A recent ruling by a New York arbitrator could have a big impact on sports betting in Michigan.
Fox Corp. was awarded a ruling that it can purchase a notable stake in FanDuel. That opens the door for Fox to become a large shareholder in FanDuel.
The decision leaves questions about where Fox’s future stands with both FanDuel and with its own Fox Bet. That could lead to one less Michigan sportsbook down the road.
What was the Fox Corp., Flutter arbitration ruling?
The ruling came in November by the Judicial Arbitration and Mediation Services against FanDuel’s parent company of Flutter.
According to Legal Sports Report, it gives Fox “a 10-year call option that expires in December 2030 to acquire 18.6% of FanDuel for $3.72 billion, with a 5% annual escalator.”
With the escalator, the current-day price on the stake moves to $4.1 billion.
Fox, in a statement, felt the ruling was “fair and favorable.”
“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.”
The history between Fox and Flutter
This legal dispute between Flutter and Fox goes back to 2019.
Flutter acquired The Stars Group in 2019. TSG operated Fox Bet at the time as part of a partnership with Fox.
The deal allowed Flutter to take full ownership of Fox Bet. In exchange, Fox would receive options to purchase 50 percent of Fox Bet, in addition to the 18.6 percent stake in FanDuel.
Fox then filed a suit in 2021 over the valuation of FanDuel as it related to its right to purchase 18.6 percent equity.
Flutter’s ability to acquire nearly all of FanDuel put FD’s sportsbook value at more than $11 billion.
Fox wanted that valuation applied to its option. Flutter felt fair market value should apply at the time of the purchase.
What does this mean for Fox Bet?
At the moment, the ruling doesn’t change anything for Fox Bet. It could be a different story, though, in less than a year.
Both Fox and Flutter have the ability to terminate the Fox Bet agreement in August of 2023. That would put an end to the sportsbook.
In Michigan, Fox Bet is the online sportsbook for Odawa Casinos.
While not one of the top online books in Michigan, it still has been a steady performer. Fox Bet sits eighth in Michigan’s all-time handle. It has collected $80.4 million in wagers since launching in January of 2021. That has led to $5.8 million in revenue.
Altogether, Fox Bet has accounted for just 1.1 percent of Michigan’s reported all-time sports betting market share. By comparison, FanDuel/Motor City Casino accounts for 16.9 percent of the share in Michigan.
Fox Bet prides itself on its odds boosts, with an added focus on the NFL, NASCAR and the UFC.
What does the ruling mean for Michigan sports betting?
If the sportsbook did close down, customers would be given plenty of notice. TwinSpires was the first sportsbook and online casino to leave the Michigan market, and it made its announcement in February of 2022 before actually shutting down on Sept. 6.
Since there are 15 licenses for online sportsbooks in Michigan, a Fox Bet exit would open the door for another operator.
Odawa Casinos uses Stars Online Casino for its iGaming operations, and PokerStars for online poker. There’s no obvious sportsbook connection without Fox Bet, so that would leave the door open to plenty of potential suitors.
Circa Sports’ connection with Detroit native Derek Stevens always makes it a potential player in the state. BetFanatics Sportsbook is a brand many expect to see major growth by the time this chance rolls around.
Potential success in neighboring Ohio, which will launch sports betting on Jan. 1, could also play a role for operators.