DAILY FANTASY- SPORTS OPERATOR AWAIT FOR REALITY CHECK

The National Football League season that kicks off Thursday will provide a reality check for an investor darling that has yet to make a profit: the daily fantasy-sports industry.

The fantasy-sports operators allow customers to draft virtual teams of professional athletes and compete against each other based on the teams’ real-world performances that day or week. The companies put customers’ contest entry fees toward cash prize pools and keep around 10% in commissions for themselves.

FanDuel Inc. and DraftKings Inc., which together control some 95% of the North American daily fantasy market, both entered the billion-dollar-startup club in July after big fundraising rounds, hitting respective valuations of $1.3 billion and $1.2 billion. But neither has made a profit because of heavy ad spending to draw in customers.

FanDuel, credited with starting the industry in 2009, generated $57 million in revenue in 2014 and awarded $564 million in cash prizes. The company has said it would dole out $2 billion in prizes this year, implying it hopes to more than triple its revenue to about $200 million in 2015.

DraftKings, founded in 2011, made $30 million in revenue last year and gave away $300 million in prizes. It has pledged to give away at least $1 billion in prizes this year.