Flutter Rumored to Be Mulling FOX Bet IPO, Says Research Firm

Posted on: September 3, 2020, 12:13h. 

Last updated on: September 3, 2020, 01:23h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

In the gaming industry rumor of the day, Flutter Entertainment (OTC:PDYPY) may be considering an initial public offering (IPO) for FOX Bet, an online gaming and media partnership with Fox Corp. (NASDAQ:FOXA).

Flutter Could IPO With FOX Bet
The latest version of the gaming industry rumor mill indicates Flutter could IPO the FOX Bet business, which has broadcast network ties. (Image: Wall Street Journal)

Chatter to this effect originated in the newest version of the EKG Line, a biweekly newsletter published by research firm Eilers & Krejcik Gaming.

Trending up: Rumors of a FOX Bet IPO, which would give parent company Flutter the opportunity to spin off its other US brand in a frothy market,” according to the publication.

The Flutter/Fox relationship dates back to last year, when the network paid $236 million to purchase a five percent stake in The Stars Group (TSG) in an effort to bolster its FOX Bet brand. Earlier this year, Flutter put the finishing touches on its $12.2 billion takeover of TSG, a transaction creating the world’s largest online gaming firm.

It’s not immediately clear if the “other US brand” being referenced by Eilers & Krejcik is FanDuel. But that’s a distinct possibility, and one that makes sense, given the lofty valuations markets are assigning to the online casino and sportsbook operators, including DraftKings (NASDAQ:DKNG), FanDuel’s arch-rival.

FOX Bet IPO Makes Sense

Selling part of FOX Bet to the public would allow Flutter to wring some value from the business, and it could spotlight growth in asset analysts view as underappreciated.

Such a move, assuming it materializes, would amount to striking while markets are enthusiastic about sports wagering equities. But it would also be another avenue for investors to tap into the media/betting theme that’s been permeating the industry for much of this year.

“It would also give investors the opportunity to play the media integration narrative, although the media integration lane — which also features PointsBet-NBC, Penn-Barstool, and theScore — has become increasingly crowded of late,” notes Eilers & Krejcik.

Last week, Australia-based PointsBet landed a $500 million deal with NBC Sports, under which the broadcaster gets a 4.9 percent interest in the gaming company that could increase to 25 percent over five years.

Moving Parts

How a FOX Bet IPO by Flutter affects the Fox network remains to be seen. But it’s estimated the broadcaster’s stake in the gaming company is worth more than $320 million, with the TSG interest valued at over $2 billion.

Under the terms of Flutter’s agreement with Fox, which was reached when the former acquired TSG, the media company has the rights to own up to 18.5 percent of FanDuel by 2021, and can eventually control half of TSG’s US operations.

With just over two percent share, FOX Bet is the ninth-largest online sports betting platform in the US. It’s available to gamblers in Colorado, New Jersey, and Pennsylvania.