A ruling made by a New York arbitrator involving Fox Corp. and Flutter Entertainment could change the course of Michigan sports betting.
The ruling results have made it possible for Fox Corp to purchase a large stake in the sportsbook FanDuel, making Fox Corp a major shareholder in the company. Fox Corp. already operates its sportsbook
Fox Bet so it will be interesting to see if it will continue to run in MI if a new acquisition occurs.
Flutter Entertainment is currently the parent company of FanDuel (the most successful US sports book), as well as many other international gaming companies.
Flutter vs. Fox Ruling
The Judicial Arbitration and Mediation Services decided on the ruling between Flutter and Fox. The ruling gave Fox “a 10-year call option that expires in December 2030 to acquire 18.6% of FanDuel for $3.72 billion, with a 5% annual escalator,” (according to Legal Sports Report).
FanDuel’s valuation is currently $22 billion, making the cost of the stake $4.1 billion.
Both companies seem to be content with the results of the ruling, which ultimately reflected well on the arbitration system.
A statement was made by Fox after the announcement: “FOX has no obligation to commit capital towards this opportunity unless and until it exercises the option. This optionality over a meaningful equity stake in the market-leading US online sports betting operation confirms the tremendous value FOX has created as a first mover media partner in the US sports betting landscape.”
This dispute between Flutter Entertainment and Fox Corp. started in 2019 when Flutter gained control over The Stars Group.
The Stars Group had previously maintained a partnership with Fox and operated the Fox Bet sportsbook. A deal was decided that once Flutter gained full control of Fox Bet, Fox would be able to purchase 50% of it along with 18.6% of FanDuel.
Fox then filed a suit against the valuation of FanDuel in 2021. This pushed Flutter to acquire a higher percentage of FanDuel’s stake, pushing the valuation to over $40 billion.
That brings us to the court ruling: Fox can purchase “18.6% of FanDuel for $3.72 billion, with a 5% annual escalator.”
Fox Bet Future
If there’s one thing that Michiganders love, it is options. Currently, there are 15 online sportsbooks legal in Michigan, and Fox Bet is one of them. There is a possibility that there could be one less sportsbook in Michigan after hearing the results of the ruling. Come August 2023, the companies will have the option to terminate the Fox Bet agreement.
Fox Bet launched in January 2021 and ranks at number 8 for the all-time handle in the state, with $80.4 million in wagers and $5.8 million in revenue. Fox Bet is the online sportsbook for Odawa Casinos in Petoskey, MI.
Fox Bet doesn’t make up a significant part of the MI sports betting market (only 1.1%), but Michigan users will be disappointed to see it go. Especially those who loved Fox Bet’s odds boost and NASCAR and UFC promotions.
Fox Bet fans will be given plenty of notice if the sportsbook does decide to leave the state. We’ve seen in the past when TwinSpires shut down, the announcement was made over six months before the action took place.
If the company left, this would open up the option for a new online sportsbook to take its place.
With a booming market like Michigan, we can predict that there will be many operators eager to jump at the opportunity.
Mac Daniel is a Michigan native and freelance writer for PlayOnlineCasino and PlayOnlineSportsBetting. He has experience writing about a wide variety of topics, including healthcare, tourism, non-profit organizations, and most recently casino and sportsbetting news. To check out more of his work, visit: playonlinemichigan.com