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FanDuel is the world-leading online daily fantasy sports company, operating in one of the fastest growing sectors of the sports and entertainment industry. It has become a household name in the US and one of Scotland’s only two unicorn companies, valued at more than $1 billion. Since its launch in 2009, its been disrupting the fantasy sports industry and changing the way millions of people experience sports.

Think about the passion that fans have for their sports teams. They are relentlessly obsessive in their devotion to their team, love of the sport, and competitiveness against other teams. In my hometown of Newcastle, the city’s football club dominates the city centre. To many hard-working fans, nothing matters more in their week than the next football match. Nothing occupies their daily chat more than their club. And nothing rouses their passion more than winning.

Imagine then, the ability to engage fans like this every day. FanDuel is the world’s largest fantasy sports game, and actually started just up the road from Newcastle, in Edinburgh. It has now spread globally, quickly across the USA, and now has its sights on the even bigger market of Asia. The model consists of traditional season-long fantasy sports leagues being compressed into a free and/or paid daily, and occasionally weekly, game of skill. Legally, it is not gambling, but a game of skill.

A professional sports season usually lasts five to eight months, depending on the sport. Why does a fantasy sports competition need to be just as long?

That simple insight has catalyzed what was already a booming business, giving birth to FanDuel, the fastest-growing fantasy sports platform. After five years of gradual growth, the Scottish startup achieved escape velocity in 2014. More than 900,000 new players signed up, a fivefold increase from the previous year, and handed over more than $600 million in entry fees for the chance to win cash payouts in daily tournaments.

In fantasy sports, participants act as managers of imaginary teams, selecting their real-life players into ideal lineups and then competing with one another based on the statistics their players produce.

FanDuel started in 2009 in Edinburgh as Hubdub, an online predictions market where users could win virtual money for correctly forecasting news events. As Hubdub ran out of money, its five co-founders, led by CEO Nigel Eccles, decided to refocus the company on American sports, the one area in which it seemed to have significant traction, and to replace the play money with real cash. The Unlawful Internet Gambling Enforcement Act, while crushing online poker and blackjack, had established a safe harbor for fantasy sports in the U.S., legally defining it as a game of skill, not chance. But the big fantasy league operators remained content to leave money collection and disbursement to the players themselves, deeming the opportunity too small to be worth getting into the messy business of payments.

Eccles and company believed the market for fantasy could be much bigger if entering a league weren’t a season-long commitment. They renamed the company FanDuel and started offering one-day leagues just as a number of other small sites were trying out similar models. “It’s ‘Here’s a product that will take the next six months of your life’ versus ‘Here’s a product that will take the next 15 minutes,'” says Eccles, a former McKinsey consultant and native of Northern Ireland. For the hardcore player, meanwhile, daily fantasy meant hundreds or thousands more competitions to enter per year.

Venture investors make bets for a living, but on this one they were risk-averse. FanDuel pitched 85 VCs before hearing a yes from Piton Capital. “It was yet another case of people looking at something as a hobby and underestimating the fans’ willingness to spend money,” says CFO Matt King. Those days are over. FanDuel has raised $88 million from investors including Bullpen Capital, Shamrock Capital, and Kravis Kohlberg Roberts. “We had the benefit of being Series D and seeing what the company had already achieved,” says Shamrock’s Alan Resnikoff. “It was very compelling and the story was very clear.”

Also invested are Comcast Ventures, NBC Sports Group, and the NBA, a sign of just how strongly the leagues and their TV partners have come to embrace fantasy-based gambling. That wasn’t always the case. As recently as two years ago, none of the major networks would accept FanDuel’s advertising. They warmed up after seeing how big an impact fantasy has on ratings: FanDuel says its players consume 40 percent more sports media after they join. They also benefit more directly–FanDuel is now one of ESPN’s 10 biggest advertisers.

The company’s revenue comes from the 10 percent commission it takes on entry fees; the rest it pays out in the form of prizes. In the fourth quarter of 2014 those revenues more than quadrupled to $36.8 million, and this year the company expects to generate more than $180 million.

Within the daily fantasy market, FanDuel, with its million-plus users, has an 80 percent share of revenues. Number two DraftKings has almost all of the remainder, and Eccles doesn’t expect many serious challengers to come along. “It’s a chicken-and-egg problem: You need the player pool to guarantee the prizes, but if you don’t have the prizes, you can’t get the player pool,” he says. “That’s what you find in this market. It’s very easy to launch but very hard to scale.”

The 400-strong FanDuel team is now based in New York City, with offices in Edinburgh, Glasgow, Orlando and LA.

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