Paddy Power Betfair Close to Buying US Fantasy Sports Site
According to reports, betting giant Paddy Power Betfair is currently pursuing negotiations to purchase leading American daily fantasy sports provider FanDuel. News of the move comes in the wake of the Supreme Court os the United States ruling to repeal a 1992 federal ban on sports betting and thus make the legality of that practice a state-level decision.
Despite the decision coming this week, there is speculation that FanDuel and PPB were in talks before the ruling. With competing bookmaker William Hill perhaps the best positioned for the opening of the US sports wagering market, PPB hopes to improve its standing with what would be a very strategically sound acquisition.
Gambling Group Announces Negotiations
In response to media reports and postulations on the business transaction, the FTSE 100 gambling group, which owns Paddy Power Betfair, confirmed negotiations on Wednesday with an official statement:
Paddy Power Betfair plc (“the Group”) notes the media speculation, and confirms it is in discussions regarding a potential combination of the Group’s US business and FanDuel to create a combined business to target the prospective US sports betting market. Discussions are ongoing and there is no certainty as to whether agreement will be reached, or as to the terms or timing of any transaction. A further announcement will be made as appropriate.
The SCOTUS ruling has sparked a massive week of growth for UK bookmakers as the Guardian reported that “the value of London-listed gambling firms, including 888, Paddy Power Betfair and William Hill, surged by more than £1.5bn” after the 26-year-old ban was struck down.
PPB alone is currently valued at £6.5 billion ($8.8 billion), and two years ago, when Paddy Power and Betfair merged, FanDuel was said to be worth over $1 billion. As the US market opens, the opportunities available to bookies will only increase as Barclays projects the “US gambling market could be worth $10 billion in net revenues to gambling operators, a figure that excludes money given back to punters in prizes.”
Move Reflects Sports Betting Transition for FanDuel
FanDuel was founded in 2009 in New York and the company of around 400 employees provides fantasy sports betting to millions across the country. Matt King, CEO of FanDuel, said to Forbes earlier this month that the company would be interested in getting involved in outcome-based sports betting:
“(A Supreme Court overturn) would mean we would get into sports betting. This business is around fan engagement and helping fans feel closer to the things they like, and clearly sports betting is one way to help people to do that. So it would be very logical for us to get into it. We have some ideas of how to make that experience better and ones that we feel will resonate with our users. We think we’re uniquely positioned to fulfill that market demand.”
This echoed recent announcements by fellow fantasy sports company DraftKings stating that it would also venture into the US sports betting market.
DraftKings and FanDuel had to call off a planned and anticipated merger last year because of intervention from the Federal Trade Commission. The Commission blocked the proposed deal because the combined firm of two fantasy sports providers would have controlled a 90 percent market share.
Acquisition Could Cement PPB’s US Stature
PPB already maintains a US division including a horseracing television channel and online betting network (TVG Network) and last year purchased Draft, an American fantasy sports site, for $48 million. The acquisition of FanDuel would carry a number of worthwhile benefits as the gambling giant looks to expand into the US market. For starters, many more Americans are familiar with the FanDuel brand due to its well-documented ad campaigns over the years.
Purchasing FanDuel would also grant PPB a massive database of millions of fantasy sports players who likely will be inclined to get into sports gambling. This is indicated by their willingness to put down money on “entry fees” for fantasy contests which is, essentially, betting they will make the right picks.
This will make converting such players to the legal sports betting market much easier as an assumed awareness and interest in that market already exists amongst said players. Furthermore, most of the states in which daily fantasy sites are legal are states that will be at the top of the list to allow sports betting earlier.
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