Paddy Power Betfair announced Wednesday that it has acquired daily fantasy sports site FanDuel. The 2 sides are still awaiting regulatory approval, but the transaction is expected to be finalized during Q3 later in the year.
Legal Sports Report reported last week that the Dublin-based betting giant was in negotiations with the American-based DFS powerhouse last week.
The timing of the acquisition isn’t much of a surprise, as the United States Supreme Court voted to strike down a law that made sports gambling illegal in the U.S. last week. The ruling clears the way for individual states to legalize and regulate sports betting within their borders. The case was brought to the Supreme Court by the state of New Jersey, which is widely expected to become the first state to take advantage of the ruling.
Paddy Power Betfair CEO Peter Jackson said,
“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 well placed to target the prospective U.S. betting opportunity.”
Paddy Power Betfair went on to reveal that PPB will own 61 percent of the combined entity, with the other 39 percent going to FanDuel’s investors. PPB reportedly paid $158 million to secure the rights, and much of the cash will be used to help pay down FanDuel’s existing $76 million worth of debt.
FanDuel, whose previous merger attempt with DFS rival DraftKings was blocked, is hopeful that this new merger will help close the gap with DK. DraftKings is currently the largest daily fantasy sports operator in the United States. FanDuel is second, but a distant second.
The name recognition that comes with Paddy Power Betfair should help generate more opportunities in the fledgling American sports betting market. FanDuel said in an email that the site’s daily fantasy operation will remain unchanged, and that the deal is geared almost exclusively toward the sports betting side.
PPB additionally released some numbers on FanDuel. PPB says that FD occupies about 40 percent of the American daily fantasy sports marketplace. The site has about 7 million registered users, though only 1.3 million of those are considered to be active. FanDuel had a revenue of $124 million in 2017 and has spent a total of $400 million on marketing.
FanDuel’s new CEO, Matt King, also issued a statement, saying,
“FanDuel and Betfair U.S. share an enthusiasm for innovation and, as a result of today’s announcement, are prepared to lead the charge into the U.S. sports betting market. The combination of our brands and team, along with a shared culture and vision for the future, will allow us to create the leading gaming destination for sports fans everywhere.”
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