Crains New York - February 11, 2013 - (Page 21)

DIGITAL NY Comcast takes swing at fantasy sports Media giant buys Manhattan’s FanDuel in big play for share of lucrative market BY JONATHAN BLUM C omcast Ventures, the investing unit of Philadelphia-based Comcast Corp., bought a chunk of upand-coming fantasy sports site FanDuel last week for $11 million. Manhattan-based FanDuel is a rarity: a midsize company in a market dominated by giants such as Yahoo Sports, ESPN, CBSSports.com, the NFL and Fox Sports. FanDuel will use the investment to double the size of its New York office to roughly 40 employees— mostly marketing, sales and customer service positions—to expand To sign up for Crain’s DIGITAL NY emails, go to www.crainsnewyork .com/newsletters. its retail user base. The company will also seek to build on media partnerships that currently include the Sporting News and Sports Illustrated. Unique riff Comcast Ventures will place partner Andrew Cleland on the board and take an undisclosed equity position in the firm, which also has an engineering back office in Edinburgh, Scotland. Mr. Cleland wrote in an email that Comcast’s motivation was simple: FanDuel is a market leader in fantasy sports. “We estimate that it is three times larger than its nearest rival,” he said. FanDuel offers a unique riff on traditional fantasy sports. Instead of players paying upfront league fees, picking a team and waiting for individual results over a full season, the process is compressed, with the results based on a single day’s play. “That allows us to offer a huge variety of fantasy options,” founder Nigel Eccles said. “You can structure it any way you want to.” More than 35 million players in the U.S. and Canada spend a total of about $3.1 billion in a mix of league, transaction and hosting fees, according to the Fantasy Sports Trade Association. Association President Paul Charchian said there are hundreds of thousands of fantasy sports sites, with only several hundred being commercially viable. “This is not an industry that builds midsize companies organically,” he said. Mr. Eccles said the operation had 400,000 registered users who paid $55 million in total entry fees last year, resulting in more than $50 million in cash prizes. One player during football season repeatedly took home more than $400,000 per month, with others earning in the six figures as well. Comcast’s investment is one of only a handful of deals of its size, according to fantasy sports industry analysts. “This kind of funding for FanDuel is extraordinarily rare in the fantasy sports world,” said Rick Wolf, founder of Pleasantville, N.Y.-based Full Moon Sports Solutions, which advises fantasy sports companies on strategy and business development. In 1999, Fort Lauderdale, Fla.based SportsLine.com paid $31 million for Daedalus World Wide, developer of Commissioner.com, which currently powers CBS Sports’ fantasy offering. In 2005, London-based FUN Technologies paid $12 million for Minneapolisbased Fanball, though it has since been sold to Colorado-based Liberty Media and shuttered. In 2006, NBC purchased Rotoworld, and in 2010, Yahoo gobbled up Citizen Sports, both for undisclosed sums. In 2012, Fantasy Sports Ventures was acquired by the Gannett Co. and its USA Today Sports Media Group for a reported $30 million. Money on the table Fantasy sports sites remain vulnerable to changes in legislation, however. “The only reason why fantasy sports are legal is because of a specific exemption in the 2006 federal online gambling rules,” said Keith S. Whyte, executive director at the National Council on Problem Gambling, an industry-sponsored trade group that studies gaming issues. States may decide to tax the sites more heavily, said Mr. Whyte. “I cannot imagine a state will leave all that money on the table,” he said. Ⅲ HAILO TAXI APP TO LAUNCH E-HAILING TAXI-HAILING APP HAILO already has 5,000 cabdrivers signed up as users with $100 million in sales, and the company hasn’t even enabled electronic hailing yet. That will change soon. Last week, Hailo said its e-hailing service will launch in New York this quarter, as soon as it receives approval from the Taxi and Limousine Commission. The company received $30 million in funding from Union Square Ventures at the end of 2012. The funding deal came through a week before the TLC voted to allow e-hails. The Hailo app is already live in Chicago and Boston. The version for cabbies allows the drivers to share information, such as traffic conditions, or how full airport lots are. That has gotten drivers here to use the application even though it can’t yet connect them to fares. “They believed, as we do, the worst that could have happened was a delay,” said Hailo CEO Jay Bregman. “The benefits are too good for drivers and passengers.” —ALI ELKIN TO PLACE A CLASSIFIED AD, CALL 1-800-444-6007 OR VISIT CRAINSNEWYORK.COM PUBLIC & LEGAL NOTICES GLN NEW YORK LLC, a domestic LLC, Arts. of Org. filed with the SSNY on 12/13/12. Office location: New York County. SSNY is designated as agent upon whom process against the LLC may be served. SSNY shall mail process to: The LLC, c/o Elisabeth M. Kovac, Esq., 90 Park Ave., FL. 18, New York, NY 10016. General Purposes. Notice of Formation of Nada Ray Media LLC. Arts of Org. filed with NY Secy of State (SSNY) on 10/25/12. Office loc: NY. SSNY is designated as agent of LLC upon whom process against it may be served and shall mail process to 803 W. 180 St, #66, New York, NY 10033. Purpose: any lawful activity. 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Table of Contents for the Digital Edition of Crains New York - February 11, 2013

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
OPINION
GREG DAVID
REPORT: SMALL BUSINESS
THE LIST
CLASSIFIEDS
DIGITAL NY
FOR THE RECORD
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - February 11, 2013