Last updated: October 09, 2023
Flutter Entertainment’s FanDuel brand is expecting tremendous growth for the sports betting brand in the USA market. The news has lead Ruper Murdoch’s Fox Corporation (NASDAQ:FOXA) to reportedly increase their position in FanDuel following the massive US growth. Reports indicate that Fox will acquire 20% more on their current position.
Fox and Flutter had a previous relationship through FOX Bet’s link with The Stars Group – which Flutter acquired in 2020 for $12.2 billion.
The acquisition created the world’s largest online gaming company and opened up Fox’s doors, giving the broadcaster the right to own a stake of up to 18.5% of FanDuel by 2021. Fox can also own up to half of The Stars Group’s US Business at an undisclosed date in the future.
Rupert Murdoch’s media empire holds one of the biggest shareholder positions in Flutter at 2.6%. With the current market, this position would be worth just north of $900 million. The increased holding is a smart move for Fox because FanDuel’s market growth has been significant, not to mention that their expectations are much higher than previous forecasts.
Flutter CEO Peter Jackson shared on the companies recent fourth-quarter earnings call that they would finish the year as the first online operator in the USA to hit $1.1 billion in gross gaming revenue.
These sales in 2020 were higher than the second and third top players combined – being DraftKings and BetMGM.
The results come as FanDuel is being recognized as more valuable than DraftKings and the new leader in online sports gambling. Jackson reiterated that Flutter expects US revenue to hit $20 billion by 2025 – a target that would be double the earlier forecasts.
Fox’s increased holding in FanFuel has significant upside given the brand’s potential and the US sports betting boom.
What’s intriguing about the FanDuel-DraftKings matchup is that analysts suggest that FanDuel is well undervalued compared to its direct competitor DraftKings. That valuation gap is estimated to be as significant as $6.95 billion.
This estimate is despite the notion that Flutter holds more market share and generates more revenue than DraftKing. “You have to believe that our business in America is more valuable than the DraftKings business. So there is some mismatch between the valuations of the business,” said Jackson.
The DraftKings stock has risen over fourfold in the past year, holding a market cap of $25.24 billion.
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