Fox Corporation is attempting to acquire a stake in FanDuel at a discounted price.
The multinational mass media company is planning to exercise a minority stake option in FanDuel which is valued on the open market at roughly $6.5 billion. According to a 2024 Fox Annual Report, the New York-based company wants to activate its option for an 18.6% stake in FanDuel for an estimated $4.3 billion marking a significant drop from its open market value. FanDuel is valued at $35 billion, per Goldman Sachs analysts.
Its next closest competitor, DraftKings, has a market cap of $18.3 billion as of Sept. 12.
Fox has the opportunity to exercise its option due to a relationship with FanDuel that started with Flutter Entertainment acquiring The Stars Group in a deal valued at $6 billion. Flutter, FanDuel’s parent company, brought the issue of Fox’s stake option to an arbitrator that ruled in favor of Fox receiving a 10-year call option that began in 2020.
The legal battle between Fox and Flutter also saw Fox agree to purchase the 18.6% stake in FanDuel for $3.7 billion with a 5% escalator each year. In order for a purchase to be complete, Fox must register as a wagering operator in markets where FanDuel is licensed.
“We’ve begun the process with state regulators,” said Fox CEO Lachlan Murdoch during the Goldman Sachs Communacopia and Technology Conference. “To fully monetize the option, we need to be licensed as a gaming operator, even with only 18.6% and so we’ve started that process with state regulators to begin the gaming licensing approvals.”
Flutter generated $3.6 billion in revenue in Q2 2024, a 20% increase year-over-year. FanDuel made up $1.5 billion of that revenue during the quarter. By comparison, the sportsbook generated $1 billion in revenue in Q2 2023. FanDuel had the largest player base in the U.S. for sportsbooks in Q2 2024 with 3.5 million average monthly players.
Flutter also owns gambling brands, Paddy Power, Betfair, and Sky Betting & Gaming.
