Fox Increases Flutter Investment to Capitalize on US Market

Fox Increases Flutter Investment to Capitalize on US Market

With more states likely to consider sports betting and online gaming to raise revenue in the wake of the coronavirus pandemic, Fox Corp. is looking toward the future.

Hoping to boost its FOX Bet sports betting platform, Fox Corp. is purchasing additional Flutter Entertainment shares, according to Reuters. Flutter said in a statement that Fox is increasing its investment, but would not give the amount of shares Fox was adding.

“Fox is bullish about the opportunities in the digital sports wagering market,” Lachlan Murdoch, CEO of Fox Corp., said in a statement. “FOX Bet has shown strong growth since launching last fall, and we look forward to continuing that success with our partner, Flutter.”

Flutter Entertainment, the world’s largest online gaming company, said last week it was selling 8,045,995 of its shares, according to the company's launch announcement. It is hoping to raise $1 billion worth of equity to raise money for future investments, according to Bloomberg.

The owner of popular brands FanDuel, Betfair and Paddy Power, Flutter finalized its merger with The Stars Group in early May. Flutter owns 55% of the merged company while Stars Group keeps the other 45%.

In addition to FanDuel and FOX Bet, the Flutter-Stars merger brought together online gaming’s PokerStars and PokerStars Casino. Under the merger agreement, Fox can acquire an 18.5% stake in FanDuel’s U.S. operations by 2021.

A Move with An Eye Toward the Future

With the sports world and casinos shut down since mid-March, Fox and Flutter are positioning themselves to be ready when more states look to sports betting and online gaming to offset budget deficits.

“Flutter believes that one potential consequence of the (COVID-19) pandemic is that the pace of regulation in the U.S. could accelerate, as an increasing number of U.S. states look for new ways to raise additional sources of tax income,” the company said in a statement. “Flutter is determined to give its U.S. business the best possible platform for future success and to replicate the leadership position it has achieved in the states that have regulated to date.”

The U.S. mobile sports betting market showed incredible growth in 2019. And in just the first two months of 2020, New Jersey and Pennsylvania combined for $1.5 billion in mobile sports betting handle before the pandemic hit.

FanDuel has access to about half of the 50 states via its deals with Penn National and Boyd Gaming. FOX Bet and FanDuel are operating in New Jersey, Pennsylvania and Colorado. FanDuel has sportsbooks in West Virginia and Indiana.

Online Gaming in US on the Rise

Another growth market for Flutter is its U.S. poker websites, PokerStars New Jersey and PokerStars Pennsylvania. West Virginia and Michigan have prioritized bringing online slots, table games and poker to state residents, joining New Jersey, Delaware, Pennsylvania and Nevada in offering online gaming.

Michigan is also working on bringing online sports betting to the state while Ohio and California are currently considering sports betting legislation. Virginia and Tennessee have legalized sports betting and could soon join the market. Three states — South Dakota, Maryland and Louisiana — will put legalizing sports betting on the November ballot.

With that type of expansion under way in the U.S., the Fox investment in Flutter could pay dividends for both companies.

“Fox’s investment in Flutter underscores our confidence in Flutter’s business and its management’s ability to continue to drive leadership in the U.S. market,” Fox’s Murdoch said in his statement.

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