Ted Leonsis DraftKings Investment Sign of Possible DFS Market Revitalization

Daily fantasy sports market leader  has raised $153 million in new investment money. Ted Leonsis, the billionaire owner of the Washington Capitals and Washington Wizards sports teams, has bought a significant, but undisclosed, stake in the company through his investment firm Revolution Growth.

This is DraftKing’s second major round of funding in just over a year. In July 2015, the company was able to raise a $300 million war chest to help finance its international ambitions, $150 million of which came from Fox Sports for an 11 percent stake in the company.

The last round was before DraftKings and fellow market leader FanDuel were beset by legal difficulties, however. Facing a threat of billions of dollars in fines from , DraftKings’ international expansion plans were temporarily curtailed, as legal costs mounted.

The good news, now that DFS is back in New York, is that the industry is once again considered to be investable. And that s despite DraftKings market cap being damaged by the various legal challenges it has faced. In July 2015, the company was valued at around $2 billion, and while its valuation was not disclosed during this round of investment, Eilers Krejcik Gaming has estimated the company’s worth to be around half of that figure today.

The analyst also said that, in light of the new investment, a merger between DraftKings and FanDuel would now seem unlikely. In June, it was reported by Bloomberg sources that the companies were engaged in negotiations regarding a merger, which private investors in both companies had been pushing for some time.

Consolidation would have made sense, largely because of the amount of money both spend on attempting to out-market one another while offering a very similar service. Then there are the costs to be saved from both companies’ various legal skirmishes in the US. Add the increase in licensing fees and local taxes as DFS becomes regulated on a gradual state-by-state basis, and the attractiveness of a merger becomes clear.

In an official statement, DraftKings CEO Jason Robins praised Revolution Growth’s “entrepreneurial outlook and spirit of innovation” that “meshes perfectly with the culture of our company,” as well as its “deep expertise in sports, technology, and policy.

Revolution’s Steve Murray, who will join the DraftKings board of directors as part of the deal, said that his company has the “expertise to help entrepreneurs execute on their ideas, especially where sports and policy intersect.

If the merger is in fact off the table, it is likely that FanDuel could initiate a new round of funding of its own in order to stay competitive.