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New York lawmakers just voted to pass a bill that will see a young subsector of the fantasy sports space become regulated under state law. That is, daily fantasy sports, basically day trading combined with fantasy sports.

 
As things stand, the two private companies FanDuel and DraftKings dominate the space. While they are both private, each has big name public backers that offer an indirect exposure to their growth ahead of what many see as a potential 2016/17 IPO. Which is the better play, and how can an investor looking to get in on the daily fantasy sports space get an exposure?

 
DraftKings is the bigger of the two companies, and reportedly paid out more than $1 billion in prize money last year. It’s partnered with Major League Baseball and the National Hockey League, and sponsors 56 pro teams in the US as of January. Funding to the same point totals $426 million. DraftKings’ best known backer is Twenty-First Century Fox Inc (NASDAQ:FOXA) by way of its fox Sports division. The latter led a $300 million financing round in late 2015, putting up $150 million for an 11% stake. Fox is such a large company that any indirect exposure to DraftKings is quite tertiary. However, it’s one of the only retail opportunities to gain exposure to the industry growth, and there’s a sound argument for the indirect nature of the pick offering an element of risk mitigation if other states choose not to follow New York’s lead and look more harshly on daily fantasy sports.

 
As for FanDeul, funding to date comes in at $363 million, which puts it just short of DraftKings, but the company has a similar number of players and a reported valuation of $1.2 billion based on financing to date. Its major partnership is with the National Basketball Association, and it sponsors around 30 pro teams as of January. Exposure to this one comes primarily in the form of two companies. The first, KKR & Co. L.P.(NYSE:KKR), a New York private equity firm that led a $275 million series E last year. The second is Alphabet Inc (NASDAQ:GOOGL) by way of Google Capital. Google Capital co-led the series E with KKR, and its choice to take a position in FanDuel as opposed to DraftKings was seen as indicative of wider market sentiment at the time. Of course, the actions of one company aren’t overly reliable in terms of future trends, but the weight of the Google name is always going to influence sentiment to some extent.

 
All said, both DraftKings and FanDeul are IPO candidates in the next few years, and some might prefer to wait until a direct exposure becomes an option. For those looking to get in early, however, indirect exposures are readily available. Right now FanDuel looks more attractive purely based on its marketing campaigns and its partnership with Google, but it’s difficult to say without a closer look at the statements, which are not accessible.