One of the largest gambling operators not only in the UK but on a global scale – Flutter Entertainment – has revealed plans to spend $4.2 billion to boost the control of its daily fantasy sports (DFS) unit FanDuel as part of its efforts to extend its footprint in the quickly-growing US gambling industry.
Flutter Entertainment, which acquired a majority stake in FanDuel two years ago, said it plans to raise £1.1 billion from its shareholders and use the money to purchase a 37% share that is currently owned by private equity group KKR-led consortium called Fastball Holdings. As the gambling group shared, the remaining 5% are set to be kept into Boyd Gaming’s holding. Currently, the casino company Boyd Gaming is an essential partner for Flutter Entertainment as the collaboration between the two companies allows Flutter to offer its services in certain US states.
The transaction is set to be funded by approximately $2.1 billion in cash to Fastball. The private equity group is set to receive the remainder in Flutter shares. Further investment in the deal through the share placing is set to be made by the Fox Corporation, which is owned by Rupert Murdoch and which currently holds a 2.6% stake in Flutter Entertainment after its massive £10-billion merger with the Stars Group that took place in 2019.
After the news, the share price of Flutter Entertainment increased by as much as 14% in intraday trading.
Sports Betting Legalisation Really Freshens US Gambling Market Up
At first, the Irish gambling giant made an investment worth $158 million in FanDuel about a week after the US Supreme Court lifter the long-year federal ban on sports betting in the US in May 2018. At the time, the company made an agreement to purchase the Fastball’s holding in two transactions set to take place in 2021 and 2023, respectively. The deal had been described as “transformational” for the company by Flutter’s chief executive officer Peter Jackson.
Furthermore, Mr Jackson shared that FanDuel would offer sports betting services in 14 US states that pretty much cover one-third of the total population of the country by the autumn of 2021. At the time, he also explained that the new market for his company’s services is equivalent to the size of Flutter Entertainment’s businesses in the UK, Ireland and Australia combined.
The Irish gambling giant’s decision to expand its presence in the US gambling sector through a bunch of investments could easily be explained by the groundbreaking decision of the US Supreme Court to overturn a federal law under which sports betting has been banned in the country for years. Since then half of the states across the country have made betting on sports legal, with some more considering to pass legislation as local governments seek fresh sources of tax revenue that would help them face some of the financial challenges that were posed to them by the ongoing coronavirus pandemic.
As revealed by the American Gaming Association (AGA), although almost all sports events, leagues and championships were interrupted earlier in 2020, US sports betting’s gross gaming revenues (GGR) still marked a 27% increase in the first nine months of 2020 in comparison to the rates registered over the same period a year earlier, reaching $677.8 million. For the time being, the sports betting market of the US is led by two operators – FanDuel and its fantasy sports rival DraftKings, with the latter having a market capitalization of approximately $20 billion.
- Author
Olivia Cole
