Watercooler announced Sunday night that it has raised $5.5 million in a Series B round of financing, led by online betting company Betfair. Also contributing to the round is Canaan Partners, which invested $4 million for Watercooler in a Series A fundraiser back in September of 2007.

Launched in 2006, the Mountain View, CA-based startup is aiming to create the ultimate social network for fans of sports and TV entertainment. Not an actual social networking site itself, Watercooler's network of users play social games on all the most popular sites--Facebook, MySpace, Yahoo, Google, Bebo, Friendster, and hi5.

Though Watercooler games aren't as popular as those made by Zynga, like FarmVille and Mafia Wars, its March Madness basketball game called 2009 Bracket Challenge gathered 1.7 million users. Already, Watercooler has 40 million registered fans worldwide.

Watercooler's biggest most recent news came over the summer, with the launch of FanSection Fantasy Football 2009, a social fantasy football game currently available on Facebook.

CEO Kevin Chou, who had been an associate for Canaan Partners for two years before joining Watercooler, says that social games monetized through virtual goods rather than advertising are on the rise. He hopes, with Betfair as a new major contributor to the company, that Watercooler can expand its business' popularity through an increase and improvement in offerings.

Chou's company will have to fend off competition from sites like Citizen Sports and One Season (among others), as the prospect of social sports networks has appeared increasingly fruitful many in the industry lately.