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Paddy Power Betfair buys FanDuel for US wagering push

| By Stephen Carter
PPB will contribute existing US assets plus $158m in cash for a 61% share of combined business

Paddy Power Betfair has entered a definitive agreement to acquire leading US DFS business FanDuel, it confirmed to the London market this evening (Wednesday).

FanDuel, one of the big two operators in the US DFS market alongside DraftKings, will be merged with PPB's Betfair US business to target the prospective US sports betting market, following the repeal of the federal ban by the US Supreme Court last week.

PPB will contribute its existing US assets plus $158m in cash for a 61% share of the combined business, with FanDuel investors owning the other 39%. “A mechanism” has been agreed to take PPB’s ownership to 80% after three years and 100% after five.

PPB's main US asset is horse racing TV and wagering network TVG. It also operates an NJ-only online casino and the nascent Draft DFS business.

The cash component will be used to pay down FanDuel's existing debt, which stood at $76m at 31 March 2018, and provide working capital for the merged US business.

PPB chief executive 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 US, with a large sports-focused customer base and an extensive nationwide footprint.”

Matt King, CEO of FanDuel, added: “The combination of brands and team, along with a shared culture and vision for the future, creates the leading gaming destination for US sports fans.”

FanDuel has over 40% market share of the US DFS market, PPB said today, boasting seven million registered customers across 40 states. In 2017, it generated revenue of $124m from 1.3m actives.

PPB said today the FanDuel brand had been bult in the US on the back of “approximately $400m cumulative marketing spend to date supported by innovative proprietary technology”.

The transaction is expected to complete in Q3 2018, subject to the usual regulatory and anti-trust reviews.

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