," Kalish told me over the phone. "It's actually relatively small in the US, and as we're looking for our product to be a little stronger when we go into new geographies, eSports is really at the top of the list of what people will be looking for."

The company's existing relationship with big sports venues will certainly make it easy to get in front of eSports audiences. DraftKings has signed deals with notable eSports teams like Cloud9, SK Gaming, Complexity Gaming, and others, and it also has partnerships with Madison Square Garden in New York and the Staples Center in Los Angeles, which host some of the biggest live events in eSports. ESL One is holding a big Dota 2 tournament in Madison Square Garden October 3, and I wouldn't be surprised to see the event plastered with DraftKings logos.

eSports is a very young business, and as such, still sorting through a lot of issues, from doping, to match-fixing, to DDoS attacks that can impact the outcomes of a given match.

But if there's money to be made there, DraftKings isn't going to let Vulcun and AlphaDraft, which raised $12 million and $5 million in venture capital this year respectively, corner the market. DraftKings hopes that its size (it has more than 250 employees and a market valuation of $1.2 billion) and its platform, which Kalish calls "the best fantasy sports platform in the world," will help it elbow its way in.