Peter Jackson: “No block” on potential FanDuel IPO from Fox Bet agreement

Flutter Entertainment’s top executives have bitten back in addressing speculation concerning a potential future public spin-off of US sportsbook FanDuel being impacted by the firm’s arbitration action with Fox Corporation.

Speculation followed a ruling earlier this week by the New York Judicial Arbitration and Mediation Services (JAMS), which fixed the valuation price of Fox’s option to purchase a 18.6% stake in market-leader FanDuel for $4.1bn by December 2030.

While the arbitrator did settle FanDuel’s valuation basis for the option at $20bn, another issue regarding the potential rights of Fox in any initial public offering (IPO) of the business (should this occur) will not be settled until the arbitrator rules again in 2023.

Speaking about the potential IPO in the firm’s Q3 earnings call, Flutter CEO Peter Jackson dismissed any talk of a Fox move to stop FanDuel being spun out into a publicly traded business, something which could be hugely lucrative for the shareholders of parent company Flutter Entertainment.

“There’s no IPO block, in respect of the arbitration, we’re just going back to the arbitrator to get her views about Fox’s participating rights in any IPO, if we were planning to do one,” Jackson said.

“Fox did not negotiate the right to participate in any IPO, therefore the arbitrator is going to look and determine whether they have any right to put any of their stake, should they exercise it, into an IPO, so it’s certainly not a block, it’s just something to be decided,” he added.

In the dispute, Flutter’s role as a commercial partner for Fox was brought into question by the latter operator, which claimed Flutter had failed to provide “commercially reasonable” resources to the operation of Fox Bet.

FanDuel’s sportsbook is live in 16 US states, compared to just four for FOX Bet, and operates with a 42% share of the US market. FanDuel is the jewel in the crown of Flutter’s US division, which recently reported 82% revenue growth year on year in Q3.

In April 2021, FOX Bet was migrated to the Paddy Power Betfair platform in an effort to improve product quality in comparison to the perceptibly less inferior FanDuel product.

Fox Corporation CEO Lachlan Murdoch expressed his disappointment with the rollout of the Fox betting brand in March of this year, citing the lack of control by the global media giant as a factor. Fox controls just 50% of FOX Bet, with Flutter controlling the remaining 50%.

The claim was ultimately dismissed by the JAMS service, which suggested all commercial help had been given. Speaking in the post-ruling environment, Jackson defended Flutter’s role in supporting the business over the lifespan of the partnership.

“We’ve always strived to be good partners, we’ve committed to making Fox successful, and we’ve tried as hard as we can and that’s why we’re putting a lot of resources in it,” the Flutter CEO explained.

“There’s some questions from Fox as to whether we’d really kept our side of the bargain. It’s great to hear that we have been good partners and done well, more than we should have done to try and make that business successful,” he added.

Flutter CFO Jonathan Hill affirmed Flutter’s stance on maintaining its relationship with Fox until the potential settlement of the FanDuel claim, and through a potential acquisition of TSG (The Stars Group) US by Fox, subject to licensing.

“The other point to carry on from that is under the existing TSG US agreements with Fox; we have commitments with Fox around committed spends into the Fox network and we will continue to honor those in their entirety as we as we go forward,” Hill said.

“We’ll see what happens post-August next year but we will honor all the commitments, that are commercial agreements going forward and continue to work with Fox as we go into 2023.”

Addressing the potential settlement of the business relationship between the two businesses and the potential timeline for this to occur, Hill remained upbeat.

“There’s always the potential to reach an agreement and if it’s one as possible, and it is to the benefit of our shareholders, then, clearly, we’ll consider it. “We’ll see where we get to over the next period with the forthcoming narrow arbitration hearing,” he added.