European bookmaking powerhouse Paddy Power Betfair is entering the daily fantasy market in the United States.
The company announced Wednesday that it has acquired DRAFT, a daily fantasy mobile app, for $19 million, with further cash considerations of up to $29 million over the next four years, depending on the businesses' performance. The deal was first reported by Forbes.
In 2016, Paddy Power, an Irish online bookmaker known for offering wacky proposition bets, merged with Betfair, a large betting exchange based in the United Kingdom. The acquisition of DRAFT expands the U.S. footprint of Paddy Power Betfair and positions the company for a future with more states offering regulated fantasy sports and potentially traditional sports betting.
"We are excited to be bringing DRAFT into the Group [Paddy Power Betfair] and to further increase our presence in the United States," Paddy Power Betfair chief executive Breon Corcoran said in the release announcing the acquisition. "DRAFT has a differentiated product and we believe the business with the support of our marketing and technology expertise, can take share in the fast-growing daily fantasy market."
DRAFT launched in 2015 and aimed to serve the recreational players with smaller contests and prize pools. Contestants select their rosters through traditional snake drafts instead of the salary cap contests, like those offered by daily fantasy giants DraftKings and FanDuel.
DRAFT co-CEOs Jeremy Levine and Jordan Fliegel will continue to run the company and will have access to Paddy Power Betfair's marketing and technology capabilities.
Levine, 30, told ESPN the company will immediately double its workforce from 10 to 20 and will apply for fantasy sports licenses in Colorado, Missouri, Indiana and Virginia -- four of the 11 states to have expressly legalized fantasy sports in recent years. DRAFT currently operates in 39 states. Levine expects to spend 100 times more on marketing after the deal than it did last football season.
"Football season is only four months away," Levine said Wednesday. "We've got a ton of work to do."
Paddy Power Betfair has been eyeing Nevada's regulated sports betting market, and last spring, Betfair's U.S. branch launched the first legal betting exchange on horse racing in New Jersey. They'll now look to compete in the daily fantasy market against other traditional gaming companies entering the space as well as U.S. leaders DraftKings and FanDuel, who are awaiting approval from the Federal Trade Commission to merge.
Industry research firm Eilers & Krejcik Gaming estimates that daily fantasy industry attracted $3.2 billion in entry fees in 2016.