Twenty First Century Fox Cuts DraftKings Value By 60 Percent
The appeal of daily fantasy sports to major investors is diminishing at a rapid pace. As we reported extensively over the last few years, DFS operators like FanDuel and DraftKings have had no problems in the past with raising massive amounts of money and surpassing market values of $1 billion with ease.
However the last six months have been disastrous for both companies as they are being bombarded on a daily basis with legal challenges as to whether their offering is any different from real money gambling or not. What was once a sure bet for investors has become a tricky and uncertain space with caution being the key word.
The latest blow has come from 21st Century Fox who invested $160 million in DraftKings during the six months ending December 31, 2015. They have written off around $95 million of the $160 million state in DraftKings in a filing with the US Securities Exchange Commission.
In a statement Fox said that their 60% devaluation was “based on information concerning DraftKings’ current valuation in a recent financing transaction. Before the data leak scandal with Ethan Haskell DraftKings was valued at around $2 billion.
DraftKings spokeswoman Sabrina Macias said in a statement,” Our relationship with Fox is strong and in good standing”. The big question is if this latest devaluation by 21 Century Fox will be just the beginning of other DraftKings investors like the Kraft Group, Major League Baseball, National Hockey League and others who may well decide that their DFS bubble is about to burst in a big way.