Ever since the legal and regulatory uncertainty in the daily fantasy sports (DFS) industry began, DraftKings, a popular DFS operator, has seen its valuation falling down by 3/5. This can be witnessed in the 10-Q filing released by Twenty -First Century Fox Inc. with the US Securities Exchange Commission. The media corporation is one of the major investors in DraftKings.
According to the filing, Twenty-First Century Fox reported that from its $160 million stake in DaftKings it had given up $95 million in July the previous year, which is equal to approximately 11% of the company. The media giant had arrived at almost 60% devaluation of its stake in DraftKings in a financing transaction. This implies that the DFS operator has been trying to raise money at low rates from its previous funding rounds at the beginning of 2015 before the legal scrutiny in the DFS sector began.
In August 2015, the last funding round of DraftKings raised $200 million, two months before the scandal in the DFS industry started. The valuation of the operator at that time was approximately $2 billion. DraftKings, however, has suffered a lot from bad publicity resulting from the legal case with Eric Schneiderman, New York attorney general. The company said that the bad news affected its ability to attract investors. This also resulted in worsening its relationship with several financial institutions such as Citigroup and Vantiv Inc, who have stated that they want to get out of the DFS sector.