Paddy Power Betfair rolls the dice with FanDuel merger
Washington AFP – Dublin-based gambling firm Paddy Power Betfair, seeking to cash in on the US Supreme Court ruling legalizing sports betting, said Wednesday it was merging its US operation Betfair US with fantasy sports company FanDuel.
Betfair said it will own 61 percent of the combined business, with 39 percent being owned by existing FanDuel investors.
FanDuel, with 1.3 million active users and revenue last year of $124 million, and DraftKings are the two largest fantasy sports companies in the United States.
The move by Betfair is expected to be followed by others as companies seek to grab a share of what is expected to be a lucrative US gambling pie.
“The transaction strengthens the Group’s opportunity to target the prospective US sports betting market through the addition of a strong brand, large existing customer base and talented team,” Paddy Power Betfair said in a statement.
Betfair said the agreement calls for it to contribute its existing US assets to the new business along with $158 million in cash.
The cash will be used in part to pay down FanDuel’s debt which was listed as $76 million as of March 2018.
In a 6-3 ruling, the Supreme Court this month declared unconstitutional a 1992 federal law which banned wagering on professional and university sports.
The ruling has set up a race by individual states to situs judi online pass legislation permitting betting on baseball, basketball, American football, ice hockey and other sports.
Betting on horse racing has been permitted in most US states, but Nevada was essentially the only US state until now where gamblers could legally lay down money on other pastimes.
In the United States, PPB already operates an online casino in New Jersey, and is heavily involved in horse racing, with an online pari-mutuel betting network that operates in 35 states.
Discussions about the potential merger had been ongoing for some time, with Paddy Power officials acknowledging the talks just last week. Both companies expect the transaction to be closed sometime later this year, likely in the third quarter.
Under the terms of the agreement, PPB has the option of raising its stake in the combined company to 80 percent after three years, and 100 percent after five years.