American media conglomerate Fox Corporation has reportedly filed a lawsuit against British iGaming behemoth Flutter Entertainment concerning its upcoming option on a 18.6% stake in prominent online sportsbook operator FanDuel Group.
According to a Tuesday report from American broadcaster CNBC, London-listed Flutter Entertainment spent approximately $4.2 billion in December so as to purchase a 37.5% stake in FanDuel Group and take its aggregate holding in the sportbetting firm up to around 95%. This arrangement purportedly came a little over a year after Fox Corporation was granted the option of buying an 18.6% share of the sportsbook operator from July for a prearranged price of $11.2 billion.
The broadcaster reported that this latter understanding was worked out at the same time as Flutter Entertainment, which was previously known as Paddy Power Betfair, inked a $6 billion all-stock deal to take over prominent iGaming firm The Stars Group Incorporated. This Canadian enterprise had purportedly partnered with Fox Corporation to launch the United States-facing FoxBet sportsbetting service that is currently available to punters in the states of Colorado, New Jersey, Michigan and Pennsylvania.
However, Flutter Entertainment is now reportedly arguing that its takeover of FanDuel Group invalidated this earlier claim with Fox Corporation still able to acquire the 18.6% option but only if it agrees to pay ‘fair market value.’ Such a move could purportedly end up costing the Nasdaq-listed firm north of $25 billion considering that up to 19 American states could vote to legalize some form of online sportsbetting this year.
Demonstrably upset at the alleged alteration to its terms and Fox Corporation reportedly filed a lawsuit before New York’s Judicial Arbitration and Mediation Services dispute resolution organization last week in hopes of getting the previously agreed price for the controversial option reinstated. The company purportedly declared that this arbitration came ‘by the consent of all parties’ and is its attempt ‘to enforce its rights to acquire an 18.6% ownership interest in FanDuel Group.’
CNBC reported that this whole issue could be further complicated if Flutter Entertainment completes its plan to spin off FanDuel Group into a separately-traded entity before July. Such a move could purportedly see the 18.6% option attract a premium as the sportsbook operator holds a dominant position in three of the United States’ most lucrative online sportsbetting markets of Illinois, New Jersey and Pennsylvania.
As if all of this wasn’t enough, the broadcaster moreover reported that Fox Corporation has a ten-year option to buy half of the American assets of The Stars Group Incorporated, which would include the FoxBet sportbetting service. It has for months purportedly been pushing Flutter Entertainment to merge these holdings with those of FanDuel Group after giving it more equity in any newly-listed concern.