Sports-related social games and online community developer Watercooler has raised $5.5 million in Series B funding.

The funding round was led by online betting and gaming giant Betfair, and included investment from Canaan Partners. Betfair’s US president, Gerard Cunningham, has joined Watercooler’s board.

Watercooler will use the recent financing to develop fantasy sports and social games on Facebook and other platforms. The company recently launched FanSection Fantasy Football 2009 on Facebook, which it describes as a “commissioner-style fantasy football game”. Its 2009 Bracket Challenge application “was the largest college basketball tournament game on Facebook” with over 1.7 million active users, it says.

"At Watercooler, we've already achieved fantastic momentum in the social gaming space on Facebook, and we look forward to continuing along that path with the new investment from Betfair and Canaan," said CEO Kevin Chou. "Betfair's innovative approach to sports and gaming, along with its strong international presence, made the company a perfect fit as we continue to build innovative social games."