Daily online fantasy sports become real as DraftKings closes $24M round

DraftKings has raised $24 million to whip its expansion of daily fantasy sports online games into high gear.

The Boston company holds cash-prize fantasy game competitions in baseball, football, basketball, and hockey.

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The funding was led by Redpoint Ventures with participation by GGV Capital, Atlas Venture, and BDS Ventures. That’s not bad for a company with a bit more than a million registered users.

But there’s a lot of money changing hands here as social sports is catching on online. DraftKings’ mission is to make fantasy sports easier to play and convert the more than 35 million fantasy sports players in the U.S. to participate in social online fantasy sports leagues.

“DraftKings has had an amazing year, but we are even more excited about what the future holds,” said Jason Robins, the CEO of DraftKings. “Going forward, we will continue to prioritize customer experience, leveraging both our online and mobile platforms. Mobile, in particular, will be an area of focus for us in 2014. Redpoint and GGV both have deep experience in mobile gaming, which we found really attractive in a capital partner.”

DraftKings has launched six different sports leagues in the past year, and it has paid out more than $50 million to thousands of winners this year alone. The company focuses on daily fantasy sports contests and same-day settlement for winners. That makes playing fantasy sports simpler and faster.

The company was founded in April 2012. Rivals include FanDuel, DraftStreet, and DraftDay. DraftKings tries to outdo them with a clean user interface, more game features, and larger payouts. DraftKings has 35 employees, and it has raised $35 million to date.

DraftKings players can play fantasy sports and win real money the company’s website, but the Facebook, iOS, and Android versions use virtual-currency play, where players can put real money into the app but can’t cash out. With fantasy sports, U.S. law permits for real-money play in games of skill. DraftKings enables players to play and win a season in just a day, or they can spread the competition out over time.

DraftKings plans to use the new money to fund marketing and acquisition, develop strategic partnerships, and to hire people. The company said it has tripled its customer base since the end of August, and year-over-year revenue has grown 10 times. You can play on DraftKings either on the web or on mobile devices as a companion to live sports viewing.

DraftKings says its players spend over five hours per week on the mobile app and website, and they compete in an average of 2.6 different sports. About 75 percent of the customers acquired in 2012 were still active in 2013.

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“One of the most exciting aspects of venture investing is when we see a company that plays a role in creating a consumer phenomenon. DraftKings is just that sort of company,” said Tom Dyal, a partner at Redpoint Ventures. “DraftKings’ innovative approach to coupling a clear monetization model with a huge, engaged fantasy sports audience captured our attention. The DraftKings’ team’s execution and focus made investing in them even more attractive to us. We’re thrilled to be investors as the company enters the next stage of growth.”