TBEN lost a legal battle to buy an 18.6% stake in sports betting FanDuel Group from its parent company flutter at a lower valuation, according to a Friday ruling by a New York arbitrator.
Should TBEN exercise its option to take the stake, it would be at a price of at least $3.72 billion.
The decision ends more than a year-long lawsuit between the two companies over the valuation of FanDuel, which has become one of the leading U.S. sports betting services, alongside services from DraftKings, Caesars and MGM.
The price TBEN 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. TBEN had argued that the price should be based on that threshold.
TBEN has a 10-year option to acquire the stake, which runs until December 2030. The arbitrator ruled there would be a 5% annual escalator on the purchase price, meaning the current deal price is $4.1 billion. would be.
“Today’s ruling reaffirms the confidence we had in our position on this matter and provides certainty about what it would cost TBEN to buy into this company, if they wanted to,” Flutter chief executive Peter Jackson said in a statement.
As part of the arbitration ruling, Flutter cannot pursue an IPO for FanDuel without the arbitrator’s consent or approval from TBEN. Flutter had previously considered making FanDuel public, taking advantage of the booming sports betting market.
“TBEN is pleased with the fair and favorable outcome of the Flutter arbitration,” the company said in a statement following the ruling. “TBEN is under no obligation to stake capital on 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 TBEN has created as a first mover media partner in the U.S. sports betting.”
Sports betting has continued to grow in the US as more states bring legal sports betting online – as of Nov. 1, 33 states allow some form of sports betting, with California taking two steps to legalize it.
That has also boosted revenues. Commercial sports betting revenue was $3.97 billion through August, up nearly 70% year on year, according to data from the American Gaming Association.
But that continued growth has not benefited all public sports betting. DraftKings stock posted its worst-ever decline 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% to date, is now valued at just over $5 billion.
