Flutter Confirms Talks over FanDuel Listing Are Under Way

Irish gambling powerhouse Flutter Entertainment Plc confirmed that it is mulling a listing of its US sports betting business FanDuel, following reports that it was under pressure to consider different options as investors were frustrated over the way the company has been trading.

The gambling operator, whose other brands include Paddy Power, Betfair, and PokerStars, said in a Friday statement that it is considering a listing of a “small shareholding” in FanDuel in the US, but no final decision has been made yet.

The statement read further that the company “regularly evaluates its organizational and capital structure to assess how best to position itself to deliver upon the group’s strategy” and that should a decision be made about FanDuel’s potential listing, they will make an appropriate announcement.

These comments came after reports emerged last week that company investors have been urging its management to consider a spinoff or share sale of the unit as Flutter has been trading at a discount to rival DraftKings, even though FanDuel is the leader in the fast-growing US sports betting space.

DraftKings went public in the spring of 2020 via a three-way $3.3 billion merger with special purpose acquisition company (SPAC) Diamond Eagle Acquisition Corp. and sports betting technology firm SBTech. That was the first of three gambling SPAC deals announced last year.

Golden Nugget Online Gaming and Rush Street Interactive were the other two US-based sports betting and online casino gaming companies to go public via SPAC mergers in recent months.

Fox Sports Deal Could Hamper Spinoff

Flutter combined its US operations with FanDuel in 2018 to tap into the nation’s young sports betting field after the US Supreme Court annulled a federal ban on the practice in the spring of that year.

Flutter announced in December 2020 that it would exercise an option to buy a 37.2% stake in the wagering operator ahead of a previously agreed July 2023 schedule. The Irish company thus raised its holding in FanDuel to 95%.

The above purchase was a combination of cash and stock. Flutter had raised £1.1 billion from investors, including Fox Corporation, to partially fund the transaction. The newly obtained stake was previously owned by KKR-led consortium of investors Fastball Holdings.

Flutter has offered Fox’s Fox Sports unit an option to buy an 18.5% stake in FanDuel in July 2021. The Irish operator said early this year that it would be “in dialogue with them to see whether they’re interested in pursuing [the option]

Fox Sports currently holds a 2.6% stake in the US wagering business.

According to people familiar with the matter, clearing up the Fox Sports’ ownership in FanDuel could result in delays in a potential spinoff of the wagering operator.

It should be noted that Fox Sports forged a media and sports betting partnership with The Stars Group in the spring of 2019, a move that paved the way for the launch of the FOX Bet operation later that year. The Stars became part of Flutter last spring.

Source: “Flutter Considering Spinoff and IPO of U.S. Betting Unit FanDuel”, Bloomberg, March 13, 2021