As much fun as fans have playing fantasy football, two Internet upstarts are making loads of money from the diversion—while giving it away at the same time.
FanDuel and DraftKings, two of the web's premier daily fantasy sports companies, are ringing in the second week of the National Football League's season by offering huge bounties to contestants. They will likely continue to do so up until Super Bowl 50 takes place in Santa Clara on the first Sunday of February.
Investors have sunk a combined $575 millioninto both DraftKings and New York-based FanDuel, helping to feed the promotional battle between the two.
DraftKings is offering $25 million in guaranteed prize money for opening week, including a $2 million top prize and a $1 million second prize as part of its "$10 Million Guaranteed Millionaire Maker," contest. Simultaneously, FanDuel has guaranteed $12 million in prizes opening week, including a $1 million top prize for a "Sunday Million" contest that it will offer every week of the NFL season.
The daily fantasy market has exploded from a hobby to what some estimates say is a multi-billion dollar market. The mother's milk of FanDuel and DraftKings' efforts are entry fees, which help fund the massive payouts that can be won by contestants.
Earlier this year, privately-held DraftKings reported it earned more than $300 million worth of entry fees last year.