Paddy Power Betfair Acquires FanDuel
FanDuel, a startup fantasy sports game, has finally agreed to merge with Paddy Power Betfair, a sports-betting giant based in Ireland and the United Kingdom. This is according to an announcement made only a few days ago. The news comes after a ruling by the U.S. Supreme Court that saw the lifting of a ban on sports betting across the United States.
Details of the agreement
In a statement to investors and the press disclosing details of the merger, Paddy Power Betfair had also agreed to pay a sum of $158 million to cover debts accrued by FanDuel, which are believed to be close to $76 million. The agreement also involved the betting powerhouse giving up some of its U.S. assets to the newly acquired company.
Upon the completion of the agreement, which will be finalized later in the year, the European company will hold 61 percent of FanDuel and have operational control of the business in the States. The same agreement also gives Paddy Power the option to increase its ownership to 80 percent in the next three years and full stake and control two years after that.
FanDuel used its $124 million profits from 2017 and 1.3 million active customers as a bargaining chip during the merger.
The company also boasted of having 7 million registered users nationwide, which is 40 percent of the overall U.S. market share actively in the fantasy sports market. The company had previously raised more than $416 million from investors, including Verizon Ventures, Comcast Ventures, and NBC.
Supreme Court ruling
The acquisition is a first of many to come, especially since the U.S. Supreme Court recently lifted the ban on sports betting in the United States. The High Court rendered the Professional and Amateur Sports Protection Act (PASPA) of 1992 null and void. The act had outlawed sport betting countrywide except for Nevada, Delaware, Oregon, and Montana,.
Peter Jackson, Paddy Power Betfair’s CEO, admitted that, although talks were already going on before the ruling, the legalization of sports betting was the key reason behind the merger. The decision by the Supreme Court justices only fueled the agreement.
Jackson also added that the coming together of the two betting companies inaugurates them as a heavyweight and powerhouse in the industry with the largest sports-focused customer base and extensive nationwide footprint.
Jackson also boasted of Betfair’s global reach and financial capabilities. He added that the merger backs Betfair capabilities and puts the company in a better position to approach prospects in the U.S.
Matt King, FanDuel’s CEO, confessed to having had an admiration of Paddy Power for quite some time. King also admitted to having shared a common enthusiasm and a goal of becoming the largest gaming operator in the United States, a goal that is now fulfilled. The combined revenue of FanDuel and Paddy Power is estimated to reach $265 million, which is larger than DraftKings, which is their closest rival.
King spoke highly of his expectations from the merger, adding that the fusing of the two cultures, brands, and visions will enlighten the objective and mission of the gaming site and make it a destination for sports fans nationwide.
Even as ambitions and excitement is evident in the two CEO’s statements, it’s also unclear what the management team will look like or who will be in charge of the now-combined entities. Nothing is assured, even for King and Jackson.
One thing is for certain. The new merger is a first of a possible wave of mergers in the gambling arena. Expect to see more in the coming months.
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