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   Technology StocksDraftKings, Inc. / Online Gambling

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From: Glenn Petersen3/18/2022 7:56:57 AM
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Analysis: Could DraftKings Stock Drop Hurt Sports Betting Market Share?

Written By Brad Allen
Legal Sports Report
on March 17, 2022

Stocks, it seems today, only go down.

Growth stocks across the market, including US sports betting companies like DraftKings, have trickled downwards relentlessly in recent months. Many are down more than 70% from their highs last year.

But the slide is more significant for some companies. Specifically, it matters most to those who might need to turn to the market for more cash.

DraftKings cash crunch?

Both DraftKings and PointsBet fielded multiple questions about their cash reserves during the Q4 earnings season.

At DraftKings’ investor day, analysts asked specifically: “Do you have enough cash to become cash-flow positive?”

“Yes,” replied CEO Jason Robins. “If there’s anything I want people to take away from today’s presentation, it’s three things. One is that the playbook is working. Two is that if we execute that playbook, we can get to profitability. And third is that we have more than sufficient capital on the balance sheet to execute that playbook.”

DraftKings has around $2 billion in the bank, but posted a net loss of $1.5 billion in 2021. It potentially has less than two years cash on hand under current conditions.

Predictions are hard in US market

Not everyone is convinced DraftKings can reach its inflection point, however. For starters, cash burn is highly dependent on new state launches.

In turn, that is dependent on the whims of state legislatures and even public voters. If California sports betting comes online in 2023, for instance, that launch alone could cost more than most others to date.

As a result, Deutsche Bank said in a recent analyst note there is “ambiguity” around DraftKings’ path to profitability.

“We believe a valuation floor will remain fleeting until investors can more confidently identify the EBITDA/cash flow potential of the business,” Deutsche said. “Given what we deem to be distant and lofty targets … there is little change in our view.”

How else to get money?

If DraftKings does need to raise cash, they could look to sell debt or equity. But neither will be cheap.

“There is zero demand for a stock down -70% in 6 months,” said Adam Steffanus, global equity portfolio manager at Advisory Research. “The existing debt is trading at distressed levels.

“The reality is that you can always raise capital. But the price would be so punitive and dilutive and investors would react so horribly, that it’s not a viable option. The stock would fall another 20% if they tried an equity raise.”

Robins’s comments also suggest DraftKings would prefer not to raise more cash.

What next then for DraftKings?

So what are the alternatives? The easiest solution is to cut costs, starting with marketing spend.

DraftKings had $734 million of variable marketing spend in 2021. But that spend is directly correlated to new signups and active customers. Cutting it would hurt market share, especially with FanDuel pledging to keep spending.

Would DraftKings potentially have to accept lower market share in that case?

Should DraftKings look at M&A?

Another route could be to try to find more cash flow via M&A. Paul Leyland, an analyst at Regulus Partners, suggested DraftKings might be smart to merge with a profitable European operator.

“Who stands out as a cash-generating solid business that can easily do US licensing?” Leyland asked. “Betclic perhaps, Kindred? Or does bet365 decide it doesn’t want to do the totally organic route in the US anymore?

“Either way, I’d argue M&A is easier for (DraftKings) now that the valuation is reasonable. Because nobody wants your paper when you are worth $40 billion based on nothing.”

A new landscape

DraftKings, of course, is not alone in its current situation. Under similar conditions, PointsBet also has around two years of cash remaining.

CEO Sam Swanell said at Q4 he was “confident” in the cash position, but that the company might need to raise more capital in the future.

He admitted it might be tricky to raise cash at reasonable rates right now, but that might be a different question in 12 or 24 months.

“I think we have flexibility,” Swannell added. “If equity markets are looking poor at certain points in time, there are levers we can pull.”

Deal or no deal?

Those levers could well be in M&A. PointsBet has explored a potential joint venture with Yahoo Sports, industry sources said. Not everyone is enamored with that potential deal either.

“We’re skeptical it would offer anything more than incremental upside for PointsBet,” Eilers & Krejcik said in a recent note.

But that might be where pure-play US sports betting operators are at present. The deals are about incremental gains rather than transformation. It’s a new world and much like March Madness, the goal is simply to survive and advance.

Analysis: Why DraftKings Stock Selloff Could Hurt Its Market Share (

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To: Glenn Petersen who wrote (244)3/18/2022 8:09:45 AM
From: Glenn Petersen
   of 275
Analysis: Is Genius Sports A Takeout Target As Market Cap Drops?

Written By Brad Allen
Legal Sports Report
on March 18, 2022

Genius Sports sank below a billion dollars in market cap last week, as the company saw a continued selloff despite strong Q4 revenue growth.

Genius quarterly revenues grew 79% year-on-year to $84 million, according to its Q4 earnings report.

Group adjusted EBITDA was -$12.5 million, driven by “accelerated investment in the business.”

Heavy losses for Genius Sports

For the full year, Genius losses were a massive $604.5 million. That was driven by nearly $500 million in stock-based compensation as it booked some of the cost of warrants given to the NFL as part of its official data deal.

Genius said it would post positive group adjusted EBITDA of approximately $15 million in 2022. However, some analysts questioned the value of that number when it does not include the cost of stock-based compensation.

Genius shares fell around 8% to $4.50 following the print and are down 78% over the last year. That equated to a market cap of $978 million as of Monday morning.

Buy or be bought?

However, the share price dislocation could spur M&A from both angles.

Genius chief commercial office Jack Davidson told analysts last week:

“There’s a lot of opportunity in the market. There’s obviously been some quite significant price corrections in lots of different ways. And that provides opportunity, frankly.

“So, we’re open, we’re working hard, we’re assessing opportunities. We’ll study and we’ll be opportunistic,. But there’s nothing specific that’s worth updating in terms of individual targets.”

Low cash on hand

Genius has about $222 million on the balance sheet at the moment.

Conversely, the company’s shrinking market cap might attract takeover bids as well.

Could an operator, supplier or even a sports league acquire Genius?

Takeover target

One analyst says the glitziest Genius partner is not a prime candidate.

“I think it is unlikely the NFL takes a swing at them,” said Ryan Sigdahl, an analyst at Craig-Hallum. “It is too diverse a business with all the other leagues covered by Genius. I doubt the NFL would want to manage 200,000 other sporting events around the world. Those sports are needed to add scale and help cover fixed costs of the business (tech, distribution, etc.).

“Could another B2B supplier be interested? I think they should be. Would $GENI be interested in selling here? I doubt it.”

Sigdahl has a buy rating on the company and a $17 price target.

Analysis: Is Genius Sports A Takeout Target As Market Cap Sinks? (

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To: Glenn Petersen who wrote (245)3/18/2022 8:29:58 AM
From: Glenn Petersen
   of 275
Rush Street Touts Marketing Efficiency As BetRivers Fights For US Share

Written By Matthew Waters
Legal Sports Report
on March 18, 2022

Executives at BetRivers parent RSI praised its disciplined marketing and online casino mix for its spot as a top operator in the US.

Rush Street Interactive laid out its expectations for 2022 earlier this month, which include launching in Ontario and Mexico while continuing to ramp up new US sports betting states like New York and Louisiana.

RSI reported $488.1 million in revenue for 2021, up 75% from 2020. The company is not yet profitable, though, with an adjusted EBITDA loss of $65.1 million spurred by ad and promo expenses of $186.9 million. Those expenses more than tripled the $56.5 million spent in 2020.

Profitability is not in the cards for the full company this year but some states should be contribution-positive, execs said. RSI expects revenue of $580 million to $630 million for 2022. Investors were less than thrilled, it seemed, as the stock was down more than 20% in early trading following the report.

BetRivers, PlaySugarHouse combine for fourth in Q4RSI’s BetRivers and PlaySugarHouse brands accounted for 10.5% online casino market share and 4.5% online sports betting market share in the fourth quarter when measured by GGR.

That makes the operator among the best in the US, CEO Richard Schwartz said.

It was clear BetRivers was not trying to hang with the big boys when it launched mobile NY sports betting alongside Caesars, DraftKings and FanDuel. The brand offered a fraction of free play that the others did which led to just a 1.9% handle share through the first two weeks.

Measured marketing means focusing on right players

That is all part of the plan in New York, Schwartz said.

“There is a lot of frost reflected in the early results from the state and the early results are following the promotional spend. Similar to RSI’s other state launches, we’ve been more measured with our promotional offerings and expect to earn market share over time as the high-quality customers we target enjoy the experience we bring to them.”

Even with limited promo spend in New York, the market will be a negative drag on revenue in the quarter, CFO Kyle Sauers said. Ontario and Mexico should turn positive faster than New York because those markets have lower tax rates and include online casino, he added.

RSI promos significantly lower than the rest of the market, it estimates. In Pennsylvania, promo credits as a percentage of online gross betting revenue were 29.6% for RSI and 37.3% for the rest of the market.

Increased Q4 marketing paying off

RSI did bump up its marketing in the fourth quarter during NFL betting season. That led to higher costs per acquisition, but it is already paying off, Schwartz said.

The increased marketing in the quarter helped reach a wider audience during the “most intense sports season of the year,” Schwartz said. But the increased brand awareness is already bearing fruit in the first quarter with cost per acquisition down to “significantly lower” levels.

Monthly active users are up 27% from where RSI was in the fourth quarter, Schwartz said.

RSI profitable this year … without newer states

RSI would be a profitable company in 2022 if it paused new state launches after the first half of 2021, Schwartz said. That means stripping out Arizona, Connecticut, Louisiana and New York, all of which launched in October or later.

That shows a path to profitability in live markets, and that massive marketing is not needed to achieve it, Schwartz said.

Sauers would not give any specifics beyond 2022 but said there is a “real good opportunity” to show profitability in 2023.

Could BetRivers and Yahoo Sports combine?

RSI is at least considering a potential combination with Yahoo Sports, Schwartz said.

CNBC reported Apollo Global is in early talks with sportsbooks to merge with Yahoo Sports.

“So, I think anytime you have a media partner asset that could help you drive traffic and have some brand awareness in the marketplace is something that is important for us to consider,” Schwartz said. “We consider all opportunities, all companies that maybe have opportunities, so that’s certainly something that is worth companies like us and others taking a look at. Because certainly they’ve been in the business for a long time and have some great assets.”

Wither RSI in Illinois with remote registration?

Remote registration is up and running for Illinois sportsbooks, which were stuck with in-person registration since last April.

That will increase competition in the state without a doubt, Schwartz said. Along with increased marketing, there could be a wave of new entrants starting with BetMGM, which waited until remote registration returned to launch.

BetRivers has a strong local brand in Illinois, though, which Schwartz expects will help the company continue to do well despite the competition.

RSI Touts Marketing Efficiency As BetRivers Fights For US Share (

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From: Glenn Petersen5/6/2022 12:35:50 PM
   of 275
DraftKings Revenue Up 34% as Gambling Unfazed by Inflation

The sports-betting company continues to post losses on high expenses to attract customers

By Dean Seal
Wall Street Journal
May. 6, 2022 10:14 am ET

DraftKings Inc. DKNG -5.60%? said first-quarter sales rose by more than a third, adding that record inflation was having no impact on gambling habits.

Still, the Boston-based company’s quarterly loss continued to widen with ballooning operating expenses to attract customers. Its first-quarter loss was the second largest it has reported since going public through a reverse merger in April 2020.

Chief Executive Jason Robins said that the company had 2 million monthly customers, up 29% from a year ago, and that it has a strong pipeline of new jurisdictions to enter over the next year. While high inflation is denting demand for everything from cigarettes to mattresses, he said that its business has been unscathed.

“We are not seeing any impact from inflationary pressures on customer demand,” Mr. Robins said. The company raised its sales outlook slightly for the year, following better-than-expected revenue.

DraftKings is in an expensive fight with competitors to draw in customers as more states legalize sports betting. Its operating expenses increased 46% to $933 million in the quarter compared with last year.

For the period ended March 31, DraftKings reported a net loss of $467.7 million, or $1.14 a share, compared with a loss of $346.3 million, or 87 cents a share, a year earlier. On an adjusted basis, the company said its net loss was 74 cents a share. Analysts polled by FactSet were expecting a first-quarter adjusted loss of $1.09.

First-quarter revenue came in at $417 million from last year, with average revenue per user up 11% to $67. Analysts projected revenue of $412 million.

For the full year, DraftKings now expects revenue between $1.93 billion and $2.1 billion, up $50 million from the midpoint of its prior guidance.

The company narrowed its forecast for adjusted losses before interest, taxes, depreciation and amortization to between $760 million and $840 million, a $75 million improvement from prior guidance.

Shares fell 7.9% in early-morning trading to $13.30. They are down around 72% over the past year.

DraftKings Revenue Up 34% as Gambling Unfazed by Inflation - WSJ

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To: Glenn Petersen who wrote (247)5/25/2022 6:10:36 AM
From: Glenn Petersen
1 Recommendation   of 275
DraftKings CFO Expects Smaller Ops To ‘Continue To Throw In The Towel’

Written By Brad Allen
Legal Sports Report
on May 24, 2022

Smaller operators will continue to be squeezed out of US sports betting as the market matures, DraftKings CFO Jason Park speculated last week.

Speaking at an investor summit last week, Park was asked how the US sports betting market would evolve in the coming years.

“I think the competitive dynamic and the market structure will continue to rationalize,” Park said. “… perhaps some of those small single-digit market share players, more of them continue to throw in the towel.”

A US market for the strong

Park contended investors “misunderstood” the market structure and how strong the leading operators’ position is. FanDuel and DraftKings alone account for more than 60% of the market versus “a long tail of single-digit market share operators.

Park expects that long tail to drop away, meaning DraftKings market share is “very defendable, with upside,” the CFO said.

Among states that report by brand, DraftKings Sportsbook has a 26% share of betting handle in CY2022. That is second to FanDuel, which has 36%.

Consolidation is already happening

Smaller sports betting operators like Churchill Downs are exiting the US sports betting market altogether. Larger players like Wynn, PointsBet and Caesars also cut back on their market spend.

Even heavyweight BetMGM is pulling back spend in New York because of concerns about profitability in the state.

Park was also asked about recent comments from Caesars that its market share had not yet been hurt by the spending pullback.

“I think the proof will be in the pudding,” Park said. “Let’s see how that pans out. … I think we have to keep an eye on whether other sportsbooks are able to retain players as well [as DraftKings.]”

Two sides to every storyOf course there is some pushback to the idea of a US sports betting oligopoly. Playtech CEO Mor Weizer said last year that a third of the market would be powered by third-party suppliers.

No cash crunch for DraftKings

In the same vein, the exec dismissed the idea DraftKings might have to raise cash again before it can turn profitable.

Jefferies noted last week this so-called “funding crunch” was factored into the current stock price. However, Park downplayed those concerns:

“I fully understand this is top of mind. And if I was not deep in the name and I looked at $2.11 billion [on the balance sheet] at the beginning of this year with -$875 million EBITDA guide, which is now an -$800 million EBITDA guide and a few things that sit between EBITDA and free cash flow, like capitalized software, you might say ‘well, gosh, that feels tight.'”

Parke said the company modeled various scenarios and was “highly confident” it had sufficient liquidity to flip profitable.

California dreamin’ for DraftKings

Park said that was the case even if California legalized sports betting.

On that front, Park was “cautiously optimistic” about voters supporting legal CA sports betting in November. California would instantly become the largest betting market in the US, though the online initiative supported by sportsbooks faces heavy tribal opposition.
DraftKings stock was last up 3% on Monday to $13.50.

DraftKings CFO Expects Smaller Ops To 'Continue To Throw In The Towel' (

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To: Glenn Petersen who wrote (248)5/25/2022 8:13:13 PM
From: Glenn Petersen
   of 275
DraftKings CEO on Accepting Crypto Payments: 'People Want It, We're Working Towards It'

As DraftKings edges more into the NFT business, might it begin accepting crypto for entry fees and bets? Jason Robins says it's likely.

By Daniel Roberts
May 25, 2022
2 min read

In the past year, the publicly traded fantasy sports and sports betting company DraftKings has gone hard on crypto—specifically NFTs.

In July, DraftKings launched an NFT marketplace that is the exclusive home of NFTs from Tom Brady's platform Autograph. The company also offered a CryptoPunk NFT as the prize for a fantasy contest, and in June the company's three co-founders all wore CryptoPunk T-shirts to ring the opening bell at the Nasdaq.

Might accepting crypto as payment for fantasy contests and betting be next on the roadmap? DraftKings CEO Jason Robins says it's likely.

"Certainly people want it," Robins said on the latest episode of Decrypt's gm podcast. "Certainly within the marketplace, we should be able to do that. So we're working towards it."

Crypto and sports continue to converge, and one of the best examples is DraftKings. CEO Jason Robins joins Dan Roberts and Jeff Roberts to talk about how DraftKings is embracing NFTs as prizes, when the company might accept crypto for entry fees and bets, and how his experience dealing with regulators and lawmakers mirrors what crypto companies are now going through in Washington.

But Robins also sees regulatory hurdles with accepting crypto payments, especially since DraftKings and other sports betting operators are dealing with a state-by-state legal landscape. (In 2018, the Supreme Court struck down PASPA, the federal ban on sports betting, which allowed states to legalize sports betting; 30 states have.) "Different products in different states might be more likely to be doable earlier, and some may be out of our control," Robins said.

He's also cautious because crypto is such a new space and can be confusing to the uninitiated. "There's protections that people don't necessarily have in the crypto space that we think are important," he said. "We feel like in order to introduce something like that to our platform, we need to go a little bit beyond maybe where some others in the market have gone, because there's an expectation from our customer that we do so."

By that same logic, Robins even thinks the entire crypto industry could use more centralization to welcome newbies—even though that flies in the face of the decentralization rallying cry of crypto purists.

On the gm podcast, Robins also talked about how and when he first got into crypto and NFTs, why so many people react so strongly against NFTs, and what he foresees happening next in the industry. Listen to the full episode wherever you get your podcasts.

DraftKings CEO on Accepting Crypto Payments: 'People Want It, We're Working Towards It' - Decrypt

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From: Glenn Petersen9/15/2022 3:59:25 PM
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Disney CEO Bob Chapek says ESPN will never take bets

Published Thu, Sep 15 202210:10 AM EDT
Updated 1 Min Ago
Lillian Rizzo @Lilliannnn

Key Points
  • Disney Chief Executive Bob Chapek said Thursday that the company's sports network ESPN is looking for a partner to help it step into sports gambling.
  • Chapek said in exclusive interview with CNBC's David Faber the sports network will never be a sportsbook that accepts bets.
  • The comments come after activist investor Dan Loeb's Third Point recently took a stake in Disney and pushed to spin off ESPN.
Disney Chief Executive Bob Chapek said Thursday that the company's sports network ESPN is looking for a partner to help it step into sports gambling.

"We at ESPN have the ability to do that. Now we're going to need a partner to do that, because we're never going to be a book, that's never in the cards for the Walt Disney Company," Chapek told CNBC's David Faber said in an exclusive interview. "But at the same time, to be able to partner with a well-respected third party can do that for us."

The comments come after activist investor Daniel Loeb's Third Point recently took a new stake in Disney during the second quarter, valued at about $1 billion, or 0.4% of the company.

Initially, Loeb pushed for Disney to spin out the sports property, saying it would be easier for it to take part in certain initiatives, such as sports gambling. But on Sunday Loeb reversed his position, saying on Twitter, "We have a better understanding of @espn's potential as a standalone business and another vertical for $DIS to reach a global audience to generate ad and subscriber revenues."

Sports betting was at the core of Loeb's earlier push to spin off ESPN.

"We look forward to seeing Mr. Pitaro execute on the growth and innovation plans, generating considerable synergies as part of The Walt Disney Company," Loeb added to the Tweet, referencing Disney's Chairman James Pitaro.

Loeb's reversal came shortly after Chapek told reporters during Disney's D23 Expo that he had big plans for ESPN's future, without disclosing details.

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From: Glenn Petersen11/4/2022 6:10:02 PM
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DraftKings shares tumbles after monthly users fall short of estimates



-- DraftKings stock sank 26% after the company reported monthly users for the quarter that fell short of estimates.

-- The company raised its revenue forecasts for the year 2022.

Shares of DraftKings were down 26% Friday after the sport betting company reported slower monthly customer growth in the third quarter that fell short of estimates.

The company raised its revenue guidance for the year, however, after revenue for the quarter came in above Wall Street expectations. Its loss for the period wasn’t as steep as expected.

For the quarter ended Sept. 30, DraftKings said its monthly unique paying customers increased to 1.6 million, up about 22% from 1.3 million a year ago. That was short of the 2 million that analysts projected, according to StreetAccount, and slower than in the previous two quarters.

DraftKings said the expansion of its online Sportsbook product, launched in September, will help drive customer acquisition, engagement and retention.

Following the launch of its online Sportsbook in Kansas in September, DraftKings said it is live with mobile sports betting in 18 states that represent about 37% of the U.S. population. It said it plans to launch in Maryland, Puerto Rico, Ohio, and Massachusetts pending licensure and regulatory approvals.

“Our team continued to drive top-line growth through highly effective customer engagement and compelling product and technology enhancements while remaining focused on our path to profitability,” said Jason Robins, DraftKings’ co-founder and CEO.

For the quarter ended Sept. 30, the company reported a net loss of about $450 million, or $1 a share, compared with a loss of $545 million for the same period last year. Analysts expected a loss of $1.04 per share.

Revenue for the period rose to $502 million, which was higher than the $437 million Wall Street expected.

The company raised its revenue guidance for 2022 to a range of $2.16 billion to $2.19 billion, up from its previous estimate of between $2.08 billion and $2.18 billion.

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To: Glenn Petersen who wrote (251)11/4/2022 9:26:51 PM
From: Glenn Petersen
2 Recommendations   of 275
More detail:

DraftKings Stock Hammered On Third-Quarter Earnings Report

Written By Matthew Waters
Legal Sports Report
on November 4, 2022

Investors hammered DraftKings stock following the third-quarter earnings report from the sportsbook operator early Friday.

The report had some positives as DraftKings Sportsbook outperformed in terms of revenue and cut its quarterly adjusted EBITDA loss by 15.7% to $264.2 million. The company also raised its revenue and adjusted EBITDA goals for this year and introduced 2023 guidance suggesting about a 33% improvement at the midpoint.

Investors clearly wanted more, though. The past week has included both Caesars and PENN Entertainment boasting sports betting and iGaming profitability in October 2022 with a potential to turn a profit for the fourth quarter.

DraftKings, however, did not join that profitability parade. The company maintained its expectations that profitability will first come in the fourth quarter of 2023 with the potential for a break-even full year in 2024.

DraftKings stock falling on high volume

DKNG was down more than 17% when the earnings call started at 8:30 am Eastern, eventually opening down 15.4% at $13.25.

The stock is still tumbling as of this writing, hitting $12.00 at its lowest so far.

DKNG’s volume was up more than a third compared to its 30-day average by 10:30 am.

New DKNG guidance for this year and next

DraftKings raised its 2022 revenue guidance midpoint by $45 million to $2.175 billion while adjusted EBITDA loss improved $10 million to $790 million.

The higher revenue came from a better mix of high-margin parlays following the addition of new products in time for NFL betting. Parlays as a percentage of handle grew 5 percentage points to 28% compared to last year.

Adjusted EBITDA expectations improved despite the addition of launch costs for Kansas and Maryland, as well as pre-launch costs for Ohio now included in the full-year guidance.

DraftKings is guiding to midpoints of $2.9 billion in revenue and $525 million in adjusted EBITDA loss for full year 2023.

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To: Glenn Petersen who wrote (252)11/7/2022 5:42:37 AM
From: Glenn Petersen
2 Recommendations   of 275
Fox wins right to buy a stake in FanDuel, but not at the price it wanted



-- Fox won the right to buy an 18.6% stake in sports betting company FanDuel Group from its parent company Flutter, but not at the valuation, according to a ruling Friday from a New York arbitrator.

-- Should Fox exercise its option to take the stake, it would be at a price of at least $3.72 billion.

-- The decision ends the more-than-yearlong lawsuit between the two companies over the valuation of FanDuel, one of the leading U.S. sports betting platforms alongside services from DraftKings, Caesars and MGM.

Fox won the right to buy an 18.6% stake in sports betting company FanDuel Group from its parent company Flutter, but not at the valuation, according to a ruling Friday from a New York arbitrator.

Should Fox exercise its option to take the stake, it would be at a price of at least $3.72 billion.

The decision ends the more-than-yearlong lawsuit between the two companies over the valuation of FanDuel, which has emerged as one of the leading U.S. sports betting platforms alongside services from DraftKings, Caesars and MGM.

The price that Fox would have to pay is based on a FanDuel valuation of $20 billion, according to the ruling. Flutter, which owns nearly 95% of FanDuel, acquired a 37.2% stake in the company in December 2021 at an implied valuation of $11.2 billion. Fox had argued the price should be based on that threshold.

Still, Fox could have been ordered to pay much more. A March 2021 estimate by Jeffries analysts said FanDuel could worth up to $35 billion, which would value a nearly one-fifth stake at closer to $6 billion.

“Fox is pleased with the fair and favorable outcome of the Flutter arbitration,” the company said in a statement following the ruling. “Fox has no obligation to commit capital towards this opportunity unless and until it exercises the option. This optionality over a meaningful equity stake in the market leading U.S. online sports betting operation confirms the tremendous value Fox has created as a first mover media partner in the U.S. sports betting landscape.”

Fox has a 10-year option to acquire the stake, which runs through December 2030. The arbitrator ruled that there would be a 5% annual escalator on its purchase price, meaning the current price of a deal would be $4.1 billion.

“Today’s ruling vindicates the confidence we had in our position on this matter and provides certainty on what it would cost Fox to buy into this business, should they wish to do so,” said Flutter CEO Peter Jackson in a statement.

Fox said, as part of the arbitration ruling, Flutter cannot pursue an IPO for FanDuel without Fox’s consent or approval from the arbitrator. However, Flutter disputed that claim and later told CNBC in a statement that Fox does not have a block on any potential IPO of FanDuel, should one occur.

Flutter had previously considered taking FanDuel public, taking advantage of the booming sports betting market.

Sports betting has continued to grow in the U.S. as more states bring legal sports betting online — as of Nov. 1, 33 states allow some form of sports betting, with California having two measures on its ballot to legalize it.

That has pushed up revenues as well. Commercial sports betting revenue nationally through August was $3.97 billion, up nearly 70% year over year, according to data from the American Gaming Association.

But that continued growth hasn’t benefitted all public sports betting companies. DraftKings stock posted its worst-ever decline on Friday after the company reported monthly customer growth that fell short of estimates even as it revised its revenue forecast upwards. DraftKings, which is down more than 59% year-to-date, is now valued at just over $5 billion.

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