PrizePicks

  • PrizePicks is a popular domestic daily fantasy sports operator.
  • The company received $850,000 in bridge funding, a form of short-term private investment aid, in response to the COVID-19 pandemic.
  • The investors for this bridge funding believe in the long-term potential of PrizePicks as a major business.
  • Sports betting companies have proven to be safe investments, but their success still relies on the ability of major sports leagues to safely stage games, which is becoming questionable.

Editors’ Note: [Correction: A previous version of this story inaccurately stated that the bridge funding was a response to financial difficulties caused by the COVID-19 pandemic. While the funding was “done in response to the current pandemic” the purpose of the bridge funding, per PrizePicks, was to “strengthen the company’s position, run R&D on new markets, and capitalize on emerging opportunities.” The implication of financial difficulties was a mistake on my part as the author.]

ATLANTA – Atlanta-based daily fantasy sports operator PrizePicks has received $850,000 in bridge funding from a group of investors led by Parlay Capital Holdings in response to the pandemic.

Bridge funding is a form of temporary funding to cover short-term operating costs and expenditures when a company experiences an unexpected downturn and does not have the needed cash reserves to cover short-term losses.

Other notable investors involved in the bridge funding include AMJ ventures, an investment fund focused on emerging businesses and industries, as well as Phil Hellmuth, a 15-time World Series of Poker champion.

Adam Wexler, PrizePicks’ CEO, assuaged concerns that the bridge funding was a sign of imminent catastrophe for the company:

“While this bridge raise was done in response to the current pandemic, it allowed us to check some boxes regarding a well-rounded cap table. Securing investors like the world’s most accomplished poker player proves we’re onto something big.”

PrizePicks is set to go through priced round funding, a form of valuation for stock trading, before the 2020 NFL season. This bridge funding should act as a good preliminary opportunity for PrizePicks to work with potential future investors.

Gaming Stocks And COVID-19

Despite the widespread economic downturn, the coronavirus pandemic has proven sports gambling stocks to be a safe and resilient investment. Most publicly traded sportsbooks have rebounded in impressive fashion after a huge crash in mid-March.

Companies focused primarily on online gambling, in particular, seem poised for sustainable success, while brick-and-mortar sportsbooks could be susceptible to long-term restrictions on inessential brick-and-mortar businesses.

Assuming that the return of sports goes according to plan, companies like PrizePicks should be some of the few businesses primed to see continued and even increased growth during the COVID-19 crisis.

How COVID-19 Can Jeopardize Sports Betting Stocks

Obviously, the short-term future success of sports betting businesses depends on one thing above all else: sports to bet on.

PrizePicks has done a good job adapting its daily fantasy products to more niche betting options like The Basketball Tournament, esports, and the international sports leagues, but the vast majority of sports betting revenues are generated by traditional major North American sports leagues.

The NBA, NHL, MLS, and MLB are all set to return in quick succession in July and August, but surging infection rates throughout the country could endanger that return.

Additionally, Major League Soccer, which is the first major league scheduled to return, has been plagued by setback after setback and its return is in danger of failing even as the first games are set to kick off on Wednesday.

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