A potential escalation

Fox Sports is reportedly ready to introduce a ban on all FanDuel ads as a result of an ongoing dispute between its parent company and the sportsbook’s majority owner, Flutter Entertainment.

Fox Corporation filed legal action against Flutter last week over the pricing of its option to buy a stake in FanDuel. The Sunday Telegraph has since reported that the second-largest US sports television network, Fox Sports, is now threatening to remove any mention of FanDuel from its broadcasts.

Fox Corporation filed legal action against Flutter last week

Advertising plays a key role in helping sports betting operators spread the word about their offerings in the burgeoning US market. If Fox were to decide to go ahead and take all FanDuel ads off its airwaves, it would result in a significant escalation of the current dispute.

Disagreement over pricing

Fox began legal action in New York against Flutter over the option to buy 18.6% of FanDuel in July 2021. Fox maintains it can acquire the sportsbook share at the same price valuation that saw Flutter buy a 37.2% FanDuel stake from FastBall last December. Flutter paid $4.18bn for this equity in a deal that valued FanDuel at $11.2bn. Based on the same valuation, Fox expects to pay about $2.09bn for an 18.6% stake.

Flutter argues that Fox has to pay the “fair market value” at the time of exercising the option in July. The gambling group accused Fox of aiming for a “windfall” by getting the stake at a discount, and it plans to “vigorously” defend its position.

Flutter Entertainment CEO Peter Jackson said of the disagreement: “We gave Fox the option to acquire a stake in the business in July 2021 at fair market value, and we continue to provide them with that option, and we will be in dialogue with them to see whether they’re interested in pursuing it or not.”

Fox will reportedly focus its efforts on promoting Fox Bet instead of FanDuel

The Sunday Telegraph reported that an insider said that Fox would prefer to resolve the dispute. Both parties are to enter arbitration proceedings in an attempt to rectify the disagreement. If they fail to reach a satisfactory solution, Fox will reportedly focus its efforts on promoting Fox Bet instead of FanDuel. Fox Bet is a partnership between The Stars Group and Fox Corporation.

The Fox-Flutter relationship

Fox and Flutter Entertainment’s relationship dates back a couple of years. In May 2019, Fox acquired a 4.99% stake in The Stars Group for $236m, also getting the option to buy 50% of the operator’s US business. This 25-year agreement led to the creation of Fox Bet.

The Stars Group merged with Flutter in May 2020. Following the merger, Fox had a 2.6% stake in Flutter, as well as getting the option to buy an 18.6% stake in FanDuel.

Shortly after the ending of the federal ban on sports betting in the US in May 2018, Flutter had bought a majority position in FanDuel. It recognized the strength of the FanDuel brand in the US through its daily fantasy sports offering. The original purchase gave Flutter the option to increase its stake over time.

In December 2020, Flutter increased its FanDuel ownership to 95% after buying a 37.2% stake from FastBall. US casino company Boyd Gaming currently owns 5% of FanDuel. Reports have been circulating in recent weeks that Flutter is considering a spin-off and IPO for FanDuel.