Ireland-headquartered betting firm Paddy Power Betfair (PPB) agreed yesterday to acquire a majority stake in FanDuel, a US-based daily sports fantasy platform backed by corporates Alphabet, Comcast and Time Warner, as part of a merger deal.
FanDuel will be merged with the TVG horseracing betting network, media business and online casinos owned by Betfair US, PPB’s American subsidiary, which have a combined value of $612m according to the BBC.
PPB will also invest $158m that will be used to pay down FanDuel’s debt, according to Variety. It will take a 61% stake in the merged business with the option to increase that to 80% after three years and 100% after five years.
Spun out of University of Edinburgh in 2009, FanDuel operates a daily fantasy sports platform that enables users to build teams of professional athletes, earn points based on the real-life performance of these players and potentially win cash prizes.
The company previously sought a merger with its biggest competitor, DraftKings, but the two called off the deal in July 2017 when they faced regulatory opposition over concerns the deal would create a quasi-monopoly.
Both FanDuel and DraftKings have also faced scrutiny in the past over whether their activities constitute gambling rather than a game of skill.
However, last month, shortly before reports about PPB’s acquisition of FanDuel first surfaced, the US Supreme Court ruled that a federal ban of sports gambling was unconstitutional, making the regulator’s concerns moot.
PPB’s acquisition of FanDuel is expected to close in Q3 2018. The combined entity will invest in new products, boast a larger headcount and pursue growth opportunities, while aiming to integrate its offering more deeply with the rest of PPB’s digital offering.
FanDuel has raised approximately $420m in funding to date and reached unicorn status in 2015 when it raised a $275m series E round featuring CapitalG, a late-stage investment arm of internet technology conglomerate Alphabet.
Time Warner Investments and Turner Sports, both part of entertainment and media group Time Warner, also took part in the series E round, as did mass media group Comcast’s NBC Sports Ventures and Comcast Ventures subsidiaries.
The round also included KKR, Shamrock Capital, Bullpen Capital, Pentech Ventures, Piton Capital and the owners of unnamed NBA and NFL teams. It was followed by $55m in convertible note financing from existing investors at an undisclosed valuation in 2016.
Shamrock Capital led a $70m series D round for FanDuel in 2014 that included Comcast Ventures, NBC Sports Ventures, KKR, Bullpen Capital, Pentech Ventures, state-owned investment agency Scottish Enterprise and private investor Richard Koch.
Comcast Ventures had already led the company’s $11m series C round in 2011, when it was joined by Piton Capital, Pentech Ventures, Bullpen Capital and Koch.
Peter Jackson, CEO of Paddy Power Betfair, 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.
“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.”