Barring a major surprise, all the major players are now in the game.
Online gaming leader Amaya became the latest to join the daily fantasy fray Thursday, announcing it had acquired existing DFS operator Victiv and will be relaunching as StarsDraft. Terms were not immediately disclosed, but the purchase amount was termed “immaterial.”
Amaya, the parent company of Poker Stars, had announced in the spring that it intended to have a daily fantasy platform in time for the coming NFL season. The “acqui-hire” of Victiv puts the company on a timeline to meet that goal.
“Although daily fantasy sports is a relatively small market compared to global online gaming, we feel it will allow us to re-engage with our customer base in the U.S.,” Amaya CEO David Baazov said Thursday morning on the company’s Q2 earnings call.
Amaya is a large company and a significant entrant into the space—the third this year, joining CBS and Yahoo. Its market cap is estimated at $3.66 billion—about three times as much as the most recent valuations of FanDuel and DraftKings—and it has an estimated 68 million users worldwide.
These factors have led some to predict a major disruption of the DFS landscape, but as industry insiders have projected, that likely won’t happen soon. Baazov said he did not anticipate making a significant investment into the new daily fantasy platform “until the market has matured.”
“Right now when you look at the marketing, companies are spending four to five times their revenue,” Baazov said. “That’s not something we’re looking at right now.
“We feel like we can grab market share over time. We’ll focus on leveraging our brand and the trust customers have in us … and capture some market share that will be meaningful.”
Given Amaya’s status as a public company, industry analyst Adam Krejcik forecasted a modest impact in 2015.
“It’s quite expensive to compete against FanDuel and DraftKings,” Krejcik told DailyFantasyTalk in July, “and so I’m not entirely convinced that even a company like Amaya, which has a very big balance sheet and is a big company, will spend enough to keep up. Not that they can’t, but it comes down to whether they want to go down that path.
“Because for a publicly traded company that enjoys very high profit margins, it would be extremely dilutive to earnings, and they’ve made some comments on prior conference calls that whatever they do in the space is not going to be dilutive.”
Nonetheless, the introduction of a major company combined with the acquisition of an existing DFS platform should shake up the space’s second tier, at the very least. Substantial growth in the industry is expected in the final four months of the year, and the territory behind DraftKings and FanDuel is up for grabs.
Leftover from their days as online poker operators, Eilers Research estimates that Amaya has access to 25-30 million users in the North America through Poker Stars and Full Tilt Poker. Conceivably, it could attract those players for a minute fraction of the cost other companies might have to spend to approach the same number.
Baazov said Amaya chose Victiv after looking into 12 companies based on its “innovative software” and “management expertise.” The current Austin, Texas-based Victiv team will manage StarsDraft.
“StarsDraft will combine Victiv’s innovative platform and experienced DFS team with Amaya’s expansive consumer base and operational excellence as the world’s preeminent online gaming brand,” Victiv CEO Matthew Primeaux said in the press release announcing the acquisition. “We intend to capitalize on what we believe is strong crossover between online poker players and daily fantasy sports.”