During the call to investors regarding their earnings for the second quarter of 2015, Amaya Gaming announced that they had completed the purchase of a daily fantasy sports (DFS) organization, paving the way for Amaya’s return to action in the United States.
In the official press release announcing the acquisition, Amaya Gaming picked up the Austin, TX, based company Victiv, which was launched in September 2014. Victiv follows the DFS formula where players put together a roster of athletes and compete against other players for real money in a format that many have said is similar to how tournament poker operates. Amaya, the owner of PokerStars and Full Tilt Poker (and other entities) on the international gaming scene, immediately rebranded Victiv as StarsDraft.com, which will be accessible from the United States and, eventually, a part of the PokerStars platform of gaming that Amaya offers.
“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,” said Matthew Primeaux, the Chief Executive Officer of Victiv. “We intend to capitalize on what we believe is strong crossover between online poker players and daily fantasy sports. PokerStars is the most-trusted brand in online gaming and brings unmatched security, customer support and technical infrastructure that we believe all players can rely on.”
Amaya’s Chief Executive Officer David Baazov sees the usage of StarsDraft as only the first step into a burgeoning industry. “The idea right now is that daily fantasy sports is still a very small market,” Baazov stated during the conference call. “You’re talking about DFS in North America generating less than $100 million as a category last year, in 2014.” However, Baazov is more concerned with making sure the customers are comfortable with the company, saying, “(We will) focus (on) leveraging our cross-sell of our database, our brand and our trust, with the fact that people’s money is secure at any time and segregated…(that) this is a brand they can trust.”
The desire of Amaya to get into the DFS game has been well-known in the online gaming community. Without any foothold currently in the U. S., Amaya was either going to have to create its own product, purchase one of those in the industry already or enter into a deal with someone to implement the plan. Amaya purchasing Victiv, is a bit of a surprise, though.
Victiv is not one of the bigger names in the DFS industry, which is essentially dominated by such sites as FanDuel and DraftKings. The price for Victiv was right, however, as those companies are seen as very lucrative outlets that could have commanded perhaps a $1 billion price tag. These sites, which have marketed to online poker players (there is a similarity in the operation of DFS to online poker), are facing some stiff competition in the industry.
Earlier this year, CBSSports.com opened up their DFS product on their website and Yahoo! Has entered the game also. Since January, ESPN has been looking to get into the DFS game, but hasn’t been able to decide on which route to take (outright creation of their own site, purchasing one or teaming with one). That search has seemingly ended with ESPN teaming with DraftKings for at least fantasy football this year.
There are some questions that lurk on the horizon for DFS. With the comparisons to online poker tournaments – and perhaps in particular the purchase of Victiv by Amaya, an online gaming (gambling) conglomerate) – some in the halls of government may start to take a look at the DFS phenomenon to see if it runs afoul of gaming laws. If Congress or a state legislature was to determine that DFS was gambling and shut them down (either federally or in the state), it would have a significant impact on the industry and could also harm the season-long fantasy sports industry.
For now, the DFS industry continues to grow as the major players’ line up for battle. Who will come out on the other side victorious?
