Flutter Entertainment could have simply cut Fox Bet from the system, one slice and the deal is done. Instead Flutter and Fox will phase out what turned out to be a failed experiment.
FanDuel and DraftKings have a clear hold on first and second place-share of the market. And BetMGM can be safe in the knowledge that it occupies number 3. Yet it didn’t stop the development of additional sportsbooks, fail though they may, according to Yogonet Gaming News.
Since there is little room beyond 1, 2 and 3, it’s no wonder sportsbooks have pulled the plug in their failed quest for U.S. market share. The latest is Fox Bet, which has had a somewhat checkered past with its parent, Flutter.
Flutter ran Fox Bet as part of The Stars Group U.S. along with PokerStars, which Flutter will retain. Flutter developed two products with Fox Bet. The first was a nationwide free-to-play game and the other a sportsbook operating in states where it was legal.
Fox will keep the Fox and Fox Bet brands, including Fox Bet Super 6. The company expects to launch a new Fox Super 6 game later this summer. It will also continue to hold its option to acquire 18.6 percent of FanDuel and, in addition, keep a 2.5 percent stake in Flutter.
Fox Sports, a subsidiary of Fox, which seemed to be an asset for the Fox Bet brand, invested $236 million for a 4.99 percent stake in The Stars Group. In exchange, the Stars Group received an exclusive license to use certain Fox Sports trademarks for games and online sports wagering as part of a 25-year agreement. The group also received exclusive advertising and editorial content rights on certain Fox Sports broadcast media and digital assets.
Fox Bet debuted in New Jersey in September, 2019, followed by Colorado, Michigan and Pennsylvania. As has happened with many a sportsbook, making a mark after the top 3 was a difficult get.
In April 2021, Fox filed an arbitration suit against Flutter over a dispute of the purchase price of Fox’s option to acquire an 18.6 percent stake in FanDuel as of July 2021. Sports Handle reported in November 2022 that a New York arbitration ruling could spell the demise of Fox Bet.
However, in its lawsuit, Fox claimed the purchase price was to be based on the value as of December 2020 at which time the share price cost $2.09 billion. In November 2022, a New York arbitrator ruled the acquisition would be based on a value of $22 billion valuation as of December 3, 2020.
From December 2020, Fox received a 10-year period to exercise the option to buy the stake. This is subject to annual compounding carrying value adjustment of 5 percent.
When PointsBet signed a $500 million multi-year pact with NBCUniversal in 2020, the Australian-headquartered operator viewed the transaction as a “transformative deal”
Nevertheless, the “size and reach of Fox makes it a valuable cross-sell and monetization channel,” JMP Securities analyst Jordan Bender wrote in a research note. Moving forward, JMP believes that Fox will look to other alternatives to drive its betting unit in the U.S.
