LONDON — Irish bookmaker Paddy Power Betfair has confirmed takeover talks with US fantasy sports company FanDuel.
Paddy Power said in a statement on Wednesday that it is “in discussions regarding a potential combination of the Group’s US business and FanDuel to create a combined business to target the prospective US sports betting market.”
The company stressed that discussions are ongoing and a deal is not guaranteed.
The takeover talks follows a landmark US ruling at the start of the week that potentially paves the way for the legalisation of sports betting. The Supreme Court on Monday overturned a 1992 law forbidding sports betting, clearing the way for individual states to legalise the practice if they wish.
Shares in UK bookmakers jumped on the news amid speculation that they would quickly move to take advantage of the news. Paddy Power Betfair, which runs sports betting shops in the UK and Ireland, rallied as much as 12% of the news.
FanDuel was founded in 2009 in Scotland but is now headquartered in New York. It operates online fantasy leagues for baseball, American football, basketball, and hockey in the US. Players who pay a fee can then compete for cash prizes and FanDuel claims to have over 1 million registered users.
No details on the size of the deal were disclosed by Paddy Power Betfair but Legal Sports Report, which first disclosed the deal, said it was likely to be below the $1 billion FanDuel was valued at in 2015, citing sources.
Neil Wilson, the chief market analyst at Markets.com, said in an email: “Something like 20 US states are either ready or have legislation in the pipeline to legalise the industry. This constitutes a significant chance to grab market share for all the major UK sports bookmakers and it’s no surprise that we are seeing this kind of move.
“A FanDuel tie-up would give PPB the ability to rollout ops more quickly and scale up. It would also remove some potential local competition.”
Paddy Power Betfair has already made moves to break into the US fantasy sports market, acquiring DRAFT for $48 million last May.
Shares in Paddy Power Betfair, which has a £6.7 billion market cap, rallied 1.3% on Wednesday morning.