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Paddy Power Betfair (PPB) might not be a household brand in the US, but after its acquisition of FanDuel the company can boast real money gaming operations in 45 states.
The company released its first-half results on August 8. Although six-month US profits of just £5 million ($6.44 million) don’t look too interesting, PPB is planning a major expansion in US state-regulated sports betting.
On top of its acquisition of FanDuel, PPB has entered into a deal with Boyd Gaming that gives it access to 15 states, four of which have already legalized sports betting.
The US market may currently be small in the grand scheme, but PPB expects to see substantial growth. H1 saw £61 million ($78.6 million) of revenue, up 21 percent in US$ on the previous year.
The company is using two brands for its US business, TVG and FanDuel. Between them, PPB has daily fantasy sports, horse racing and with the launch of New Jersey sports betting, real-money gaming already up and running in 45 states.
Jackson told investors that this gave PPB a real advantage over other operators.
He pointed to the New Jersey market where FanDuel has launched its first sportsbook at Meadowlands Racetrack, explaining that the company already had 100,000 existing customers before the sportsbook opened. Many of these are from the Betfair online casino, the second-largest online casino in the state.
A strategic deal with Boyd provides the rest of the expansion strategy.
The last few months saw PPB and FanDuel focused on the merger, so the next half-year is likely to see FanDuel continue to lose money. Jackson added that this was also “due to the seasonality of the fantasy sports operations and the launch of the sports betting business.”
Jackson refused to give a date for the introduction of a mobile sports betting app in New Jersey, or for any other innovations that FanDuel may introduce.
The investor presentation did say that online sports betting would be launched in time for the NFL season starting and that the product would consist of:
PPB produced a slide which summarized its belief that FanDuel will scale quickly:
From the US perspective, PPB has positioned itself well. Now they have to get down to executing the strategy in the expectation more sports betting legislation will soon be on the books.
PPB CEO Peter Jackson commented:
“It has been a busy and successful few months for Paddy Power Betfair. We have made substantial progress against our strategic priorities and trading in Q2 was good, with all brands and operating divisions contributing to the Group’s double-digit revenue growth.
In the USA, we were delighted to add FanDuel to the Group’s portfolio of leading sports brands, creating the industry’s largest online business, with a large sports-focused customer base and an extensive nationwide footprint. Our FanDuel sportsbook is now available in New Jersey and with our recent partnership with Boyd Gaming we’re looking forward to launching in further states as the legislation progresses.”
The markets were unimpressed by the figures, particularly the reduced revenue forecast, with shares falling by around 3 percent in early trading.