Facing Influx of Competition, AlphaDraft Sells to FanDuel

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E-sports fantasy league AlphaDraft, launched nine months ago, has been acquired by fantasy sports company FanDuel for an undisclosed amount.

AlphaDraft began shopping itself to fantasy sports companies this summer for as much as $25 million, making overtures to both FanDuel of New York and Boston’s DraftKings. The company chose to sell to FanDuel, though co-founder and Chief Executive Todd Peterson declined to comment on the terms of the acquisition, which Re/code reported were less than the asking price.

Ultimately, it wasn’t just the price that compelled AlphaDraft to sell, but the prospect of facing down larger competitors.

“We could go independent, but it’s very likely that when FanDuel and DraftKings entered, we would be drowned out,” said Peterson. “I don’t think anyone of us anticipated the market would move this fast.”

The e-sports market has exploded recently. More than 134 million people are expected to watch professional video-game tournaments this year, generating an estimated $612 million in advertising and ticketing revenue, according to New York video-game research firm Super Data Research.

AlphaDraft runs fantasy competitions online, much like fantasy football competitions, in which contestants bet on the statistical performance of players in video-game tournaments. Competitions are free or have paid entry fees: AlphaDraft takes a percentage of the fees.

The Venice company raised a $5 million seed round in May led by Metamorphic Ventures of New York and 10 other investors, including accelerator Amplify.LA, former NBA Commissioner David Stern and William Morris Endeavor Entertainment.

Snubbed by AlphaDraft, DraftKings announced on Wednesday that it would be launching an e-sports fantasy league of its own.

Further highlighting the growth in the e-sports market, WME Entertainment and Turner Broadcasting System Inc. announced the formation of a new e-sports gaming league for video game Counter-Strike: Global Offensive, which will be broadcast on TBS starting next year.

Not to be outdone, Santa Monica’s Activision announced today it would be launching an e-sports league in 2016 for its Call of Duty: Black Ops 3, which will give away $3 million in prize money.

Technology reporter Garrett Reim can be reached at [email protected]. Follow him on Twitter @garrettreim for the latest in L.A. tech news.

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