Paddy Power buys US firm for up to €44m

Paddy Power-Betfair has made what analysts have called a “modest” bet on the US market by acquiring New York-based specialist betting firm Draft for a potential total price of $48m (€44m).

The purchase marks the Dublin-headquartered betting services group’s first foray into the so-called fantasy sports market, where punters bet online on virtual sporting results.

The betting sub-genre, while active on this side of the Atlantic, is huge in the US and worth an estimated $300m.

Draft offers odds on North American ice hockey, basketball, golf, baseball, football and college football.

The two largest players in the US fantasy betting market — FanDuel and Draft-Kings— are merging and Paddy Power-Betfair boss Breon Corcoran said the company feels it can take a share of the market with this deal after scaling up the business with financial and marketing support.

It is spending an initial $19m on Draft with an additional $29m payable over the next four years depending on business performance.

Davy Stockbrokers’ David Jennings said the move is “a relatively modest bet” for Paddy Power.

“It provides the group with optionality around the future of this tangential product space in the US and elsewhere and could add to the diversification of the group over time,” he added.

Paddy Power-Betfair — which recently reported a 23% rise in first quarter revenues and an 87% rise in underlying earnings, helped by a strong Cheltenham festival — is already active in the US via its TVG betting website and an online casino business in New Jersey.