Dreamstime/Amelia Martin Early this year, investors were getting excited at the prospect of Flutter spinning off FanDuel Group in an IPO. Several factors derailed those plans, but now just about everything is in place for next year.
Two major hurdles remain. One is that Flutter needs to resolve its dispute with its media partner, Fox Sports. There’s also an ongoing legal battle with FanDuel co-founder Nigel Eccles.
Dublin-based Flutter had originally been rumored to be considering a July 2021 public offering of its US powerhouse brand. However, a quadruple threat got in the way. As a result, Flutter delayed the move by a year.
Now, at least, two of the other problems are resolved: Flutter reached a $300 million settlement with the state of Kentucky in the PokerStars case.
FanDuel IPO needs Flutter/Fox resolution
The main reason for a public offering is to generate cash for the offering entity. If Flutter fails to reach a favorable resolution in its dispute with Fox , those difficulties could cost the company a fair bit.
Fox wants a better deal for itself out of the IPO, which by necessity means a worse one for Flutter and its shareholders. It had a pre-existing relationship with Stars Group when Flutter bought out that company in May last year. Part of that deal was a guarantee to Fox that it would have the right to buy a piece of FanDuel Group after the merger.
Fox explained its view of things in an April 2021 press release: Fox Corporation has filed suit against Flutter to enforce its rights to acquire an 18.6% ownership interest in FanDuel Group—an American sports betting brand—for the same price that Flutter paid for that interest in December 2020. Flutter’s understanding was that Fox could exercise its option at a fair market value, not this historical price. The way the US online gambling market has been surging, this makes a big difference.
The dispute has been happening behind closed doors since April. Both parties are respecting the privacy of their negotiations happening in JAMS , formerly known as Judicial Arbitration and Mediation Services. What is FanDuel actually […]
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