Gambling giant Paddy Power Betfair announced Wednesday that it would merge its US operations with fantasy sports operator FanDuel in a bid to expand its US footprint and place itself in a better position for the upcoming legalization of sports betting across different states.
Paddy Power Betfair’s US assets are valued at $612 million. The company said that it would contribute these as well as $158 million in cash to assume control over 61% of the newly combined business. FanDuel’s current owners will own 39% of it, once the transaction is complete.
The deal comes with an option for Paddy Power Betfair to extend its ownership to 80% after three years and to take full control over the entity after five years.
The Dublin-based gambling behemoth will also have full operational control over the newly merged operation. The venture will operate as a fully consolidated subsidiary of Paddy Power Betfair, the company revealed on Wednesday. The transaction will likely be closed sometime in the third quarter of the year.
Commenting on the deal, Paddy Power Betfair CEO Peter Jackson told media that it would create the largest online gambling business in the United States ahead of the upcoming legalization of sports betting across the nation. The executive went on to say that the merger will benefit from the large sports-focused customer base of both FanDuel and Paddy Power Betfair as well as from the considerable nationwide footprint of the two brands.
Sports Betting in the US
According to previous estimates, a legalized sports betting industry in the US could be worth over $150 billion. Last week, the US Supreme Court lifted the long-standing federal ban on the provision of betting services, paving the way for individual states to legalize the activity if they find fit.
A number of states have already said that they would look to capitalize on the potential of sports betting, with New Jersey leading the way. It has become clear that state lawmakers have already begun discussions over the introduction of a proper regulatory framework and it is expected that one will be crafted by early June.
New Jersey is home to seven operational casinos and a number of racetracks. It was understood that almost all of its casinos will open sports books once betting becomes legal. Borgata, the state’s most profitable casino, said Tuesday that it was ready to launch a sports book facility on the very first day the activity is legalized. Two new casinos are also set to open doors in the city at the end of June – Hard Rock Atlantic City and Ocean Resort Casino. The two new venues have also expressed interest in entering New Jersey’s nascent betting industry.
Sports betting is currently only legal in Nevada and three more states. It is yet to be seen how the recent annulment of the ban will impact the nation’s largest gambling market.