The Murdoch-owned media corporation Fox has turned to court, filing an arbitration claim against the gambling giant Flutter Entertainment. The legal dispute with one of the biggest gambling operators on a global scale is over the value of its stake in FanDuel, a quickly-growing sports betting platform.
Fox is provided with the opportunity to purchase an 18.5% stake in July this year and, according to the company, it should be able to do so at the same price [aid by Flutter Entertainment in December 2020. The deal valued FanDuel at $11.2 billion. Currently, the Irish gambling operator is trying to force Fox to pay a higher price, claiming that the deal in December was agreed at a discount to the actual value of FanDuel’s assets.
Fox issued a statement to confirm that legal action was filed confidentially against it by “consent of the parties” with the Judicial Arbitration and Mediation Services in New York. As revealed by The Financial Times, Flutter Entertainment refused to comment on the case.
Lately, the valuations of US sports betting operators have considerably increased, and so is the popularity of the new form of gambling that is being legalised in more states, some of which are making it legal in an attempt to offset the negative financial impact of the coronavirus pandemic.
Fox Got the Chance to Stop 18.5% Stake in FanDuel in December 2020
Fox received the opportunity to purchase an 18.5% stake in FanDuel at a fair market value under the provisions of the £10-billion merger of Flutter Entertainment and The Stars Group, as the latter operated a sports betting platform in partnership with Fox. In December 2020, that estimated FanDuel at $11.2 billion and Flutter Entertainment acquired a 37% stake held by Fastball Holdings. The Murdoch-held media helped with the deal’s funding by purchasing new shares in Flutter.
The legal action comes at a time when Flutter Entertainment has been considering listing a part of the business. According to management, the UK-listed shares of the Irish gambling giant do not properly reflect FanDuel’s value that currently holds the biggest market share in many of the US states that feature legal sports betting services.
The main rival of FanDuel – DraftKings – merged with a blank cheque company in April 2020 and its shares have increased more than three times since then. A 250% increase has also been registered in the share value of Penn National, the casino operator that purchased Barstool Sports in January 2020.
Recently, the Murdoch-owned media has been trying to expand its interests in the sports betting sector in collaboration with the Irish gambling giant. Unfortunately, the lawsuit is now threatening to turn the two companies into rivals. According to people close to the matter, if the dispute is not resolved, Fox is ready to start advertising its own sports betting application, Fox Bet, in competition with FanDuel.
- Author
Daniel Williams
