Barely days after rumors made the rounds that Fox and Flutter would pull the plug on FOX Bet, both entities have released a public statement confirming the shutdown. The statement, which was issued on Monday, July 30 read in part:
“Flutter Entertainment and Fox Corp. announce today the decision to close sports betting platform FOX Bet. A phased closure of FOX Bet’s operations will take place between 31 July and 31 August 2023.”
FOX Bet was launched in 2019 after a collaboration between Fox and top Canadian gambling brand, The Stars Group. However, Flutter would enjoy controlling shares of FOX Bet in 2020 when it acquired The Stars Group in the same year.
Since then, Flutter had continuously been accused of neglecting FOX Bet’s operations in favor of its other gambling operations. Flutter currently controls a large chunk of PokerStars’ US operations and 95% of FanDuel’s total shares.
Over the past three years, FOX Bet has been dealt cruel economic losses, which, in turn, trickled down to Flutter and Fox. The sportsbook brand loses up to $60 million annually, and this year, it contributed to a 20% loss to Flutter’s gross earnings. To many stakeholders, the economic drawbacks were sufficient reason to shut down the operations.
Unfortunately, FOX Bet barely penetrated the US market, as it could only operate in four of a possible 30 states. As a result, the sportsbook could only account for a little above 1% of the total US market share, a far cry from other sportsbooks where Flutter enjoys controlling shares.
On a positive note, though, Fox Corp. which potentially appears to be worst hit by the aftereffects of the closure would not walk away without compensation.
The company can exercise an option to acquire 18.6% of FanDuel’s operations. This clause formed a part of the agreement that allowed Flutter to take control of FOX Bet after its acquisition of The Stars Group. Interestingly, Fox sued Flutter in 2021 with both companies differing on the exact price of the stake.
Should Fox exercise its right to buy the FanDuel stake, it may well be set for a windfall. Currently, FanDuel is worth an estimated $20 billion, and the returns could provide a much-needed financial cushion for the company.
Fox also owns 2.5% of Flutter and the value of the shares could see a massive boost when Flutter finally lists on the New York Stock Exchange. With investor approval already secured, Flutter is expected to list before the end of the year.
Perhaps the most important compensation for Fox in the midst of this development is that it gets to retain rights to the brand.
“FOX will retain future use of the FOX and FOX Bet brands, including FOX Bet Super 6, and intends to launch an all-new FOX Super 6 game later this summer,” the statement that announced the closure of FOX Bet revealed.
This part of the statement has led many to conclude that FOX Bet could be revived soon enough. Fox has also been reported to engage in multiple talks with gaming companies across the country. In addition, News Corp, the owners of Fox, enjoy extensive broadcast rights for popular US sporting events, including the NFL, MLB and NASCAR.
Having shares in FanDuel and Flutter may provide a much-needed financial leverage if Fox does indeed want to revive the sportsbook. This way, it can easily direct returns from its stocks into improving the operations of FOX Bet.