A writer from Forbes was the first to tweet this morning that the parent company of DraftDay had agreed to sell its daily fantasy sports assets including DraftDay to an investment group owned by Sportech PLC, for $7 million. DraftDraft had been courting a new buyer for at least the last few few months.
A press release from MGT Capital Investments named the buyer as Random Outcome USA, a new company formed to purchase DraftDay. The deal also includes MGT Capital’s business-to-business network and $4 million in cash. MGT expects the deal to finalize by the end of the month.
MGT, which trades on the NYSE, saw a run up of 16% in its shares from the previous morning to close at $0.38. Shares are up another 16% today after the deal was announced. Before terms of the deal were released, shares of Sportstech were down slightly at the close of trading on the London Stock exchange.
Details of the MGT Capital-Sportech Deal
According to the press release, MGT will retain minority equity in Random Outcome USA with a valuation of $3 million. The new entity will continue look to raise funds via a leading investment bank that specializes in the gaming industry.
After funds are raised, DraftDay will then be managed by SportsTech PLC, which will be able to put a greater focus on daily fantasy sports. DraftDay, which had launched in 2011 and initially gained a cult following with some daily fantasy sports players, haf struggled as more capitalized FanDuel and DraftKings broke away in recent years.
“A focused daily fantasy sports business to be delivered on a B2B partnership basis to the regulated gaming industry has the potential to quickly disrupt the rapidly growing market,” said Rich Roberts, President of Sportech Digital.
CEO of MGT followed, “DraftDay could not be going into better hands, and we firmly believe our residual interest will undergo enormous appreciation under Sportech’s leadership, relationships and access to capital.”
About MGT Capital
MGT Capitals Investments and subsidiaries run and operate a handful of websites in the social and real money online gaming sites. In addition to DraftDay, the company also owns FantasySportslive, a daily fantasy sports information site, although the website does not appear to have been updated since late February.
Sportech is London-based online gambling and entertainment company with a public valuation of £139.73 million. According to the Sportech official website, the company processes over $13 billion in bets each year in 30 countries. Sportech is comprised of three major divisions – Sportech Racing and Digital, Sportech Venues and The Football Pools. They are also licensed to operate in over half of US states.