India's fantasy gaming firm Dream Sports closes $840M financing round; reportedly seeking US listing

India’s Dream Sports, parent company of popular fantasy gaming brand Dream11, has raised $840 million from investors, according to an announcement made on Wednesday. The financing round was led by Falcon Edge and Tiger Global, in a deal which valued the sports technology firm at $8 billion.

A pioneer of fantasy sports in India, Mumbai-based Dream Sports was founded in 2008 and currently has a user base of about 140 million people. In addition to the Dream11 brand, the group also owns companies including sports content platforms FanCode and DreamSetGo, which offer a wide range of services, from game tickets and hospitality to stadium tours.

“Our vision and mission are to create an entrepreneur-led virtuous cycle of investment, innovation and wealth creation for all stakeholders in the sports ecosystem, from fans to athletes, teams and leagues,” Dream Sports’ co-founder and CEO Harsh Jain said in Wednesday’s statement.

Dream11, its flagship firm, which grew rapidly via marketing and hiring, has now become one of India’s biggest fantasy gaming brands. According to local media, it is seeking a US listing by early 2022.

However, the popular app has also been entangled in legal challenges and uncertainties amid concerns of similarities between fantasy sports and gambling, reports Reuters, which is largely illegal in the country. For several years, the firm failed to attract investors, as games of skill are confused with games of chance.

While a favorable court order in 2017 was set to remove legal hurdles, the regulation of games of skill still remains fairly unclear within the country, still leading to legal issues for gaming companies. In October, a police case was filed against Dream11 in Bengaluru for continuing to offer services despite a new law banning online gaming in the southern Karnataka state.

In addition to previously mentioned Falcon Edge and Tiger Global, the newly-announced financing round was also led by DST Global, D1 Capital and Redbird Capital. Existing investors TPG and Footpath Ventures also participated.

“Our investors have deep experience in developing sports ecosystems globally,” added Jain. “We are fortunate to have their guidance to ‘make sports better’ for 1 billion Indian fans.” The firm had raised $400 million in its previous funding round at a $5 billion valuation in March this year.

Dream Sports has taken advantage of the growing gaming sector in India, in which investments have amounted to about $1.6 billion in the first nine months of 2021, according to Business Standard. These have exceeded what was invested in the last five years, as gaming adoption is led by smartphone penetration, the pandemic, growing Internet availability and digital payments.

“We’re impressed with their customer-centric approach, product strategy and ability to strengthen connections between fans and their favorite sports,” said Rahul Mehta, managing partner at DST Global. Dream Sports is currently one of few Indian consumer-tech unicorns that have turned profitable, reporting a profit of 24.1 million in FY20.

Dream Sports is also ramping up its investments in the sports market through its venture capital arm, Dream Capital, which has 10 companies in its portfolio.