Paddy Power Betfair Diving into US DFS Market with DRAFT Acquisition
Paddy Power Betfair, the Ireland-based operator, is dipping its toes into the US daily fantasy sports market with its recent acquisition of an American DFS site called DRAFT. It’s a gutsy move that puts Paddy Power Betfair in direct competition with the industry’s biggest players, Draft Kings and FanDuel.
The purchase was announced yesterday and, according to the Irish Times, the Paddy Power Betfair deal is worth a little over $48 million, but will be paid out over time.
At this point, the operator has ponied up about $19 million for the initial purchase. The other $29 million is based on DRAFT’s overall performance over the course of the next four years.
Diving into the US daily fantasy sports market in this manner is a gutsy, and potentially risky, move for Ireland’s biggest operator. For starters, the Draft Kings/FanDuel juggernaut currently controls more than 90 percent of the US market and its football-crazy players.
Paddy Power Betfair made some move yesterday to steel its shareholders against the enormity of the risk by issuing a statement outlining the Draft acquisition’s overall impact on company profits. In a note to investors, the company said:
However, the market opportunity is such that this dilution could represent a small price to pay for longer-term returns.
In an interview with the Irish Times, Breon Corcoran, chief executive of Paddy Power Betfair was bullish on the deal saying:
Draft has a differentiated product and we believe the business, with the support of our marketing and technology expertise, can take share in the fast-growing daily fantasy sports market.
How much of a share of the US DFS market Paddy Power Betfair will be able to grab with this acquisition remains to be seen. Knocking much more than a small chunk away from Draft Kings and FanDuel will be tough, but if the company’s in it for the long haul, they may have a reasonable chance.