Paddy Power Betfair, one of the largest gaming and sports betting companies in the world, has agreed to acquire daily fantasy sports operator FanDuel.
The announcement comes just over a week after the US Supreme Court’s landmark decision in ruling the Professional and Amateur Sports Protection Act of 1992 unconstitutional, a move that has left companies moving quickly to position themselves for the new regulatory environment in the sports betting industry, which optimistic projections say could be worth up to $13 billion by next year.
Both FanDuel and DraftKings hope to soon launch a traditional sports betting product that will leverage the brand they have built with daily fantasy sports users over the last few years. The expectation is that the brands will have a product available before the start of the NFL season this September.
Paddy Power Betfair CEO Peter Jackson reiterated the company’s position in the emerging marketplace.
We are excited to add FanDuel to the Group’s portfolio of leading sports brands. This combination creates the industry’s largest online business in the U.S., with a large sports-focused customer base and an extensive nationwide footprint. The Group has leading sports betting operating capabilities globally and strong operations on the ground in the U.S. Together with our substantial financial firepower, we believe we are now exceptionally well placed to target the prospective U.S. sport betting opportunity.
Delighted to announce our transaction with @FanDuel – hugely excited about the deal and the opportunity it gives us to tackle the US sports betting market
— Peter Jackson (@jpeterjackson) May 23, 2018
About the FanDuel Paddy Power Betfair Deal
As part of the deal, Paddy Power Betfair will use its $612 million in US assets plus $158 million in cash to purchase a 61% stake in FanDuel which allow the brand to pay down debt and make the company the largest online gambling business in the United States.
Existing shareholders of FanDuel will continue to hold 39% of the company, allowing Paddy Power Betfair to control a majority of FanDuel. After the deal is completed, which is expected sometime during the third quarter of 2018, FanDuel will become a subsidiary of Paddy Power Betfair.
After three years, Paddy Power may increase its share of FanDuel up to 80% and up to 100% after five years.
Paddy Power Betfair’s Latest Expansion Into the US
This isn’t Paddy Power Betfair’s first foray into the fantasy sports market. Last year the Dublin-based company purchased DRAFT for $48 million.
Not only is Paddy Power Betfair interested in the United States daily fantasy sports market, but where that market may position themselves. After the U.S. Supreme Court’s decision to declare the PAPSA unconstitutional, sports betting could spread quickly now that states have been given the go-ahead to regular the games.
In addition to the DRAFT acquisition, Paddy Power Betfair also operates an online casino and horse racing betting exchange. FanDuel is among the DFS operators that have been approved to operate DFS in Pennsylvania and 19 other states. FanDuel operates games in 40 states and Canada.
Paddy Power Betfair undoubtedly hopes that FanDuel’s track record in the United States combined with the worldwide history and infrastructure of the Dublin-based company will be a recipe for success.
Daily fantasy sports companies such as FanDuel and DraftKings will be well-positioned to take advantage of the new markets opening up. New Jersey is expected to go live in June with sports betting while states like Delaware, Pennsylvania and others will likely be fast-tracking regulations as well.