Yahoo’s entry into the daily fantasy sports vertical is a natural extension of its fantasy sports business, which has traditionally hosted season-long fantasy games. Judging by the growth of FanDuels and DraftKings, each valued at $1b, I expect YHOO’s fantasy sports to be as equally successful as the leading players, given YHOO’s longer operating history and user base. While I acknowledge that the daily fantasy sports industry has been bubbly over the past several months with hundreds of startups coming online to capitalize on the fantasy sports market, there are an estimated over 40m fantasy sports participants in North America. That said, FanDuels and DrafKings only account for 5% of the total user base, which suggests plenty of room for YHOO to leverage its existing fantasy player base and fantasy news source, which are critical to participants when they select their lineups. While management did not give much color on the specifics, we can expect YHOO to have a launch by this summer, and I believe YHOO can be a formidable competitor to FanDuels and DraftKings on both PC and mobile fantasy sports.
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Yahoo: Daily Fantasy Sports The $1 Billion Call Option