Published: Fri, May 12, 2017
Science | By Cecil Little

Paddy Power Betfair announces acquisition of DRAFT

Paddy Power Betfair announces acquisition of DRAFT

The acquisition of DRAFT expands the USA footprint of Paddy Power Betfair and positions the company for a future with more states offering regulated fantasy sports and potentially traditional sports betting.

The company has paid an initial cash consideration of $19 million (€174 million) to take ownership of DRAFT, with a further consideration of up to $29 million payable over the next four years depending on performance. To boost its growth rate, Paddy Power Betfair is planning to invest heavily in marketing.

Shares of Paddy Power at 0749 GMT trading 0.4% higher at 8,405 pence.

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In an investor note, Davy said: "The acquisition of DRAFT, while small in the context of the overall group, is an interesting move by Paddy Power Betfair". The company has been looking to boost its presence on the worldwide regulated gambling markets, so the acquisition would provide it with the opportunity to reach USA customers. The business will continue to be run by co-CEOs Jeremy Levine and Jordan Fliegel and will now have access to the group's marketing and technology capabilities. It is forecast to make underlying losses of about $20 million this year.

It is estimated that the online fantasy sports market is worth about $300m in the U.S. - and Draft is among a wave of companies offering fantasy games which offer cash prizes.

To maximise DRAFT's potential, substantial investments in marketing are envisaged. "The transaction is demonstrative of the increasing search for mobile-led, digital companies that are able to cater to the changing habits and needs of customers and could be the first step in the diversification of the group's offerings".

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Correction: Paddy Power Betfair bought mobile game Draft.

The bookmaking business of the operator was created by the merger of the market rivals Paddy Power and Betfair in 2016 into a combined entity to create a gaming and betting giant that is more competitive on the worldwide gambling markets.

The market has almost doubled in value over each of the past three years.

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