Will FanDuel Become a Spin-off Brand in Growing US Market?

It has been reported that the parent group of sports betting giant, FanDuel is mulling the option of spinning out the company in order to boost its value. CNBC reports that Flutter is being pressured by some of its investors to spin out FanDuel as a separate company and list it on the stock exchange, in a bid to take advantage of the fast growing sports betting industry in the US.

Flutter has not confirmed or denied this report.

One major obstacle in such a plan – if Flutter decides to go ahead with it – is the question of Fox Sports. Fox owns 2.5% of Flutter at the moment, with an option to by an additional 18.5% stake by July 2021. The question of FanDuel’s ownership after July could affect plans for a spinout.

But investors want Flutter to take advantage of the growing sports betting industry in the US. They have expressed their frustration that Flutter is trading at a discount to DraftKings, FanDuel’s greatest rival in the market, and despite the fact that FanDuel has a larger piece of the US market (40%).

DraftKings has a market capitalization of over $28 billion. It reported revenue of over $644 million last year, and predicts that it may even reach the $1 billion mark in revenue this year.

Flutter also has to justify why it spent $4.5 billion to acquire another 37.2% stake in FanDuel at the end of 2020.

Investors argue that there has never been a better time than now to spin out a sports betting company as big as FanDuel in the United States.  This year alone, 19 states are due to vote on the potential legalization of mobile sports betting – including two of the most populous states in the nation – New York and Texas.

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