Excitement over fantasy sports is growing among sports fans. What options do investors have when looking at fantasy sports stocks?
When sports writer Daniel Okrent invented Rotisserie League Baseball in 1979, it’s unlikely that the “father of fantasy sports” could have imagined it would evolve into an US$8.9 billion market.
Of course, much of that growth can be attributed to advancements in technology. Fantasy sports magazines published in the late 1980s became websites in the 1990s, and eventually fantasy sports businesses; more recently there’s been a boom in fantasy sports apps for smartphones.
North America currently represents the largest market for fantasy sports services. Research and Markets estimates that more than 59 million people in the US and Canada play fantasy sports. However, India is set to experience significant market growth in the near-term future, with expectations that the number of players will rise from 20 million to a projected 150 million by 2022.
The main growth drivers in the fantasy sports market are rising internet, 5G and smartphone use globally, as well as advancements in fantasy gaming mobile apps that allow players to compete with other sports fans and win cash prizes. An additional factor positively impacting this market, according to Research and Markets, is the “growing use of fantasy sports gaming apps for brand promotion.”
Included in that growth is a rising interest in investing in fantasy sports stocks. While it’s still a relatively small market, that could be poised to change given the fantasy sports boom over the last several years.
Fantasy sports stocks: Key public players
While most fantasy sports companies are private or under the umbrella of related publicly traded companies, public fantasy sports stocks do exist. Well-known options include:
- Playgon Games (TSXV:DEAL,OTCQB:PLGNF): Playgon Games’ initial focus was the daily fantasy sports industry, but it has since grown to encompass a much wider swath of the gaming market. In addition to daily fantasy sports, the software-as-a-service company’s platform includes live dealer casino and e-table games. Playgon’s success earned it a spot on 2021’s TSX Venture 50 list, an annual list of top-performing companies on the exchange.
- DraftKings (NASDAQ:DKNG): DraftKings allows fans in North America and the UK to compete in single day online fantasy sports contests associated with a variety of professional sports. It is an exclusive partner of Major League Baseball, Major League Soccer, the National Hockey League and NASCAR. The company went public in 2020 with a US$1.6 billion initial public offering.
- FanDuel: Founded in 2009, FanDuel focuses on fantasy football, baseball, hockey and basketball. It allows players to draft fantasy sports teams at any time and play in head-to-head or multi-player contests. The company has been majority owned (95 percent) by Flutter Entertainment (LSE:FLTR,OTC Pink:PDYPF) since a US$4.2 billion deal in late 2020.
Fantasy sports stocks: Private options
As mentioned, the number of publicly traded fantasy sports stocks is fairly limited. That said, there are private fantasy sports companies that investors can keep an eye on, such as:
- Mobile Premier League: This fantasy sports company is India’s largest mobile gaming platform with over 80 million users. In India, fantasy sports players follow live sports in leagues such as the Indian Premier League, the English Premier League and the National Basketball Association. The company has also expanded into Indonesia, and recently gained a foothold in Europe through a partnership with Berlin, Germany-based GameDuell.
- Dream 11: Another India-based company, Dream11’s fantasy sports app allows users to play fantasy cricket, hockey, football, kabaddi and basketball for cash prizes. In 2019, Dream11 became India’s first gaming startup to attain unicorn status (over US$1 billion valuation).
- PlayOn: This UK-based daily fantasy sports provider offers cash prizes across a variety of sports, including soccer, Formula 1, American football, hockey, tennis, cricket, rugby, basketball and golf.
- PlayUp: An Australian sports betting company, PlayUp has been expanding into the US gaming market. The private company recently garnered a US$35 million investment from FTX, a cryptocurrency derivatives exchange, to further its growth in the US.
These companies are just a few possible avenues for investors interested in fantasy sports stocks. With the number of people playing fantasy sports increasing at a rapid rate, it’s a market worth watching. And looking to the future, there’s certainly plenty of room for growth in the fantasy sports stocks industry.
This is an updated version of an article first published by the Investing News Network in 2017.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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