Flutter Entertainment and Fox Corporation recently unveiled a pivotal plan. Their Fox Bet sports betting joint venture will cease operations next month. The phased closure will kick off today, running until August 31st as reported by Reuters. Amid these changes, Flutter will continue running the PokerStars US-based operations under The Stars Group US brand.
Origin and Journey of Fox Bet
Fox Bet had a unique inception in May 2019 when Fox teamed up with The Stars Group to introduce a novel sports betting service in the United States. This partnership was an exciting development, preceding Flutter’s acquisition of The Stars Group in the following year. The original vision was to launch Fox Bet as two distinctive products: a nationwide free-to-play game, and a second one targeted at states where betting was legal.
In a strategic move, Fox Sports, a Fox subsidiary, decided to acquire a minority holding in The Stars Group. They agreed on a 4.99% stake for a sum of $236 million. This collaboration included an exclusive 25-year commercial agreement for The Stars Group to use certain Fox Sports trademarks for games and online sports wagering.
Fox Bet made its grand entry in New Jersey in September 2019, effectively replacing the previously active BetStars brand. With a solid start, the platform later expanded its reach to Colorado, Michigan, and Pennsylvania.
Legal Hurdles and the Future of Fox Bet
The journey wasn’t all smooth sailing. In April 2021, Fox instigated an arbitration suit against Flutter regarding a dispute over the purchase price of Fox’s option to buy an 18.6% stake in FanDuel. The case concluded in November 2022, with a New York arbitrator ruling in favor of Flutter.
The tribunal established that the purchase price was based on FanDuel’s fair market value as of December 3, 2020. Interestingly, this was the day Flutter revealed the acquisition of Fastball’s 37.2% stake in FanDuel. Fox now has a 10-year period, starting from December 2020, to exercise the option to purchase the stake. Failure to do so will result in the option’s lapse.
Implications for the iGaming Industry
This decision bears significant implications for the entire US iGaming industry:
- Re-Structuring of Partnerships: Fox’s retention of the right to use Fox and Fox Bet brands suggests a potential for new strategic partnerships and ventures.
- Market Re-Alignment: The decision to close Fox Bet could lead to a market realignment, with other players vying for the gap left by the platform’s exit.
- Legal Considerations: Legal disputes such as those experienced by Fox Bet underscore the importance of clear contractual agreements and thorough understanding of fair market values.
Fox’s journey, marked by innovation and challenges, offers valuable insights into the dynamic world of iGaming. As this chapter closes, the industry watches with anticipation for the next moves by Flutter Entertainment and Fox Corporation.