US expansion was a key theme of Paddy Power Betfair’s (PPB) corporate update on Wednesday, with the FTSE100 firm outlining its mandate to maximise the FanDuel merger and develop as a household proposition for the US sports scene.
Facing increased US competition, PPB detailed that it won’t disregard the fantasy sports element of FanDuel’s offering, as the vertical enhances the merger to ensure customer acquisition targets are met during the operator’s period of expansion.
The DFS focus comes in spite of Paddy Power’s previous fantasy investment, PlayDraft experiencing a period of continued turbulence with PPB governance revealing that PlayDraft has suffered £3m in losses.
Nonetheless, with FOBT regulations and the Italian advertising ban limiting options within the European betting sector, PPB will be hoping that DFS will be the gatekeeper to a profitable US market it so desperately seeks.
Updating investors, PPB Group Chief Executive Peter Jackson reaffirmed the importance of maintaining a key focus on FanDuel’s core offering.
“A huge part of the DFS market is the NFL season, which is not many weeks long and last year I think they had four weeks before the season started where they found out that the planned merger with Draftkings had been called off. So actually, the plans and preparations that FanDuel had done, were pretty poor because they hadn’t expected to be operating as a standalone business at that stage.”
Jackson further emphasises that DFS and building on the FanDuel product can aide PPB’s growth into States that are yet to legalise sports betting:
“In terms of what’s going to happen going forward with fantasy and how important it will be, there are going to be a lot of States that sports betting isn’t allowed, and we will continue to be able to offer our TVG services and fantasy services in those markets.”
He added: “I think where sports betting will be legalised and it will be fascinating to see what happens in New Jersey, I do think we are going to see a different market construct in the US to the ones that we see in Europe or around the world, there is going to be a bigger balance between free to play games, fantasy and sports betting. Things will work different to how they do in other parts of the world, the fantasy stuff will continue to be important even in States where sports betting is legalised, and of course, it will allow us to acquire customers in those States in advance of it becoming legalise.”
Further affirming the idea that PPB has ambitions of utilising the already strong FanDuel footprint within US States, the operator also detailed that marketing expenditure in the US will be “significantly lower” than the £50-£60m that had been touted by many analysts.
A move that further strengthens the firm’s faith in the FanDuel brand, especially given that its heightened marketing approach during the World Cup saw it report £45m revenue throughout the tournament, as well making the Paddy Power brand amongst the most popular brand in UK conversation for the duration of the tournament.