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Report: Disney to invest $250 mil in fantasy sports website DraftKings

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Investing.com -

Investing.com -- Disney marked Opening Day of the 2015 Major League Baseball season by making a significant investment into online Fantasy Sports provider DraftKings Inc., the Wall Street Journal reported.

The Walt Disney Company (NYSE:DIS) reportedly will invest $250 million into the popular fantasy sports website, according to the Journal. The Boston-based DraftKings will reciprocate by reportedly spending up to $500 million in advertising over the next several years on Disney-owned ESPN platforms. While the sports giant currently operates a wide array of fantasy sports leagues on ESPN.com, the leagues do not offer cash payouts like DraftKings or its main competitor FanDuel.com.

The deal could pave the way for DraftKings to launch an IPO as early as 2016, with strong earnings during the NBA and NHL playoffs, as well as the baseball and football seasons. In December, DraftKings CEO Jason Robins told TheStreet.com that his company needed only "one more mega round," of venture financing to significantly boost its operations.

Last year, DraftKings' prize payout soared above $200 million, representing a massive increase from its first two years of operations. DraftKings has projections for $1 billion in prize payouts by the end of this year, which could result in $100 million in added revenue for the company. DraftKings receives approximately 10% of all prize pools from the fantasy tournaments on its site.

As DraftKings rapidly increases their customer base, their payouts have grown exponentially. Last August, DraftKings hosted a $3.3 million Fantasy Baseball Championship, its largest tournament in its short history.

Shares in the Walt Disney Co. fell slightly on Monday by 0.37 or 0.35% to 105.63.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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