A deal to sell a daily fantasy sports site Draft day is finally finished, with Sportech PLC and Viggle Inc. takeover of the DFS platform.
The details of the DraftDay agreement
A planned agreement for Sportech to acquire DraftDay from MGT Capital Investments had been under construction since at least June, when the principles spoke of the potential transaction. But it took nearly three months for the sale to become a reality, and it came in a different form than originally advertised.
It’s the second time DraftDay has been sold since its launch in 2011.
The agreement forms a new company: DraftDay Gaming Group, Inc. It will continue to exist as a site that players can use directly for DFS, but it is likely that the new company will try to take more advantage of DraftDay as a business-to-business product. Extract from the press release:
DraftDay will be the differentiated platform in the industry, having a management team highly experienced in B2B aggregate network operations and regulated gaming markets.
Further details of the Press release on the case:
- The distribution of the ownership group: Viggle owns 44%, Sportech owns 35%, MGT holds 10%, with “the employees and other shareholders holding the balance”, according to the press.
- Rich Roberts, current President of Sportech Digital, will serve as CEO of DraftDay. Nic Sulsky of Sportech will be president. Chief Financial Officer of Viggle John Small will assume the same role at DraftDay.
- MGT received “approximately $ 5 million in full consideration ”in the transaction.
How DraftDay integrates with Viggle
Previously, Sportech had been the driving force behind the agreement, had he appeared, and he still retains a major role in the new society. But it is interesting to note that Vigilant, which was not part of the initially announced deal, now owns most of DraftDay.
Viggle describes itself as “an entertainment and rewards marketing platform whose app rewards its members for watching TV shows and discovering new music.”
Viggle is already somewhat familiar with the fantasy industry, as it also offers a pair of free sports games that allow players to earn rewards – MyGuy and Viggle Football. The former is a fantasy style game, while the latter is more of a prediction-based game. DraftDay will be Viggle’s first foray into real money fantasy, Nevertheless.
Viggle also notes that he has an “average monthly total reach of 23.6 million for the three months ended. June 30, 2015, of which nearly 10 million Viggle registered users. “Without knowing more details about DraftDay’s plans, it looks like Viggle has plans to convert some of these users to the DraftDay platform.
Whether this might be successful is an open question, although free-to-play or social casino / poker operators making the transition to real-money games have encountered difficulties; see the case of Zynga Poker, who tried unsuccessfully to switch to a real money product in the UK
While Viggle had not been in the real money gambling industry before, this is where Sportech’s expertise will undoubtedly come.
Sportech, a UK-based company, already provides pooled betting systems and technology, operates sports bars and licensed betting sites and, according to its website, deals “over $ 13 billion in bets per year.” Sportech operates in the United States, providing horse betting “equipment, services and software” in a number of states, as well as race book services for The Connecticut Mohegan Sun tribe.
“We are delighted to have expanded our product portfolio in the United States into the rapidly growing Daily Fantasy Sports sector, in association with industry partners Viggle and MGT,” said Ian Penrose, Managing Director of Sportech in a press release. separate press release.
The bottom line: Sportech has the resources and know-how to take advantage of DraftDay as a B2B product in certain jurisdictions.
Definitely a different business model
No matter how you slice it up, DraftDay doesn’t seem to intend to compete to be in the upper echelon of the daily fantasy sports industry with people like FanDuel and DraftKings, which would be an ambitious goal for any unnamed second-tier operator Amaya, Yahoo or CBS. This was clarified in a article at EGR North America (paywall), with Penrose saying as much.
Focusing on the B2B side of the DFS industry, which is still a largely untapped market, appears to be the future of DraftDay.