A deal to sell daily fantasy sports site DraftDay is finally complete, with Sportech PLC and Viggle Inc. taking over the DFS platform.
The details of the DraftDay deal
A planned deal for Sportech to acquire DraftDay from MGT Capital Investments had been in the works since at least June, when the principles talked about the potential transaction. But it took nearly three months for the sale to become a reality, and it came in a different form than originally announced.
This is the second time DraftDay has been sold since its launch in 2011.
The deal forms a new company: DraftDay Gaming Group, Inc. It will continue to exist as a site that players can use directly for DFS, but it is likely that the new venture will try to leverage DraftDay more as a business-to-business product. From the press release:
DraftDay will be the differentiated platform in the industry, having a leadership team highly experienced in B2B aggregated network operations and regulated gaming markets.
Other details from the press release on the deal:
- The breakdown of the ownership group: Viggle owns 44%, Sportech owns 35%, MGT owns 10%, with “employees and other shareholders owning the balance,” according to the presser.
- Rich Roberts, current President of Sportech Digital, will serve as DraftDay CEO. Sportech’s Nic Sulsky will be president. Viggle CFO John Small will take over that same role at DraftDay.
- MGT received “approximately $5 million in total consideration” in the transaction.
How DraftDay fits with Viggle
Previously, Sportech had been the driving force behind the deal, it had appeared, and it still maintains a major role in the new company. But it’s interesting to note that Viggle, which had not been a part of the originally announced deal, now owns the largest piece of DraftDay.
Viggle describes itself as “an entertainment marketing and rewards platform whose app rewards its members for watching TV shows and discovering new music.”
Viggle is already acquainted somewhat with the fantasy industry, as it also has a pair of freeplay sports games that allow players to earn rewards — MyGuy and Viggle Football. The former is a fantasy-style game, while the latter is more of a prediction-based game. DraftDay will be Viggle’s first foray into real-money fantasy, however.
Viggle also notes that it has an “average monthly total reach of 23.6 million for the three months ended June 30, 2015, including nearly 10 million Viggle registered users.” Without knowing more details about DraftDay’s plans, it would appear that Viggle has designs on converting some of those users to the DraftDay platform.
How successful that might be is an open question, although freeplay or social casino/poker operators making the transition to real-money games have met with difficulties; see the case of Zynga Poker, which unsuccessfully tried to move to a real-money product in the U.K.
While Viggle had not been a part of the real-money gaming industry previously, that’s where Sportech’s expertise will undoubtedly come in.
Sportech, a company based in the U.K., already provides pool betting systems and technologies, operates sports bar and wagering venues under licenses, and according to its website, it processes “over $13 billion bets annually.” Sportech does operate in the U.S., providing horse-racing betting “equipment, services and software” in a number of states, as well as operating racebook services for Connecticut’s Mohegan Sun tribe.
“We are delighted to have expanded our product portfolio in the U.S. into the rapidly growing daily fantasy sports sector, in association with industry partners Viggle and MGT,” Ian Penrose, Chief Executive of Sportech said in a separate press release.
The bottom line: Sportech has the resources and knowhow to leverage DraftDay as a B2B product in some jurisdictions.
Definitely a different business model
No matter how you slice it, DraftDay does not appear to have plans on competing to be in the upper echelon of the daily fantasy sports industry with the likes of FanDuel and DraftKings, which would be a lofty goal for any second-tier operator not named Amaya, Yahoo or CBS. That was made clear in an article at EGR North America (paywall), with Penrose saying as much.
Focusing on the B2B side of the DFS industry, which is still a largely untapped market, appears to be where the future of DraftDay lies.