The NBA has signed a four-year exclusive daily fantasy deal with FanDuel, the league announced Wednesday.
Financial details were not disclosed, but as part of the deal, the league will become an investor in the market leader in one of the fastest-growing sports sectors. FanDuel also will be the only daily fantasy site featured on the league's official website.
"The special status helps legitimize us, but we wanted to do this deal because the NBA, more than any other league, they understood the upside to them as well," FanDuel CEO and co-founder Nigel Eccles said.
Eccles noted that the company's data shows that once a fan starts playing daily fantasy, his or her weekly sports TV consumption jumps from 17½ hours to 24 hours.
"It's clear that many of our fans are in the two-screen world, watching the game and having another device open to do something else," said Sal LaRocca, president of the NBA's global operations and merchandising. "Daily Fantasy is now part of that experience."
The relationship does not enable FanDuel to be the exclusive provider of NBA daily fantasy, as any service is legally allowed to offer an NBA fantasy game. In 1996, statistics company Stats Inc. won a case against the NBA, which established that players' names when tied to statistics were not subject to copyright protection.
FanDuel's deal with the NBA comes days after the NHL announced an exclusive partnership with its competitor DraftKings.
The market for daily fantasy has been growing exponentially in the past couple of years.
"We used to have a guy who kept a spreadsheet of all the daily fantasy sites," Eccles said. "We had to stop counting."
FanDuel has recently raised its projections on net revenue for 2014 to $60 million. That's up from just $14.5 million last year.
The company says it will take in more than $550 million in entry fees this season, giving 91 percent of that back to its customers in prize money.
FanDuel has brought in 650,000 new paying players in the past three months. Before this year, the company never had a single quarter with more than 200,000 active players.
Eccles said he's excited about basketball because it has been relatively untapped, as the season-long game has proved to be a grind for many.
"More than half of people who start playing daily fantasy basketball with us are playing fantasy basketball for the first time," Eccles said. "We hope we can convert half the fans who came to our site to play daily fantasy football and get them to like playing daily fantasy basketball."
FanDuel, which already had forged individual deals with the Brooklyn Nets, Chicago Bulls, Dallas Mavericks, New York Knicks and Orlando Magic, has taken in $88 million in venture capital funding from the likes of Bullpen Capital, Shamrock Capital and Comcast Ventures.
Daily fantasy is considered legal thanks to the Unlawful Internet Gambling Enforcement Act which, in 2006, clarified online gambling regulations. Participation in fantasy sports was exempted on the grounds that it was a game of skill.
Online fantasy sports still can't be played in five states -- Arizona, Iowa, Louisiana, Montana and Washington.