Fox Bet to Shut Down as Fox Sports Backs Out of Joint Venture

Flutter has announced that Fox Bet has stopped taking bets and will shut down entirely by the end of August, making it the latest casualty of a challenging US sports betting market. The news does not come as a surprise. Last year, I predicted that this would be likely in the wake of arbitration between Flutter and Fox Sports.

Fox Bet Sportsbook has been operating alongside PokerStars in New Jersey, Pennsylvania, and Michigan. It also has a standalone sportsbook in Colorado. All four sites have ceased taking bets effective immediately.

Flutter expects a phased closure of these operations over the next month. On August 31, all Fox Bet sites will go offline. In the meantime, Fox Bet will settle open bets and allow customers access to their funds.

Players will retain access to their funds after August 31 through PokerStars. PokerStars, PokerStars Casino and Fox Bet share the same login and account balances. After downloading the PokerStars or PokerStars Casino app, players can log in to their accounts and either continue to play or withdraw their funds.

Flutter’s Game-Changing Acquisition of PokerStars

Fox Bet arose from a deal between PokerStars and Fox Sports. At the time, legal US online sports betting was in its infancy, and PokerStars had only recently released its sportsbook product. It believed that Fox branding would help it attract a broader customer base. Though PokerStars is a famous name in online poker, it isn’t as well-known in other gambling verticals.

The arrangement made sense at the time but became more awkward after Flutter acquired PokerStars. Flutter already had a top US sportsbook in its portfolio, having acquired FanDuel in 2017.

Fox Bet launched in Colorado in May 2020, the same month Flutter completed its acquisition. It also went live in the new Michigan market in January 2021, at the same time as PokerStars. However, Flutter has opted not to bring the brand to any other states, even though there are now 24 states with active online sports betting markets.

At the same time, the US sports betting market was proving to be a challenge for smaller brands. In 2022 alone, the following brands made a strategic exit, finding it impossible to turn a profit:

  • TheScore Bet
  • TwinSpires
  • Vie.gg
  • MaximBet
  • Fubo Sportsbook

Even as Fox Bet shuts down, Fox Sports will retain a 2.5% stake in Flutter. The terms of the PokerStars acquisition included an option for Fox Sports to buy 18.6% of FanDuel. It will retain that option until December 2030 unless it chooses to exercise it in the meantime.

Fox-Flutter Arbitration Doomed Fox Bet

Quite quickly after the acquisition, Fox’s relationship with Flutter soured. The main point of contention was the price at which Fox could exercise its option to acquire a stake in FanDuel.

Fox believed that it was securing the rights to buy at a price in proportion to what Flutter originally paid for FanDuel. Conversely, Flutter believed it would be getting a fair market value if Fox elected to exercise the option.

Judicial Arbitration and Mediation Services gave neither company exactly what it wanted. It calculated a price based on what would have been a fair market value at the time Flutter acquired FanDuel since it had done so at a discount. To that, the arbitrator added an annually compounded 5% “valuation adjustment.”  That produced a total of about twice what Fox was hoping to pay, though still less than Flutter’s assessment. If Fox waits until 2030 to exercise its option, it will pay about $6 billion.

There were other aspects to the arbitration as well. It was one of these secondary issues that doomed Fox Bet.

Fox claimed that the Fox Bet brand was suffering because Flutter was not supplying “commercially reasonable resources” to the brand. In Fox’s view, Flutter wasn’t spending enough on marketing and expanding Fox Bet. However, the arbitrator sided entirely with Flutter on that issue, denying the request to compel an increase in budget for Fox Bet.

Under the original deal, Fox provided only the brand and marketing up front, while PokerStars provided the platform and financial investment. Fox had until August 2023 to make the deal permanent by becoming a licensed sports betting operator in the relevant jurisdictions and purchasing 50% of Fox Bet from PokerStars.

I wrote at the time that the arbitrator’s decision “could mean the disappearance” of Fox Bet. The subtext seemed to be that Fox would not consider the sportsbook worth investing in if Flutter was not also interested in devoting more resources to it.

The Fox Bet site provides no rationale for shutting down beyond saying it’s a “commercial decision.” However, the timing coincides with the expiration of Fox’s deadline to buy into the product.

Fox Retains Branding, Technology Stays With Flutter

With the deal falling apart, all Fox-related branding will revert to its original owner. That includes the Fox Bet name and all related intellectual property. Although it won’t re-enter the sports betting space, Fox intends to relaunch a new Fox Bet Super 6 free-to-play app.

It will need to develop or purchase new technology for that, however. Flutter had supplied the app for the existing product, as it had for the sportsbook. All that software will remain with Flutter and PokerStars, which acquired the original Sky Sports Super 6 as part of its purchase of Sky Betting & Gaming in 2018.

The Sky version tasks players with correctly predicting the scores of six weekly soccer matches to win a £250,000 ($320,000) jackpot. Fox Bet Super 6 adapted the concept for the American market by asking participants to predict the winner and margin of victory in weekly NFL matchups.

Possible Entry Point for a New Brand in Michigan

PokerStars still offers sports betting abroad as PokerStars Sports and formerly did so in New Jersey as BetStars. In principle, it could return to doing so after disentangling itself from Fox Sports.

However, the Fox Bet shutdown FAQ suggests players move to FanDuel Sportsbook to continue betting. That may imply Flutter intends to leave PokerStars without a directly affiliated sports betting brand. When asked by Bonus for confirmation, Flutter declined to comment.

One interesting implication is that, in Michigan, the Little Traverse Bay Bands of Ottawa Indians may find themselves without a sports betting partner. Michigan’s online gambling laws allow only one online brand per land-based casino operator, which caps the number of brands in the state at 15. 

When TwinSpires shut down, SI Sportsbook & Casino swooped in to take over the Hannahville Indian Community license. As long as PokerStars continues to operate, there’s no room for another iGaming brand. However, the Little Traverse Bay Bands may seek a new sports betting partner.

The question is whether they’ll find any takers. Competing against integrated casino-sportsbook apps as a standalone sportsbook has generally proven impossible in the US. The most significant brands without a presence in Michigan, like Bally’s and Unibet, have indicated that their focus is now on iGaming, so they’re unlikely to seize the opportunity.

About the Author
Alex Weldon

Alex Weldon

Alex Weldon is an online gambling industry analyst with nearly ten years of experience. He currently serves as Casino News Managing Editor for Bonus.com, part of the Catena Media Network. Other gambling news sites he has contributed to include PlayUSA and Online Poker Report, and his writing has been cited in The Atlantic.
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