The decision to close the FOX Bet platform is to be undertaken over the course of the next month, with a phasing out of operations to begin today (Monday 31 July) and last under August 31, 2023.

As a result, Flutter, which operated FOX Bet as part of the Stars Group, will retain ownership of PokerStars, in addition to one of the leading lights of the US’ sports betting space in FanDuel.

FOX will hold the right for all future usage of the FOX and FOX Bet brands, including FOX Bet Super 6, and intends to launch a new game associated with the latter later this summer.

Furthermore, the New York-headquartered media conglomerate will also continue to hold its option to acquire 18.6 per cent of FanDuel, which would complement the 2.5 per cent stake in Flutter that is currently held.

In September 2019, New Jersey was the first step in a FOX Bet journey that represented the first time that a US sports media organisation’s brand was serving as the face of a real money sportsbook.

The entity is to replace the Betstars portal in the Garden State as part of a commercial arrangement that was scheduled to be in place for a 25 year time frame.

At the time, Robin Chhabra, the then CEO of Fox Bet who currently occupied a similar position at Tekkorp Capital, hailed the introduction as “a game changer” that would deliver an experience “found nowhere else in the United States”.

In addition, Rafi Ashkenazi, current Executive Chair of Hard Rock Digital and past Stars Group CEO, stated that the strategic partnership “uniquely positions us to build a leading betting business in the US” and that it represented “one of the most exciting long-term growth opportunities for our company”.

Earlier in the year, Flutter revealed that the US continued to be the dominant geographical location for the group through the year’s first quarter, with further inroads seeing revenue rising 54 per cent to £2.41m (£1.56m).

The US saw revenue surge 112 per cent to close at £908m (2022: £429m), with sports and gaming up 116 per cent and 43 per cent, respectively, at constant currency.

This performance was said to have been pushed along by launches across Ohio and Massachusetts, which drove a 20 per cent player increase and led to “number one positions in both markets”.

Chief Executive Peter Jackson also reemphasised pleasure at the “overwhelming support among our shareholders” for an additional listing of Flutter in the US, the benefits of which, he noted, will “position the group well for its next phase of growth”.

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This related to the pricing of an 18.6 per cent stake in FanDuel, a brand which Flutter owns approximately 95 per cent of, that Fox has won the right to acquire.

However, despite winning the right to purchase a portion of the online casino and sports betting brand, the ruling, which was delivered late last week, has deemed a $3.72bn valuation that is higher than that being sought by Fox.

On April 7, 2021, Fox commenced the proceedings over the pricing dispute, with the group arguing that the potential payment should be based on an implied valuation of $11.2bn that Flutter shelled out to secure a 37.2 per cent stake Fastball a little over four months earlier.

However, the tribunal has determined that fair market value is that of $20bn, based on the valuation submissions of both Flutter and FOX. 

The latter has a ten-year period from December 2020 to exercise the option, with the group subject to a five per cent annual escalation. Cash payment is required at the time of exercise, and can only be done so in full.

“FOX is pleased with the fair and favourable outcome of the Flutter arbitration,” a statement issued by Fox noted.  

“Flutter cannot pursue an IPO for FanDuel without FOX’s consent or approval from the arbitrator. FOX has a 10-year call option that expires in December 2030 to acquire 18.6 per cent of FanDuel for $3.72bn, with a 5 per cent annual escalator.  

“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 US online sports betting operation confirms the tremendous value FOX has created as a first mover media partner in the US sports betting landscape.”

Following the commencement of the arbitration process in April 2021, Fox filed two supplementary items for consideration, the first of which claimed that Flutter had failed to provide commercially reasonable resources to the operation of Fox Bet.

With Flutter noting that “the tribunal has denied Fox’s claim in its entirety,” the ruling means that the group continues to retain the right to acquire up to 50 per cent of The Stars Group US, which it can only exercise if licensed.

In the event Fox does not get licensed and exercise its option in relation to TSG US, both parties have a right to terminate their agreement in August 2023. Should either party do so, this would result in a termination of the Fox Bet business. In this event Flutter would retain ownership of PokerStars US and Super6, while the use of the Fox Bet brand name would reside with Fox.

The remaining matter regards what conditions Fox is entitled to participate in an IPO of a parent company of FanDuel, should one occur.  Flutter has agreed that it will not proceed with any potential IPO, if at all, until the tribunal has resolved this remaining matter or both parties have reached an agreement on the matter. A decision on this point is expected in early 2023.

Peter Jackson, Flutter Chief Executive, commented: “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. 

“FanDuel is winning in the US market and the clear #1 operator, a position driven by its exceptional market leading product and efficiency in acquiring customers at scale. 

“The team remain focused on maintaining our leadership position and we look forward to updating the market on our progress at our US capital markets day on November 16.”

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1.7

Betfred was ordered to pay £1.7m to a Lincolnshire man after High Court Judge Mrs Justice Foster ruled that the company didn’t have grounds to withhold a jackpot payment.

Andrew Green won the huge sum playing the Frankie Dettori’s Magic Seven Blackjack game via mobile on January 26, 2018, before an alleged software glitch led the gambling firm to withhold payment.

The company claimed that the defect made the game, which was provided by, and was the intellectual property of, Playtech, more likely to pay out higher sums in winnings than intended, and that this was covered in the game’s terms and conditions.

However, Justice Foster ruled that “I am of the clear view that these clauses in the terms and conditions are inadequate to exempt Betfred from the obligation to payout on an ostensibly winning bet or series of bets”.

Green, whose official winnings was £1,722,500.24, celebrated with family and friends to the tune of £2,500 following the triumph, with Justice Foster stating that when he contacted Betfred they “did not seek at this point to suggest other than that he was a big winner”.

18.6

Flutter Entertainment affirmed that it will “vigorously defend its position,” after the Fox Corporation confirmed that it has filed a lawsuit against the digital gambling giant over a stake in FanDuel Group.

Responding to media reports of the legal dispute, Fox, which has an option to acquire a stake in the US sports betting and gaming brand in July, said that it had made its move to acquire an 18.6 per cent ownership “for the same price that Flutter paid for that interest in December 2020”.

This saw Flutter increase its interests in FanDuel to 95 per cent after the acquisition of a $4.175bn (£3.131bn) 37.2 per cent share in the group that was previously held by KKR-led consortium Fastball Holdings.

Responding to the legal manoeuvres, Flutter has labelled Fox’s position as “incorrect” and “without merit,” stating that it would “represent a windfall to Fox compared to the fair market valuation as of July 2021”.

25

Apple was hit with a class action lawsuit in the United States which alleges that the tech giant is breaking the anti-gambling laws of twenty-five states.

The lawsuit, filed by plaintiffs Joshua McDonald and Michael Helsel in the US District Court Northern District of California, San Francisco Division, alleges that the group has been profiting from illegal gambling games developed by DoubleU Games Co.

The plaintiffs are seeking statutory damages and costs, as well as the implementation of an injunction prohibiting Apple from taking part in the allegedly illegal acts. A jury trial is also demanded.

The suit alleges that ‘Apple permits and facilitates illegal gambling by operating as an unlicensed casino,’ citing the use of in-game currencies as a major contributing factor.

2021

The UK Gambling Commission outlined five core strategic objectives which it says will shape ongoing work during the coming years in striving to “make gambling fairer and safer”.

The regulator has detailed its vision for the next three years in its Corporate Strategy, published alongside its 2021/22 Business Plan, which sets out a continued focus on protecting the public and players from harm.

Confirming comments made by Tim Miller, executive director of the UKGC, in a keynote address to the CMS Virtual Gambling Conference last week, the new strategy will be delivered through five priority areas.

These are protecting children and vulnerable people from being harmed by gambling; a fairer market and more informed consumers; keeping crime out of gambling; optimising returns to good causes from the National Lottery; and improving gambling regulation.

80

The European Gaming and Betting Association welcomed the introduction of the Netherlands’ long-awaited Remote Gambling Act as a “significant achievement,” however, channelisation warnings have been issued.

The April 1 debut, which the trade association says “brings the Netherlands into line with other EU countries,” means potential licence holders are now able to submit applications to the Dutch Gambling Authority, Kansspeelautoriteit, ahead of market opening on October 1. The Ksa expects to issue 35 licenses.

In welcoming the move, the EGBA adds that it is “pleased that the new regulations focus on achieving a high-level of consumer protection and acknowledge the consumer-centric nature of online gambling by allowing a broad scope of online gambling products”.

However, the group warns that “significant concerns remain,” most notably that of an objective to achieve 80 per cent channelisation of the newly regulated market within three years.

21

A new report from Gamstop highlighted the number of bettors utilising the self-exclusion tool during February has increased by 21 per cent, according to the Guardian.

The national self-exclusion scheme now has nearly 200,000 sign-ups, with 326 new registrants recorded on 22 February, a single-day record for the charity.

Additionally, Gamstop pointed to the number of registrants who attempted to bet after signing up to the self-exclusion service as evidence that blocking software is not a ‘silver bullet’ for preventing gambling related harm.

Overall, the Guardian has reported that 49,328 out of a possible 177,039 self-excluded gamblers attempted to bet but were stopped from doing so due to their registration with Gamstop.

6

Holland Casino confirmed that six of its properties are to welcome back a select number of patrons later this month, as the group participates in the country’s pilot events programme.

The move comes after a series of extended closure orders have been mandated by the country’s government, the most recent of which came in March and will continue to apply up to, and including, Tuesday 20 April.

However, the latest update from the operator will see its casinos in Enschede, Venlo and Breda open on Saturday 24 April, with Amsterdam West, Utrecht and Leeuwarden, set to follow suit the following day.

Holland Casino’s remaining branches in Amsterdam Center, Rotterdam, Scheveningen, Zandvoort, Groningen, Nijmegen, Valkenburg, and Eindhoven, will remain unaffected and shutdown.

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Responding to media reports of the legal dispute, Fox, which has an option to acquire a stake in the US sports betting and gaming brand in July, said that it had made its move to acquire an 18.6 per cent ownership “for the same price that Flutter paid for that interest in December 2020”.

This saw Flutter increase its interests in FanDuel to 95 per cent after the acquisition of a $4.175bn (£3.131bn) 37.2 per cent share in the group that was previously held by KKR-led consortium Fastball Holdings. 

Responding to the legal manoeuvres, Flutter has labelled Fox’s position as “incorrect” and “without merit,” stating that it would “represent a windfall to Fox compared to the fair market valuation as of July 2021”.

In its own statement, Flutter commented: “Under the terms of Flutter’s agreement with Fox Corporation, an arbitration mechanism was put in place at the time of The Stars Group merger announcement to be conducted in the event of a disagreement between the two parties relating to the option. That now being the case, such a process has been initiated by Fox.”

Adding: “Flutter will not allow Fox’s filing, which is without merit, to distract from its business and will vigorously defend its position in the arbitration.”

Early in March 2021, Peter Jackson, Flutter CEO, suggested that the group would honour its commitment to the option, but emphasised that Fox would “have to pay the fair market value” in an earnings call.

He explained: “In terms of the mechanism for dealing with Fox and why we negotiated with them as part of the purchase or the deal we did with The Stars Group, we haven’t put anything formal in place at this moment, but we will honour our commitment to give Fox an option to acquire 18.6 per cent of FanDuel at fair market value in July 2021. 

“To be clear on the valuation, Fox will have to pay the fair market value, which is different from the negotiated price agreed between Flutter and Fastball, which reflected the specific circumstances that Fastball found itself in. The valuation will be carried out in the same manner that would have occurred had Fastball still owned the stake.”

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The news comes after the company announced a $4.175bn (£3.131bn) conditional agreement to acquire the 37.2 per cent interest in the group that was previously owned by KKR-led consortium Fastball Holdings. 

Speaking earlier this month on the transaction, Peter Jackson, Flutter’s chief executive, commented: “Flutter’s initial acquisition of a controlling stake in FanDuel in 2018 has been transformational for the shape of the group. Our number one position in the crucial US market is built on many of the assets we acquired through that transaction, supported by the broader group’s capabilities. 

“Our intention has always been to increase our stake in the business and I’m delighted to be able to do so earlier than originally planned and at a discount to its closest peer. 

“I would like to take this opportunity to thank our partners in Fastball for their tremendous support over the last two and a half years and for their ongoing commitment to Flutter as soon-to-be shareholders in the wider group. 

“We look forward to continuing to grow our US business, alongside our key media partner Fox, as further states move to regulate sports betting and gaming.” 

Earlier this week, 99.9 per cent of Flutter shareholders voted in favour of pushing forward with the deal with the global gaming and sports betting group having raised around £1.1bn from investors, which included Rupert Murdoch’s Fox Corporation.

Lachlan Murdoch, executive chairman and CEO of Fox Corporation, commented: “We are delighted to participate in this capital raising. Maintaining our ownership stake in Flutter signifies our long-term commitment to Flutter, and ongoing confidence in management’s ability to execute against the fast growing US opportunity.

“Fox’s audiences have proven to be highly engaged with free to play and wagering content, and we are excited to offer them access to products from Flutter’s market leading stable of US brands.”

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The partnership will see Stars Group and Fox Sports launch two US products in the fall of 2019 under the Fox Bet umbrella, one being a sportsbook bearing that moniker, whilst the other will be a free-to-play portal awarding customers with real money prizes and rewards.

The group informs that it has secured a 25-year commercial agreement, acting a lead sports betting and igaming services provider for Fox Corporation, and also gaining an exclusive licence for the usage of certain trademarks.

Rafi Ashkenazi, chief executive officer of The Stars Group, said of the agreement: “We believe this strategic partnership uniquely positions us to build a leading betting business in the US, which represents one of the most exciting long-term growth opportunities for our company.

“Leveraging our proven media partnership strategy with Sky Sports in the UK, we are excited to partner with Fox Sports to integrate wagering into sports media and drive customer acquisition and retention in the US.”

Strengthening the partnership, Fox Corporation has moved to purchase 14.3m newly issued common shares in the TSX enterprise, representing approximately five per cent of Stars Group equity.

Securing transactional funding of $236m, the Stars Group confirms that it will use the net proceeds ‘for general corporate purposes and to prepay outstanding indebtedness on its first lien term loans’.

Eric Shanks, chief executive officer and executive producer of Fox Sports, added: “Fox Sports is already synonymous with the best live sports events in the country, and now we are expanding the way we immerse fans in the sports culture they love.

“Digital sports wagering represents a growing market opportunity that allows us to diversify our revenue streams, connect directly with consumers and expand the reach of the Fox Sports brand.”

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Titled Stars Affiliate Club, it is designed to support the Stars Group’s PokerStars entity, in addition to its igaming operation PokerStars Casino and leading online betting and gaming brands Full Tilt, BetStars and Sky Bet by Stars in Italy.

By utilising the service, it will allow affiliate partners access to a single resource to simultaneously promote multiple brands, and leverage the support of the Stars Affiliate Club team.

As a result of the partnership, Income Access is to supply affiliate marketing software, equipped with multi-channel tracking and reporting technology, to an array of partners across the regulated igaming space.

Jason Prasad, department head of affiliates at The Stars Group, said of the new agreement: “We believe Stars Affiliate Club is the first programme of its kind in the industry. The affiliate team here has worked closely with our partners on this for some time, and we’re really excited to see it in action. It’s a big step forward in our goal to become the number one affiliate programme worldwide.”

Affiliate partners of Stars’ offering are to utilise an array of features from the Income Access platform, such as reporting tracking features that are designed to aid in the enhancement of acquisition and retention initiatives.

Furthermore, a selection of tools are to enable the effective promotion of corresponding brands, complementing Stars Affiliate Club’s existing suite of online marketing and monitoring technologies.

Tara Wilson, SVP and general manager at Income Access, commented: “Partnering with The Stars Group, one of the gaming industry’s most respected leaders in quality entertainment and social responsibility, represents a landmark occasion for Income Access.

“Through this mutually beneficial relationship, we will further solidify our position as the leading provider of strategic solutions for the industry’s top brands.”

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