PrizePicks Rumored To Be Exploring Funding, M&A Options
DFS operator is reportedly working with investment bank Moelis & Co. as it weighs possibilities
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PrizePicks has tapped investment bank Moelis & Co. to explore potential mergers and acquisitions, according to industry sources. While the Atlanta-based company — and the self-proclaimed largest daily fantasy sports (DFS) operator in North America — isn’t actively seeking a full-scale sale, it’s evidently keen on expanding and strengthening its footprint through strategic partnerships or acquisitions, and potentially has an eye on raising a war chest to compete in regulated online sports betting with the likes of market leaders DraftKings and FanDuel.
Bloomberg was the first to report the rumor involving Moelis & Co.’s involvement, although so far it’s light on details.
PrizePicks stands out in the DFS landscape with its unique approach to gaming. Unlike traditional DFS platforms where users draft entire teams, PrizePicks allows users to predict the over/under on individual player statistics and fantasy scores. PrizePicks recently found its way back into several regulated markets, which could help strengthen its viability and sustainability cases.
DraftKings and FanDuel, the two giants in the DFS market, offer a more extensive range of contests, including massive tournaments and head-to-head games. They also provide a wealth of stats and features to help users craft their ideal teams, and their platforms are available in over 44 states, making them the most widely accessible DFS options.
The Bloomberg rumor comes as PrizePicks continues to navigate a complex regulatory landscape for DFS and so-called DFS+ operators across the U.S. The DFS sector has been marked by rapid growth and evolution, with companies increasingly seeking to capitalize on the growing popularity of sports wagering.
Trying to get ahead
The evolving legal landscape for DFS presents both opportunities and challenges for industry participants. While some states have embraced DFS as a form of skill-based gaming, others have imposed strict regulations or outright bans. The inconsistencies in state laws have created a patchwork regulatory environment.
PrizePicks has faced particular challenges in Florida, where the Gaming Control Commission deemed its DFS formats non-compliant with state law. In September 2023, the commission issued warnings to PrizePicks, Underdog Fantasy, and Betr, demanding they cease operations or face legal action. The trio initially complied but returned to the market in April 2024 with a peer-to-peer betting model.
PrizePicks’ response to the Florida regulatory crackdown has been multifaceted. The company launched PrizePicks Arena, a peer-to-peer betting platform, in several states, including Tennessee, West Virginia, Wyoming, and Alabama. This strategy, aimed at threading the DFS regulations (or perhaps regulatory capture), has since expanded to Arizona and Massachusetts, where similar legal challenges have arisen.
Despite the regulatory hurdles, PrizePicks has managed to secure significant partnerships. In April 2024, the Atlanta Braves extended their partnership with the company, marking their fourth consecutive season as the team’s official DFS partner. This endorsement underscores PrizePicks’ growing influence in the sports betting and gaming industry.
However, the company’s aggressive expansion into peer-to-peer betting amid regulatory uncertainty is significantly altering its business model. As states continue to grapple with the complexities of regulating DFS and sports betting, operators like PrizePicks will need to carefully balance growth ambitions with compliance risks.
Who is Moelis & Co.?
Per Earnings & More on Monday:
PrizePicks is looking at identifying “areas of growth,” according to insiders. Sources point out this could include a need to raise cash to compete in OSB, possibly via a minority partner. Moelis could help the company understand the value of DFS+ in the current market.
Moelis & Company has been at the forefront of facilitating significant transactions across various industries. One of the most notable is the pending sale of Angel City Football Club’s controlling stake to media veterans Willow Bay and Bob Iger, a deal valued at $250 million, announced on July 17. This move is expected to bring a fresh perspective to the club’s management and strategy moving forward.
Further solidifying its reputation in the aerospace sector, Moelis & Co. has managed the sale of Spirit AeroSystems Holdings, Inc. to The Boeing Company, a deal announced on July 10, and valued at $8.3 billion. This transaction is poised to have a significant impact on the aerospace industry, potentially leading to advancements in aircraft manufacturing and design.
The entertainment industry has also seen Moelis & Co.’s influence, with the pending strategic investment and merger of Skydance and the Skydance Investor Group with Paramount Global, announced on July 7. The deal, valued at $28.1 billion, is set to create a powerhouse in media and entertainment.
