Scottish online sports betting startup FanDuel was today unveiled as one of the 50 fastest growing technology companies in the UK.
The company ranked sixth on Deloitte’s annual “Fast50” report, which ranks UK technology firms based on their revenue growth rate over the last four years.
FanDuel’s exact revenues couldn’t be revealed because it is a private company but it is said to have grown a whopping 4,632% since 2011, putting it ahead of fintech heavyweight Funding Circle in 8th on 2491% and Scottish neighbour Skyscanner in 38th on 392%.
The ranking would suggest FanDuel is on top form but the reality is FanDuel’s executives have a big challenge on their hands, with US courts threatening to shut down their business.
Where is all the money coming from?
FanDuel has a betting platform that entices sports fans into creating fantasy teams for US sports that can be pitched against strangers.
The platform — used by five million people and operational in 40 US states — has proved incredibly popular with NFL (football), NBA (baskeball), and NHL (ice hockey) fans.
Last year, Techworld said FanDuel took $600 million (£390 million) in bets and kept $60 million (£40 million) of that as profit.
There’s big money to be won (and lost) on FanDuel’s betting platform. Gambler Chris Prince has won $762,388 (approximately £494,094), according to the company’s homepage, where he is pictured with a big smile across his face and a quote reading: “Playing a game in one day and getting paid the same day is awesome.”
Technology investors are keen to capitalise on the company’s success, with high-profile names such as Google Capital, Time Warner Investments and Turner Sports taking part in this summer’s $275 million (£176 million) round, which brought total investment in the company up to $361 million (£234 million.)
But recent development might have them wondering if they have put their money in the right company.
There’s a potential roadblock in the way for FanDuel: a New York court is investigating it for illegal gambling.
Earlier this month, New York state attorney-general Eric Schneiderman insisted that FanDuel and rival DraftKings be terminated, accusing them of operating gambling companies without a licence. The pair argued their case in New York on Wednesday.
The Sunday Times ran a piece last weekend where it stated that it’s likely to be the first of many US legal cases for FanDuel. The piece — written by Peter Evans and Kiki Loizou and titled “Unicorn to Unicorpse” — paints a worrying picture for FanDuel, which started in Edinburgh in 2009.
Class action lawsuits are already being assembled in several states that will seek to reclaim money lost to “illegal” bookmakers, the British broadsheet stated.
A court in Tennessee is suing FanDuel for $10 million (£6.6 million), while a DraftKings employee is facing accusations of insider trading after winning $350,000 (£233,000) through FanDuel competitions.
Jason Trost, the US-born co-founder of online betting exchange Smarkets, told The Sunday Times: “It’s very possible that Americans will get rid of this completely.”
In response, FanDuel said: “The trend in the States is clear: towards regulation and keeping our game legal, and we are fully in support of smart regulations.”
It remains to be seen whether FanDuel will be banned or whether it will continue to exist in a more regulated landscape.
An American exit would be devastating for the company and embarrassing for the company’s investors but it may not be enough to kill it. There are other markets FanDuel could operate in. For example, FanDuel has stated its intent to launch outside the US, possibly in its home country the UK.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.