DraftKings and LeagueSafe partner up

Earlier this month, the increasingly popular daily fantasy game site, DraftKings, announced a partnership with LeagueSafe, a fantasy sports escrow company. LeagueSafe is to become the exclusive provider for fantasy owners to deposit any monetary transactions while playing with DraftKings fantasy games.

DraftKings was started only a couple of years ago however it promotes itself as the #2 provider of daily fantasy sports. The daily fantasy sports market has had a number of recent financial investments in this growing market. In January of this year, FanDuel secured Series C financing from investors that included Comcast Ventures. In addition, mainstream heavy weight like CBS Sports may also be drawing interest in the daily fantasy game market.

LeagueSafe was founded in 2008 and claims it has captured 99% of the escrow market. What give LeagueSafe notoriety and legitimacy is that it was found  by the current president of the Fantasy Sports Trade Association, Paul Charchian.

MY TAKE: Daily fantasy games are still in the gray area when it comes to legality. Marc Edelman explains the legal issue in an excellent article.  Without any precedents set and the fact that it can be a lucrative business, daily fantasy games will continue to grow. A watershed event in the market is when the largest game hosters such as ESPN, Yahoo, CBS Sports and Fox announce and promote their own daily fantasy game. So far, they have been sitting on the sideline pending clarification of the legal issue if daily fantasy games constitute gambling.

Partnerships like these are good things for the ecosystem. You can think of LeagueSafe as becoming the defacto PayPal system for the fantasy sports industry. PayPal is instrumental in leading the online payment system and contributes to the explosive growth of the commercial ecosystem for the internet.

Related: DraftKing and LeagueSafe press release