Daily fantasy sports site FanDuel is being taken over by U.K.-based betting house Paddy Power Betfair, a deal that will give one of Europe’s largest bookmaking companies access to the U.S. market in a new era of legalized sports gambling.
Paddy Power Betfair agreed to pay $158 million for 61% of FanDuel. It will up its stake to 80% after three years and will have full ownership of FanDuel by 2023.
The European betting giant is publicly traded on the London Stock Exchange, has a multimillion-dollar legal gambling business in the U.S. through its ownership of the TVG horse racing betting network and an online casino business in New Jersey. FanDuel offers single-day, weekly and season-long fantasy game options across a range of public and private leagues, including the NFL, NBA, MLB, NHL, Golf, NASCAR, WNBA, and the English Premier League.
The merged brand will have a head start in the U.S. as many companies, including FanDuel rival DraftKings, race to prepare for sports gambling. Last week, the U.S. Supreme Court ruled that states could make their own decisions on whether to allow sports betting within their borders.
“This combination creates the industry’s largest online business in the US, with a large sports-focused customer base and an extensive nationwide footprint,” said Paddy Power Betfair CEO Peter Jackson, in a statement. “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.”
Pending regulatory approval, the transaction is set to close in the third quarter of this year.
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SportTechie Takeaway
The deal between Paddy Power Betfair and FanDuel marks one of the first mega-deals to emerge in a new era of legalized sports betting in the U.S. There will likely be more of these kinds of takeovers in the coming years, where companies with established European betting houses look to take advantage of the sports betting opportunity in the U.S. by buying established companies here.
Earlier this year, competing daily fantasy sports site DraftKings hired a manager for its newly-formed sportsbooking operation in anticipation of the Supreme Court ruling. DraftKings CEO Jason Robins told CNBC on Wednesday that he’d prefer to work towards an initial public offering, but would also be open to a other opportunities if the right partner came around. Robins declined to elaborate when asked if Paddy Power Betfair or any other company had approached DraftKings in the wake of the Supreme Court ruling.