Dollar signs in their eyes
Flutter Entertainment confirmed rumors Monday that it is considering an initial public offering for sports betting and daily fantasy sports arm FanDuel. Other than that, Flutter, which also owns PokerStars and several other big gaming brands, did not say much.
The company’s stock price closed up nearly 6 percent on the news.
Flutter’s ownership of FanDuel isn’t the simplest puzzle ever put together, glued, and then hung on your basement wall. In December, the Ireland-based gambling giant acquired 37% of FanDuel from Fastball for $4.2 billion, bringing its total stake in the company to 95%. So it doesn’t own all of FanDuel, but all you need is 50% plus one share to control a company. Boyd Gaming owns the other 5%.
But now let’s go back to May 2019. It was then that The Stars Group, which owned PokerStars at the time, entered into a sports betting partnership with the Fox Corporation. In the deal, Fox bought 4.99% of The Stars Group for $236 million with the option to buy 50% of Stars’ U.S. business within ten years.
In October 2019, Flutter Entertainment acquired The Stars Group and as part of THAT deal, Fox Sports got the option to buy 18.5% of FanDuel at fair market value in July 2021.
So that’s the story. And that fair market value Fox might be staring at is likely to be quite high. Sports betting stocks are soaring right now as the United States market continues to grow and sports are back from their pandemic hiatus. FanDuel’s arch rival, DraftKings, saw its stock hit an all-time high of over $74 on Friday, though it has pulled back to below $68. DraftKings’ market capitalization is $26.94 billion.
FanDuel’s value is estimated at $11 billion.
In its brief statement on Monday, Flutter Entertainment indicated that if it were to spin off FanDuel, it likely would not put the entire business unit up for grabs. Rather, the company said that its options include “the listing in the US of a small shareholding in FanDuel.”
FanDuel wheeling and dealing
FanDuel has been busy lately. Also on Monday, it opened a new retail (brick and mortar) sportsbook at Bally’s Atlantic City Hotel & Casino, its second sportsbook in New Jersey and 15th in the US overall. Naturally, it has all the trappings of a modern book, like tons of LED televisions, a 25-foot-wide video wall, and self-serve kiosks.
Last week, FanDuel and Boyd Gaming announced that they are teaming up to resurrect the old Stardust gambling brand, using it for online casinos in Pennsylvania and New Jersey. The launch in the former will be a new offering with Valley Forge Casino (owned by Boyd), while in the Garden State, Stardust will replace the Betfair brand, which is one of Flutter’s sites.
