Arbitration Ruling Gives Fox Option To Purchase FanDuel Stake

Written By Nicholaus Garcia on November 7, 2022 - Last Updated on November 8, 2022
valuation flutter fanduel arbitration ipo consent

An arbitrator in New York ruled in favor of Fox Corp., clearing the way for the company to become a significant shareholder in FanDuel. 

Fox Corp. can purchase a sizable stake in FanDuel from a $20 billion overall valuation.

In a press release, Judicial Arbitration and Mediation Services (JAMS) ruled against FanDuel parent company Flutter Entertainment giving Fox “a 10-year call option that expires in December 2030 to acquire 18.6% of FanDuel for $3.72 billion, with a 5% annual escalator.”

The statement also says Flutter cannot pursue an IPO (initial public offering) for FanDuel “without FOX’s consent or approval from the arbitrator.”

Favorable outcomes for both Fox and Flutter in FanDuel arbitration

FOX was pleased with the outcome calling the ruling “fair and favorable.”

“FOX has no obligation to commit capital towards this opportunity unless and until it exercises the option. This optionality over a meaningful equity stake in the market leading US online sports betting operation confirms the tremendous value FOX has created as a first mover media partner in the US sports betting landscape.”

Flutter was also pleased with the final ruling. 

“Today’s ruling vindicates the confidence we had in our position on this matter and provides certainty on what it would cost FOX to buy into this business, should they wish to do so,” said Flutter CEO Peter Jackson

“FanDuel is winning in the US market and the clear #1 operator, a position driven by its exceptional market leading betting product and efficiency in acquiring customers at scale. The team remains focused on maintaining our leadership position and we look forward to updating the market on our progress at our US capital markets day on November 16.”

Origins of the lawsuit

Many point to the 2019 acquisition of The Stars Group by Flutter, as the origin of the dispute between the two companies.

At the time, The Stars Group and Fox Sports operated the Fox Bet Sportsbook app. 

The terms of the deal gave Flutter full ownership of Fox Bet in exchange for Fox receiving options to purchase an 18.6% stake in FanDuel. The lawsuit filed in 2021 dealt with the valuation of FanDuel. At the time, the valuation was more than $11 billion, which Fox argued should apply to its option. However, Flutter countered by asserting “fair market value” would apply at the time of purchase.

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Nicholaus Garcia

Nick Garcia is a senior reporter for PlayUSA. Garcia provides analysis and in-depth coverage of the gambling industry with a key focus on online casinos, sports betting and financial markets. Garcia has been covering the US gambling market since 2017. He attended Texas Tech University as an undergrad and received a Master of Arts in Journalism from Columbia College Chicago.

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