You may have heard on the news that Paddy Power Betfair recently acquired FanDuel. This was announced on May 23rd, 2018, and surprised a lot of people in the world of daily fantasy sports. After the shock wore off, this deal has been seen as an unarguably great one, but for FanDuel and Betfair. It’s also going to benefit U.S. sports fans that want access to a trustworthy and secure sports betting platform. Both companies have strong reputations, and this positions both to expand financially as a result.
The Details
For now, things will continue to run the same that they always have at FanDuel. The biggest change will be that ever since the U.S. Supreme Court decided to allow states to decide for themselves whether or not sports betting will be legal, FanDuel has been looking for ways to increase their influence in the U.S. Betfair’s acquisition allows them to do just that. Betfair has a reputation for having one of the strongest online sports betting platforms in the world, and this merger gives FanDuel access to a pre-existing betting platform without having to create, test, and secure their own from scratch.
Betfair currently holds a 61 percent ownership stake in the two combined companies, and after five years, they will have the option to increase that to 100 percent. Before the decision to allow online sports betting in the U.S., FanDuel had about 40 percent of the U.S. based users when it came to daily fantasy sports play. After this merger, they hope to chip away at the larger base controlled by DraftKings.
Betfair has agreed to contribute all of its existing assets to help grow FanDuel, and they have even agreed to contribute $158 million to help FanDuel pay off its current $76 million in outstanding obligations and future debt. This has helped to act as an energy boost for FanDuel, and should allow it to effectively open up the sports betting market ahead of DraftKings. There have been talks of a “super-merger” in the world of online sports betting and daily fantasy sports for several years, but recent developments in the U.S. made this particular one perfectly timed. It’s the first big acquisition of its kind.
Potential Changes
For now, we shouldn’t expect there to be too much happening in the way of changes, except for the addition of sports betting to FanDuel’s site, of course. It is tough to say what’s going to happen five years from now, though. Betfair has the option to purchase the remaining portion of FanDuel, which they will likely do if this new positioning proves to be lucrative to them. The changes, if any, that will come at that time are impossible to predict with certainty. It’s fair to say that the FanDuel brand is an important part of their consideration, so huge changes are probably not going to be occurring, at least any time soon.
Another question that has been raised is whether other companies are looking at a similar type of merger. The other big player in DFS is DraftKings, and they have already announced that they are releasing their own betting platform. This will likely insulate them from a sports betting merger, but deals like this can and do happen in the world of business, so it’s hard to say what the future holds for other companies.
Ultimately, this will be good for both FanDuel and Betfair. FanDuel has been falling behind DraftKings in recent years. Although they offer a strong a trustworthy product, their user base has fallen to just 7 million registered users, while DraftKings has increased more consistently. Betfair is based out of Ireland and has long been regarded as one of the EU’s most trusted sports betting sites. This new change gives them a share in the action that is about to open up in the U.S. Combining a strong betting platform with FanDuel’s already state of the art fantasy league software will create a great product that U.S. users will soon gain access to and be mutually profitable for both. It’s an exciting development, so stay tuned to the progress that is made in order to start using FanDuel’s soon-to-be new features.
