FanDuel Strikes Deal with Paddy Power Betfair to Merge US Businesses

FanDuel announced this morning that it has signed a merger agreement with Paddy Power Betfair to combine their US-based businesses. The deal will see Betfair US acquire a 61% share of the combined business venture, with options to increase that stake to 80% after three years and 100% after five years.

A FanDuel press release explains some of the rationale behind the deal:

“The transaction combines FanDuel’s world-class technology, well-recognized brand, and large, highly engaged user base with Betfair US’s existing TVG horseracing betting network and media business along with its online casino business in New Jersey. The combined business is incredibly well-positioned to capitalize on the sports betting market opportunity in the United States.”

In an e-mail sent to registered users, FanDuel explains that nothing will change on the players’ end right now. FanDuel will continue to run as normal and host all the same fantasy sports contests we know and love. All existing customers’ account information will stay the same and everyone will still be able to log in as usual to play DFS, make deposits and cash out winnings.

FanDuel Aims to Offer Sports Betting by the Start of the 2018 NFL Season

FanDuel’s announcement shows how quickly things are changing just a week after the Supreme Court struck down PASPA. In the e-mail, FanDuel explains to users that the company wants to begin offering sports betting to certain customers by the start of the 2018 NFL season.

From the e-mail:

“Last week’s Supreme Court ruling on sports betting is a welcome opportunity for sports fans throughout the United States to enjoy new sports gaming experiences and this deal will accelerate our ability to deliver those experiences to you. We’re currently working on a sports betting product which we expect to be available by the 2018 NFL season. We can’t wait for you to see what we have in store!”

FanDuel sports betting will not be available to all customers by that time, as individual states must now pass and implement their own sports betting laws. New Jersey, Delaware, West Virginia and Mississippi are likely contenders to be ready by the 2018 season. Other states are also preparing sports betting bills of their own.

FanDuel Wins Big with Experienced Sports Betting Partners

News of the FanDuel / Paddy Power Betfair merger comes in the wake of last week’s Supreme Court decision ruling the federal sports betting prohibition unconstitutional. DraftKings has been all over sports betting since even before the Supreme Court ruling, and now FanDuel will be joining the party.

FanDuel’s goal to begin offering sports betting by the start of the 2018 NFL season is aggressive, but signing a deal with an experienced online sportsbook will give FanDuel all the power it needs to move quickly on this.

The Paddy Power Betfair group has been active in the UK market for years and is itself the product of a merger between two formerly separate companies. Ireland’s Paddy Power joined forces with the UK’s Betfair three years ago in a £5 billion deal. Today, Paddy Power Betfair is one of the world’s largest online gaming companies.

To call Paddy Power Betfair experienced is almost an understatement. Paddy Power was founded as a brick-and-mortar bookmaker way back in 1988 and established its online betting service in 2000. That means Paddy Power alone now has nearly two decades in online betting experience.

Paddy Power brings experience not only in setting odds and running insane marketing campaigns, but also in dealing with the nitty-gritty of handling huge volumes of bets, managing the money flow and making sure their IT system is up to snuff. Although FanDuel has surely gained experience in a lot of these areas dealing with daily fantasy contests, Paddy Power will bring that little extra bit of expertise and marketing prowess.

Betfair likewise brings many of the same skills to the table. However, one thing worth speculating on is Betfair’s long history in exchange betting, which allows customers to set their own odds and bet with one another rather than betting against the house. Could Betfair possibly open the door to FanDuel differentiating itself out and away from the traditional sports betting model and offer a betting exchange in addition to a standard sportsbook?

We do know Betfair is already operating an exchange in New Jersey. Betfair has had a tough time reaching the critical mass necessary to support a major exchange product because it is currently limited not only to New Jersey, but also to horse betting.

However, that could all be changing now that PASPA has been stricken down. It is exciting to imagine FanDuel and Betfair teaming up to build a full-service sports betting exchange. That is pure speculation on my part, by the way, but it does go to show that FanDuel will have plenty of options and a good bit of experience on its side as it seeks to expand into the legal US sports betting market.

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