New York court ruling ends Fox’s battle with Flutter over FanDuel prize

A New York arbitrator has settled a long legal dispute between Flutter, the parent company of FanDuel Sports and betting, and Fox, the Murdoch-owned media company, with both sides claiming victory.

Fox must pay at least $3.7 billion if it decides to exercise its option to take an 18.6% stake in FanDuel, according to the ruling.

Fox filed for arbitration against Flutter in April last year, arguing it should be allowed to pay a lower price for the minority stake in FanDuel, based on an $11.2 billion valuation. dollars since it last increased its stake in the company in December 2020.

But New York’s Judicial Arbitration and Mediation Services ruled on Friday that Fox’s option should be based on a $20 billion valuation with a 5% annual ratchet, meaning Fox should currently paying over $4 billion for equity. Fox has until 2030 to exercise its option.

The decision represents a victory for Flutter, which could have been forced to sell the minority stake at a steeply discounted rate if it had lost.

“[The] The decision confirms the confidence we had in our position on this issue and provides certainty about what it would cost Fox to invest in this business, should it choose to,” said Peter Jackson, chief executive of Flutter.

Valuations of sports betting companies have soared in recent years as a wave of states have legalized the activity and more consumers have joined in. Sports betting revenues totaled $4.3 billion last year and are expected to nearly triple by 2025, according to Morgan Stanley.

Media companies are jostling for a share of the booming market. ESPN is considering a possible licensing deal with rival betting company DraftKings. In August, Fox CEO Lachlan Murdoch told investors that sports betting was “a huge opportunity” for Fox Sports.

Fox also claimed victory in the decision, saying its 10-year option for a stake in “the market-leading U.S. online sports betting operation” confirmed the “enormous value” it had created for shareholders by being a “first move media partner” in the sports betting industry.

Fox added that Flutter cannot sue a long-running public FanDuel listing without “Fox’s consent or referee’s approval.” But Flutter denied that Fox could block an IPO, pointing out that a separate decision would determine Fox’s role in a potential listing, with a decision expected in the first half of next year.

The Murdoch-owned media conglomerate has secured its option to buy an 18.5% stake in FanDuel at fair market value as part of Flutter’s £10bn merger with The Stars Group, which will operated a sports betting platform with Fox.

The arbitrator dismissed Fox’s allegation that Flutter mismanaged the FoxBet brand, which is currently only available in four US states.

About Charles D. Goolsby

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