Flutter Entertainment Increases Stake in FanDuel to 95%

Written by Chris Monti

Flutter Entertainment Increases Stake in FanDuel to 95%

Flutter Entertainment shares increased to a record high after it tied up a $4.2 billion deal to acquire Fastball Holdings LLC’s 37.2% interest in FanDuel. The Irish firm will own 95% of FanDuel’s issued share capital once the deal is completed, with market access partner Boyd Interactive Gaming continuing to own the remaining 5%. The deal gives FanDuel an estimated enterprise value of $11.2 billion, and it is fast becoming the crown jewel in the Flutter Entertainment empire.

Shares in Flutter increased 14% in Thursday trading after it announced the deal. The company pointed out that it has secured an attractive price, as the transaction equates to a discount of more than 40% on the $20.3 billion enterprise value of its closest peer, DraftKings Inc. Fastball shareholders will receive $2.088 billion in cash and 11.7 million in new ordinary shares in Flutter as part of the deal. They agreed to a discounted offer in exchange for “price certainty and liquidity”.

Paddy Power Betfair acquired a controlling stake in FanDuel back in May 2018, just after the US Supreme Court overturned PASPA, a federal ban that prohibited sports wagering in every state apart from Nevada. It contributed existing US assets worth $612 million along with $158 million in cash to take a 61% stake in the combined business. Existing FanDuel shareholders, known collectively as Fastball, controlled the remaining 39%. FanDuel’s value has soared since then.

A Commercial Juggernaut

Paddy Power Betfair capitalized on the popularity of the FanDuel brand and used its operational expertise in the sports betting sector to turn FanDuel into the market-leading online sportsbook in several states, including New Jersey and Pennsylvania. The firm later rebranded as Flutter Entertainment in order to reflect its increasingly diverse portfolio. It then bought The Stars Group in a $6 billion deal to form the world’s largest online gambling group. That deal saw Flutter take control of the Fox Bet brand, along with PokerStars, Full Tilt and Sky Bet. As part of the agreement, Fox Sports has the right to acquire an approximate 18.5% stake in Flutter’s US business at its market value in 2021. Flutter is now bidding to see off competition from DraftKings, BetMGM and Caesars-William Hill to become the market leader in the rapidly expanding US sports betting market.

This week, Flutter raised approximately £1.1 billion ($1.48 billion) through a share placing. It placed around 8 million new ordinary shares via Goldman Sachs International and J&E Davy at a price of 14,000 pence per placing share. These shares represent around 5.2% of the Flutter’s issued share capital immediately prior to the placing, excluding treasury shares. That will bolster its cash balance as it embarks upon an ambitious customer acquisition drive across the United States.

Fox Doubles Down on Flutter Partnership

Fox Corporation was one of the participants in the capital raising. “We are delighted to participate in this capital raising,” said executive chairman and chief executive Lachlan Murdoch, son of founder Rupert. “Maintaining our ownership stake in Flutter signifies our long-term commitment to Flutter, and ongoing confidence in management’s ability to execute against the fast-growing US opportunity.”

Fox had a 4.99% stake in The Stars Group, and that equated to a 2.6% stake in Flutter’s equity following the takeover. It decided to take part in Thursday’s capital raising to maintain its stake in the Irish company. Fox has also kept options to acquire more shares in FanDuel in future. “The first person I rang to tell about this deal on a confidential basis was Lachlan Murdoch,” said Flutter chief executive Peter Jackson said. “Fox are an incredibly important media partner.”

Sky Bet has carved out a large share of the UK sports wagering market thanks to its partnership with Sky Sports, another brand created by Rupert Murdoch. Flutter hopes Fox Bet can enjoy similar levels of success in the US, but FanDuel remains the key focus. “When we look at life through the lens of Fox Bet, as a subscale competitor, it’s very tough,” Jackson said in an interview last month after delivering strong Q3 results. “It makes us realize how big an advantage the FanDuel brand has. Particularly around acquiring customers at sensible costs. And that reminds us to keep pushing hard and investing.”

888 Embarks Upon Expansion Drive

FanDuel, DraftKings, BetMGM and Caesars-William Hill are the main players in the emerging US sports betting market, but rivals are also showing considerable ambition. On Wednesday, London-listed operator 888 Holdings announced plans to launch its 888 Sport brand in Colorado, Iowa and Indiana in 2021. It will launch of the licenses of Colorado Grande Casino, Catfish Bend Casinos in Iowa and Caesars-owned Harrah’s Hoosier Park in Indiana. 888 was founded by Israeli entrepreneurs and it has established a strong presence in the European market. It is already live in New Jersey, Delaware and Nevada.

“We are delighted to sign these agreements with three great partners – the Colorado Grande Casino, Catfish Bend Casino II LLC, and Harrah's Hoosier Park – that will enable 888 to bring its first-class online sportsbook to bettors in Colorado, Iowa and Indiana,” said chief executive Itai Pazner. “The U.S. online betting and gaming market has huge growth potential, and we continue to build a strong platform for growth across both our B2B and B2C operations.” 888 Sport formerly used the Kambi white-label sportsbook, but it now has its own proprietary technology after buying Irish operator Bet Bright. Yaniv Sherman, head of commercial development, added: “Expanding 888Sport.com into these three states represents another major milestone in our ongoing growth across the regulated US online gaming market.

We have deployed our proprietary technology in the US, and our exciting pipeline of new products will deliver industry-leading propositions to customers across both our B2B and B2C operations. We continue to appraise strategic partnerships that will provide additional brand-building and market access opportunities for 888 across the U.S. market in the near future.”

  • William Hill Casino

    $500 Risk Free Bet

    To be eligible for this Promotion, all eligible Patrons must place their first real money sports wager via the William Hill mobile app or desktop site, within 7 days of opening a William Hill NJ Account. If their Qualifying Wager is graded as a Loss the Participant will earn a one-time Free Bet token equal to the lessor of: 1) The full value of the Qualifying Wager or 2) $500 (“Free Bet(s).
  • 888 Sport

    $500 Welcome Bonus

    Player must be at least 21 years old, located in New Jersey, has completed the full registration process with us.888sport.com, makes a first deposit equal to or greater than $10 and may be entitled to a Welcome Bonus of 100% up to $500 on the players first deposit at us.888sport.com.
  • Unibet Sportsbook

    Play Now

    Join Unibet Sportsbook today and once you add funds, we'll insure your first cash bet - get up to $500 back if you don't hit a winner. Make your first cash bet on any event. If your first settled cash bet loses, you will receive a refund to your account equal to the amount of your losing wager (up to $500). Your first cash bet ($10 or over) will qualify. You will receive the refund within 72 hours.
  • Sugar House

    100% Up To $250 Deposit Match Bonus

    Player must create a new account, make a first deposit up to $250 to get a Deposit Match Bonus. Use code 250MATCH.
  • FanDuel Sportsbook Review

    $500 Risk Free Bet

    New Sportsbook Customers Only NJ. Join FanDuel Sportsbook today and make your first bet. If you lose, we'll give you a refund of up to $500 in site credit (within 72h). Your first bet will qualify (If you have multiple selections on one betslip, it will be the first selection you made)
  • Draft Kings Sportsbook

    Get a deposit bonus up to $500!

    Join Draft Kings today and with your first deposit of $5 or more, you will receive a free $3 ticket to play in any $3 paid contest. A user’s first deposit (min. $5) made between 5/13/20 – 8/17/20 qualifies the user to receive up to $500 in bonus funds in the form of site credits that can only be used on DraftKings. Bonus amount is equal to 20% of that deposit amount, not to exceed $500 (the user must deposit $2,500 to be eligible to receive the maximum possible bonus amount of $500).
  • Caesars

    $300 Free Bet

    Make your first deposit using SPORTS300 and we will match your first sports bet up to $300! Cash bet must have minimum odds of -200. On Parlay wagers, each legs must have odds of -200 or greater.
  • Bet America

    Bet $50 Get $50 [code: BET50]

    Join BetAmerica today for an exclusive Bet $50 and Get $50 using code [BET50] on your next sports bet. Register today and enjoy our Freeplay contests where you can use your sports and casino knowledge to win $1000's in prizes every week.

Latest news