The deal enables Flutter to Expand the Business in the US Market
Flutter, the holding company operating international brands including Paddy Power, Betfair, Pokerstars, Sky Bet, Sportsbet, FOX Bet, etc., is to acquire the 37.2% interest in FanDuel, a New York City-based gaming company, which is currently held by Fastball, for USD$4.175bn.
Consideration for the agreement is expected to be satisfied through a combination of $2.088bn in cash and the issue of approximately 11.7m new Flutter ordinary shares directly to Fastball.
The cash portion will be funded through cash on balance sheet and an equity placing to raise approximately £1.1 billion.
The deal, which is still conditional on Flutter shareholder approval, takes Flutter’s stake in FanDuel from 57.8% to 95% accelerating the buy-out of minority investors in the company, and increasing its exposure to US market. It also ends Fastball’s economic interest in FOX Bet.
As said by Peter Jackson, Flutter Chief Executive Officer, with this new transaction, the company plans to continue to expand their US business, given the potential size of the US total market for online betting and gaming, which continues to grow year on year.
By the end of 2021, Flutter expects its online sports betting products to be available in US states accounting for approximately one third of the US population and its online gaming products to be available in four states, equating to 11% of the US population. In these cases, regulated states does not include any of the four most populated states, namely California, Texas, Florida or New York.
Based on the earnings guidance provided in the third quarter trading report (issued on November, 11 2020), Flutter expects to generate online EBITDA from these three regulated markets of over $1bn in 2020. To comprehend the scale of the US market opportunity, the states that they expect to be live in by the end of 2021 can be worth c.$9.1bn in gross gaming revenue terms at maturity.
The US is to challenge European regulated markets where operators offer a huge offering and different kind of rewards similar to casinobonus in Finland.
Founded in 2009, FanDuel offers sportsbook in New Jersey, Pennsylvania, Indiana and West Virginia, daily fantasy sports, online casino and online horse race betting products. In addition, the company has a presence in all 50 US states through its free-to-play products while it takes real-money play in 41 states.
Today, FanDuel has over 9.5 million customers nationally. Marketing investments and media partnerships (with Turner Sports and Entercom) have enabled the company to secure access to key media assets and integrations at both a local and national level and drive direct customer acquisition. Since 2018, Flutter Entertainment’s U.S. operations have merged under the FanDuel brand, leveraging the the latter’s existing brand recognition and user base to expand its U.S. sports betting business.