Fox Plans to Acquire 18.6% Stake in FanDuel

Fox Corporation to Acquire Major Stake in FanDuel Following Fox BET Closure

Fox Corporation is making a bold move into the sports betting landscape. The company is set to exercise its option to acquire a significant stake in FanDuel, the market leader in U.S. sports betting. This acquisition represents a strategic play to capitalize on the booming sports betting market and regain momentum after the Fox BET closure. Fox Corporation’s decision could reshape its presence in the gambling industry and bolster its market position against competitors.

Fox Moves to Acquire 18.6% Stake in FanDuel After Shutting Down Fox BET

More than a year after the closure of Fox BET, Fox Corporation has announced plans to exercise its option to acquire an 18.6% stake in FanDuel, marking a strategic re-entry into the sports betting market. Despite Fox BET’s closure, the media giant is not stepping back but rather doubling down on its ambitions within the gambling industry.

Fox Corporation CEO Lachlan Murdoch revealed this bold plan during the Goldman Sachs Communacopia and Technology Conference on September 10, signaling the company’s intent to strengthen its foothold in the rapidly growing U.S. sports betting market. According to Murdoch, FanDuel, owned by Flutter Entertainment, is valued at approximately $35 billion, making it one of the most valuable assets in the sector.

Significant Discount on Market Value

Fox’s strategic move involves activating an option that allows it to acquire a stake in FanDuel at a considerable discount. The estimated market value of Fox’s 18.6% stake in FanDuel stands at around $6.5 billion. However, Fox is set to pay only $4.3 billion to exercise this option, which it initially secured through its investment in The Stars Group (TSG). This represents a roughly $2 billion discount, giving Fox a strong competitive advantage as it enters the sports betting arena.

The option to acquire this stake was confirmed in January 2023, following arbitration proceedings upheld by the US District Court for the Southern District of New York. The court confirmed Fox’s right to a 10-year call option to acquire the stake in FanDuel, priced initially at $3.7 billion and subject to a 5% annual increase. As of June 2024, the exercise price stood at approximately $4.3 billion, providing Fox with a prime opportunity to solidify its presence in the market.

Navigating Regulatory Challenges

One of the challenges Fox faces in completing this acquisition is obtaining the necessary gaming operator licenses across various U.S. states. Murdoch emphasized the company’s commitment to resolving these regulatory hurdles, stating, “We’re not going to leave $2 billion on the table.” Fox is actively engaging with state legislators to secure the required permissions, highlighting its dedication to moving forward with the deal.

The Fox BET Background and FanDuel Focus

Fox’s renewed interest in FanDuel comes in the wake of the closure of Fox BET in August 2023. Launched in 2019 as a partnership between Fox Corporation and TSG, Fox BET quickly positioned itself as a prominent player in the U.S. sports betting landscape, operating in Colorado, Michigan, New Jersey, and Pennsylvania. However, following Flutter’s merger with TSG in 2020, the focus shifted heavily toward expanding FanDuel’s market share, eventually leading to the decision to discontinue Fox BET.

Despite the shutdown, Fox’s strategic focus on FanDuel reflects a long-term vision of dominating the sports betting space. FanDuel continues to lead the U.S. market, and Fox’s planned stake acquisition is expected to further bolster the brand’s market position.

Fox Corporation’s decision to exercise its stake option in FanDuel underscores the company’s commitment to capitalizing on the lucrative sports betting market. By securing an 18.6% stake at a significant discount, Fox not only strengthens its strategic position but also demonstrates its confidence in FanDuel’s continued growth. As regulatory hurdles are addressed and market integration progresses, Fox’s move could have a transformative impact on the sports betting industry, setting the stage for renewed competition and expanded opportunities.