Posted on: July 31, 2023, 02:36h.
Last updated on: July 31, 2023, 02:44h.
It’s official. News Corp (NASDAQ: NWSA) and Flutter Entertainment (OTC: PDYPY) pulled the plug on FOX Bet.
Speculation to that effect surfaced last week and the two companies made it official with a press statement issued Sunday.
Flutter Entertainment and Fox Corp. announce today the decision to close sports betting platform FOX Bet. A phased closure of FOX Bet’s operations will take place between 31 July and 31 August 2023,” according to a release issued by Dublin-based Flutter.
Flutter came to control FOX Bet via its 2020 acquisition of the Stars Group, which created the world’s largest online gaming entity. Fox was a large investor in the Stars Group leading up to that transaction. In the years since that deal closed, FOX Bet languished with Fox lobbing accusations at Flutter that the latter allowed FOX Bet to wither while it focused on FanDuel. Flutter owns 95% of FanDuel, which is the largest online sportsbook operator in the US.
FOX Bet Could Be Revived in the Future
As part of the Stars Group deal, Flutter also gained control of the US arm of PokerStars, which it will maintain going forward.
“FOX will retain future use of the FOX and FOX Bet brands, including FOX Bet Super 6, and intends to launch an all-new FOX Super 6 game later this summer,” according to the statement.
It’s possible that at some point in the future, the FOX Bet brand will be revived. Fox has reportedly held talks with other gaming companies and the media giant has a portfolio of attractive broadcast rights for major US sports, including Major League Baseball (MLB), NASCAR, and the NFL.
FOX Bet loses about $60 million per year and represented about 20% of Flutter’s earnings before interest, taxes, depreciation, and amortization (EBITDA) loss in the first half of the year, indicating the operator has good reason to consider shuttering the unit.
Fox Gets Some Compensation
While FOX Bet only entered four states and failed to amass market share in excess of 1%, Fox itself isn’t going away empty-handed. For starters, keeping the gaming entity alive would have required a financial contribution from the media behemoth. Now, that capital can be deployed in a potentially more profitable fashion.
Additionally, Flutter reiterated that it will honor Fox’s rights to acquire up to 18.6% of FanDuel down the road. With FanDuel estimated to be worth approximately $20 billion, that’s a multibillion-dollar prize for Fox. By way of the Stars Group transaction, Fox also owns 2.5% of Flutter.
That’s been an appreciating asset for Fox as well and that upside could accelerate when Flutter lists its shares in New York, which is expected to happen later this year.