Paddy Power Betfair Merging with FanDuel for US Operations
Paddy Power Betfair and FanDuel are merging their US operations, creating a US-facing gaming entity with a focus on sports betting. It’s the first major UK/US gaming merger to emerge from the US Supreme Court’s recent decision to leave the future of American sports betting in the hands of American States.
Details of the deal have not yet been released but it does appear to be a slightly different deal than the rumored purchase of FanDuel by Paddy Power Betfair that emerged late last week. What is known, however, is that this deal will only involve Paddy Power Betfair’s US-facing operations.
While the deal is being described as a “merger” today, it sounds more like a purchase. Under the current arrangement, Paddy Power Betfair will control 61 percent of the company from day one. From there, it will have the option to enlarge its stake to 80 percent after three years and 100 percent after five years. Paddy Power Betfair also retains the privilege of naming the company’s CEO and other executives.
As one might expect, the current executives from both companies were over the moon regarding the new deal with Peter Jackson, Chief Executive, Paddy Power Betfair saying in a press release:
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. The Group has leading sports betting operating capabilities globally and strong operations on the ground in the US. Together with our substantial financial firepower, we believe we are now exceptionally well placed to target the prospective US sport betting opportunity.
For FanDuel, the deal offers a new lease on life and an opportunity to turn a profit for the first time in its history.
The new entity’s first project will likely be a sports betting operation based out of Paddy Power Betfair’s New Jersey horse racing operation. From there, the company is likely to expand further into the emerging US sports betting market.