The FanDuel Inc. app.
Andrew Harrer | Bloomberg | Getty Images
Fox won the suitable to purchase an 18.6% stake in sports betting company FanDuel Group from its parent company Flutter, but not on the valuation, in line with a ruling Friday from a Recent York arbitrator.
Should Fox exercise its choice to take the stake, it could be at a price of at the least $3.72 billion.
The choice ends the more-than-yearlong lawsuit between the 2 firms over the valuation of FanDuel, which has emerged as certainly one of the leading U.S. sports betting platforms alongside services from DraftKings, Caesars and MGM.
The value that Fox would should pay is predicated on a FanDuel valuation of $20 billion, in line with the ruling. Flutter, which owns nearly 95% of FanDuel, acquired a 37.2% stake in the corporate in December 2021 at an implied valuation of $11.2 billion. Fox had argued the worth must be based on that threshold.
Still, Fox might have been ordered to pay rather more. A March 2021 estimate by Jeffries analysts said FanDuel could value as much as $35 billion, which might value a virtually one-fifth stake at closer to $6 billion.
“Fox is pleased with the fair and favorable consequence of the Flutter arbitration,” the corporate said in an announcement following the ruling. “Fox has no obligation to commit capital towards this chance unless and until it exercises the choice. This optionality over a meaningful equity stake available in the market leading U.S. online sports betting operation confirms the tremendous value Fox has created as a primary mover media partner within the U.S. sports betting landscape.”
Fox has a 10-year option to amass the stake, which runs through December 2030. The arbitrator ruled that there could be a 5% annual escalator on its purchase price, meaning the present price of a deal could be $4.1 billion.
“Today’s ruling vindicates the arrogance we had in our position on this matter and provides certainty on what it could cost Fox to purchase into this business, should they need to accomplish that,” said Flutter CEO Peter Jackson in an announcement.
Fox said, as a part of the arbitration ruling, Flutter cannot pursue an IPO for FanDuel without Fox’s consent or approval from the arbitrator. Nevertheless, Flutter disputed that claim and later told CNBC in an announcement that Fox doesn’t have a block on any potential IPO of FanDuel, should one occur.
Flutter had previously considered taking FanDuel public, profiting from the booming sports betting market.
Sports betting has continued to grow within the U.S. as more states bring legal sports betting online — as of Nov. 1, 33 states allow some type of sports betting, with California having two measures on its ballot to legalize it.
That has pushed up revenues as well. Business sports betting revenue nationally through August was $3.97 billion, up nearly 70% 12 months over 12 months, in line with data from the American Gaming Association.
But that continued growth hasn’t benefitted all public sports betting firms. DraftKings stock posted its worst-ever decline on Friday after the corporate reported monthly customer growth that fell wanting estimates at the same time as it revised its revenue forecast upwards. DraftKings, which is down greater than 59% year-to-date, is now valued at just over $5 billion.
