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NEWS 23 September 2019

Opinion: DraftKings should look into acquiring Football Index

By Tim Poole

It is three years since DraftKings launched its daily fantasy sports (DFS) product in the UK. To date, it hasn’t had much of an impact.

The UK audience wants different things than its US counterpart. Free-to-play fantasy football for the English Premier League is perhaps the most influential reason behind this difference.

But one gaming site enjoying UK success despite the existence of fantasy football could offer DraftKings a route to reigniting its UK ambitions and reinvigorating its UK offering; it could also offer more opportunities in the operator’s home US market.

Football Index, a site Gambling Insider recently analysed, exceeded £200m ($248.9m) in trades for the 2018/19 season, a huge leap from figures of £66.3m the previous campaign. The number of players, who trade shares in professional footballers akin to financial stock markets, also rose from 63,728 to over 135,000.

This season, with its simple refer a friend offer (where the referrer and the new player receive a free £10 bonus each) and increased advertising (you can now see Football Index adverts all over the London Underground), those numbers are set to increase even further.

So could this open a door for DraftKings?

UK market access

While DraftKings has already entered the UK market, the simple fact of the matter is it has not succeeded.

Acquiring a site with a strong existing UK footing however, would change that, giving the DFS and sports betting operator access to a growing database, which it could use to market to for both DFS and sports betting.

The trading of shares itself is equally something involving high volumes and the commission structure guarantees a cut for Football Index on every trade.

Whether the UK was high on DraftKings’ priority list or not, Paddy Power’s UK launch of NFL fantasy in August means the company risks falling behind if it doesn’t act soon.

Paddy Power is part of the Flutter Entertainment parent group which also owns DraftKings rival FanDuel. FanDuel left the UK in 2017 but Paddy Power's launch brings the operator back into the mix, even if not directly.

Unique technology

M & A of this kind would offer another inherent benefit, in that DraftKings could replicate Football Index’s product in the US.

With the nationwide popularity of the ‘big four,’ who’s to say a Baseball Index, Hockey Index, American Football Index and Basketball Index wouldn’t become a success?

Here’s where the actions of competitors come into the fore once again. Fox Sports has recently imported ‘Super 6,’ a free-to-play predictor game which has been a huge hit for Sky Betting & Gaming in the UK.

If it’s good enough for an organisation the size of Fox (encompassing both the media giant itself and parent company Stars Group), it could provide an avenue worth exploring at the very least for DraftKings.

The key benefit both Super 6 and Football Index offer is they do not clash with Premier League fantasy football. They are products players can engage in at the same time, rather than as a direct competitor, which would equally apply to DFS and sports betting in the US.

DraftKings in the market for M & A?

Something else worth considering is reports in June suggesting DraftKings will acquire sports betting supplier SBTech. The story was not denied and the rumour mill has remained awfully quiet since, suggesting there may well be some substance to the links.

If DraftKings is indeed in the M & A market, SBTech ticks a certain box, while Football Index ticks another box on the very same page.

Football Index Founder Adam Cole meanwhile, has founded and sold a company before. For the right price, and with the potential of Football Index succeeding in the US, Cole would surely be open to a good offer.

At ICE London earlier this year, DraftKings CEO Jason Robins told Gambling Insider: "Right now, the priority for us will be investment in new US states opening up.

"However, depending on the pace at which that goes, international expansion is something we could focus on more heavily in the near term. It will 100% be something we focus on more in the medium to long term."

Football Index could be the perfect channel for that long-term expansion.

RELATED TAGS: Online | Sports Betting | Mergers & Acquisitions | Feature
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