PokerStars parent Flutter Entertainment wins arbitration battle over FanDuel's market worth

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Haley Hintze Author Photo
Haley Hintze
Posted on: November 06, 2022 11:45 PST

Flutter Entertainment, the parent company of online poker giant PokerStars, has triumphed over its arms-length partner, FOX Corporation, over the value of the nearly 40% of sports-betting firm FanDuel for which Flutter and FOX share forms of ownership rights. Flutter announced on Friday the results of a binding arbitration that holds that the portion of FanDuel owns, 37.2%, is currently worth approximately $22 billion.

FOX has a ten-year option to buy half of the joint-option share of FanDuel, or 18.6%, and initiated binding-arbitration proceedings in April 2021 to contest FanDuel's market value. The arbitration tribunal held that the 37.2% of FanDuel's value as of December 2020 was worth $20 billion, with that value having grown to $22 billion in the two years since. Flutter already owns the majority of FanDuel from an earlier deal it reached with the American DFS (daily fantasy sports) and sportsbetting force in 2018.

The arbitration tribunal affirmed that FOX Corporation retains a 10-year option for its half of the FanDuel slice, with the December 2020 start date in effect. The option calls for 5% annual increases, also compounded annually, and FOX has no option to buy a smaller or larger share; the firm must commit to the 18.6% option by 2030 or its rights to half of Flutter's share of FanDuel becomes null and void.

FanDuel has become a pivotal piece of Flutter's multi-segment plans for the U.S. market, especially in the wake of federal legal decisions that have paved the way, state by state, for legalized sports betting across the U.S. As a DFS operator, FanDuel grew immense brand recognition during the post-Black Friday years when the PokerStars brand name had relatively little American exposure. Crossover between FanDuel, PokerStars, and other Flutter brand names will almost certainly increase in the years ahead as the U.S. legalization process continues.

"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's Chief Executive, Peter Jackson. "FanDuel is winning in the US market and the clear #1 operator, a position driven by its exceptional market leading product and efficiency in acquiring customers at scale. The team remain focused on maintaining our leadership position and we look forward to updating the market on our progress at our US capital markets day on 16th November."

Featured image source: Flutter Entertainment