FanDuel IPO rumors are kicking off again. In the new few months, FanDuel’s primary owner, Flutter Entertainment, may resolve the feud with its broadcast partner, Fox. The battle arose because each company is interested in making as much money as possible from a US IPO, yet it has also been one likely reason for the IPO being delayed.
Now, investors can once again get excited over the prospect of buying shares of the No. 1 US sportsbook.
Those shares may cost $65 each, estimated John DuCree, a director and head of institutional research with Las Vegas-based Union Gaming from CBRE. Seeking Alpha quoted DuCree in March.
However, stocks may not be available to buyers until around the time of the 2023 Super Bowl.
Even if Flutter and Fox resolve their disagreement in October, investors may be looking at a three-month wait for a US offering on New York-based FanDuel. That’s a similar projected lag to last year when Dublin-based Flutter first confirmed rumors of the IPO.
Flutter confirmed the probable FanDuel IPO in March 2021, at which point analysts said they expected it to happen in July 2021.
If that timeline holds up, a FanDuel IPO may occur in time to buy shares in the company, plus place bets through FanDuel Sportsbook before the culmination of the NFL season on Feb. 12 in Arizona.
One share of FanDuel will likely cost less than the average Super Bowl bet as well. Using numbers from the American Gaming Association (AGA), the average 2022 Super Bowl wager was $242.
Is Wall Street Excited About a FanDuel IPO?
These renewed FanDuel IPO rumors may explain why FLTR stock has risen nearly 13% since Friday. However, it’s more likely that it’s because of Friday’s Q2 2022 earnings report that included details about Flutter’s US sports betting market share reaching 51%.
Flutter’s US sports betting businesses comprise FanDuel and Fox Bet Sportsbook.
Flutter CFO Jonathan Hill says Fox Bet generated 3% of revenues.
He added on Friday, according to The Motley Fool transcript:
It’s a pretty flat business.
That means most of that 51% is due to FanDuel. In fact, FanDuel CEO Amy Howe and CCO Mike Raffensperger claimed the entire percentage for FanDuel in their LinkedIn posts on Friday.
The earnings report notes that FanDuel is live in:
- Arizona
- Colorado
- Connecticut (where FanDuel Group also powers Mohegan Sun Casino)
- Illinois
- Indiana
- Iowa
- Louisiana
- Michigan (where FanDuel Casino also takes bets)
- New Jersey (FanDuel Casino is also live)
- New York
- Pennsylvania (FanDuel Casino)
- Tennessee
- Virginia
- West Virginia (FanDuel Casino)
- Wyoming
Fox Bet Sportsbook launched in:
- Colorado
- New Jersey (Fox Bet Casino)
- Michigan
- Pennsylvania (Fox Bet Casino)
Fox Disputed FanDuel’s Price
The dispute between Flutter and Fox that may be resolved in October entered formal negotiations in April 2021. While the talks in JAMS, formerly known as Judicial Arbitration and Mediation Services, were private, Fox issued a statement that month.
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 representatives said Fox had to pay the fair market value as of July 2021.
FanDuel and Fox Q2 2022 Statements
On Friday, Flutter CEO Peter Jackson said:
We have a clear line of sight to US profitability in 2023, for the full year, including the cost of share-based payments. You’ll have seen that we now expect the outcome of the arbitration process with Fox in October. Unfortunately, as this is a live process, we can’t provide any further detail. However, as previously stated, we remain very confident in our position regarding fair market value.
Flutter’s earnings announcement used more formal language:
As announced on 2 October 2019, in order to achieve economic alignment of Flutter’s and TSG’s strategic third-party relationships across their respective US businesses, the Group entered into an arrangement with Fox, pursuant to which FSG Services, a wholly-owned subsidiary of Fox, had an option to acquire an 18.6% equity interest in FanDuel Group at its fair market value in July 2021. As a consequence of there being no increase in the market value of FanDuel since the valuation date of the option, it is determined that the value of the option is not material and has close to nominal value at 30 June 2022.
Fox CEO and Executive Chairman Lachlan Murdoch said on Wednesday during his company’s Q2 2022 earnings call:
We continue to have beliefs or have a fundamentally strong belief in the sports betting business. We think it’s a huge opportunity in the marketplace, specifically in its association with the Fox Sports brand. We drive the largest sports audiences in this country. And no other broadcaster can achieve … the reach and engagement that we deliver, during the — certainly during the autumn and the fall on a weekly basis.
And so, we’ve proven this last couple of years … [we’re] taking our sports audiences from television into Fox Bet Super 6 [providing] a tremendous funnel, which Fox Bet is the ultimate beneficiary of. That continues to be our strategy and it continues to be very successful.
As regards to, Flutter we’re still in our arbitration process with them. We look forward to the clarity of getting through that process, which we expect to be in the next couple of months certainly sort of by the beginning of the autumn. But once that situation is clarified and also in early September as you see the NFL season kick off again, you’ll see a lot more activity around Fox Bet and FOX Bet Super 6.
Regardless of whether a FanDuel IPO is ready before the Super Bowl, Fox Sports is firmly in place to broadcast the Big Game. Meanwhile, both of their sportsbooks are already setting odds.
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