The New York Judicial Arbitration and Mediation Services issued an arbitration ruling stipulating that Fox, owner of Fox Bet, has a 10-year-long right to buy an 18.6% stake in major US sports betting operator FanDuel from Flutter, which currently owns the company.
Arbitrator Confirms Fox’s 10-year Option to Buy Stake in FanDuel
According to the ruling of the New York Judicial Arbitration and Mediation Services, Fox will be obliged to pay $3.7 billion for the right to purchase an 18.6% stake in FanDuel, which is subject to an annual increase of 5% as of December 2020.
According to the market valuation numbers on November 4, 2022, this means FanDuel is valued at $22 billion and Fox has to pay $4.1 billion in order to purchase an 18.6% stake in the company.
Flutter heralded the decision of the New York Judicial Arbitration and Mediation Services as a win.
Flutter CEO Peter Jackson commented positively on the arbitrator’s decision: “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. 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.”
Despite the decision being duped as a loss for Fox, the company still welcomed it as favorable. Fox noted that it provides considerable value as Fox will be able to acquire a significant stake in the leading sports betting operator FanDuel at its own discretion and without having to allocate capital towards the option unless it decides to purchase the stake.
Fox Wanted to Pay a Lower Price
The lawsuit between Fox and Flutter lasted for over a year and stemmed from complications in connection with Flutter acquiring The Stars Group at the beginning of 2020.
As per the court documents, Fox claimed that the price the company should pay for the option in FanDuel should be $2.1 billion. This sum was based on the amount Flutter had to pay for its 37% stake in FanDuel in December 2020.
On the other hand, Flutter claimed that Fox has to pay an amount to acquire a stake in FanDuel corresponding to the market valuation of the company in July 2021, which was determined at $35.1 billion.
In the end, the arbitrator made a decision to base Fox’s option for the stake in FanDuel on the company’s market valuation from December 2020 when Flutter made the acquisition, which was set at $20 billion.