Paddy Power is in talks to combine its US assets with fantasy sports website FanDuel.
The Irish bookmaker is targeting America after a Supreme Court ruling on Monday paved the way for states to legalise sports gambling.
“Paddy Power Betfair confirms it is in discussions, regarding a potential combination of the Group’s US business and FanDuel to create a combined business to target the prospective US sports betting market,” the company said.
The company, which owns a US horse racing channel and betting network, paid $48m for FanDeal’s smaller rival DRAFT.
FanDeal and another rival, DraftKings, held merger talks but plans were called off after the US Federal Trade Commission opposed the deal.
Analysts have valued FanDeal at more than $1bn.
FanDuel allows players to pick fantasy sports teams and play against each other for cash prizes.
Fantasy sports websites have been able to operate because they are considered to be games of skill rather than chance.
“Amid tougher market conditions in the UK and Australia, the chance to delve into a huge new market is being snatched by the major players and they may be prepared to pay big for a slice of the action if they believe US partners are required,” said Neil Wilson, chief market analyst at Markets.com.
“A FanDuel tie-up would give PPB the ability to roll out ops more quickly and scale up.”
Shares in Paddy Power Betfair rose more than 5% in early London trading.