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Sports betting in Michigan could experience significant changes due to a recent decision made by an arbitrator in New York.
Fan Corp. has been granted a ruling allowing it to acquire a significant portion of FanDuel, thereby creating an opportunity for Fox to emerge as a major stakeholder in the company.
The decision raises uncertainty regarding the future of Fox with both FanDuel and its own Fox Bet, potentially resulting in the absence of one Michigan sportsbook in the future.
What was the Fox Corp., Flutter arbitration ruling?
In November, the Judicial Arbitration and Mediation Services issued a ruling against Flutter, the parent company of FanDuel.
Fox has been granted a 10-year call option, as stated by Legal Sports Report, which will expire in December 2030. This option allows Fox to acquire 18.6% of FanDuel for $3.72 billion, with an annual escalator of 5%.
The escalator pushes the current stake price up to $4.1 billion.
In a statement, Fox expressed their satisfaction with the ruling, deeming it “fair and favorable.”
FOX is not required to invest any money in this opportunity unless it chooses to exercise the option. The fact that it has the option to acquire a significant ownership share in the top online sports betting platform in the United States demonstrates the immense value that FOX has established as a pioneering media partner in the U.S. sports betting industry.
The history between Fox and Flutter
The origins of this legal dispute between Flutter and Fox can be traced back to the year 2019.
In 2019, Flutter successfully acquired The Stars Group. Back then, The Stars Group was running Fox Bet as a result of their collaboration with Fox.
Flutter was granted complete ownership of Fox Bet in the agreement, while Fox was given the opportunity to acquire 50 percent of Fox Bet and an additional 18.6 percent stake in FanDuel.
In 2021, Fox initiated legal action concerning the assessment of FanDuel’s value in connection with its entitlement to acquire 18.6 percent ownership.
The acquisition of almost the entire FanDuel by Flutter resulted in a sportsbook value of over $11 billion for FD.
Fox desired to have the valuation enforced on its option, while Flutter believed that the fair market value should be considered when making the purchase.
What does this mean for Fox Bet?
Currently, the ruling has no immediate impact on Fox Bet. However, the situation might alter within a year.
The Fox Bet agreement can be terminated by both Fox and Flutter in August 2025, effectively bringing an end to the sportsbook.
Odawa Casinos in Michigan have designated Fox Bet as their online sportsbook.
Although not among the most popular online books in Michigan, Fox Bet has consistently performed well. Ranking eighth in Michigan’s all-time handle, it has gathered $80.4 million in wagers since its launch in January 2021, resulting in $5.8 million in revenue.
In total, Fox Bet has only captured 1.1 percent of Michigan’s recorded historical sports betting market share. In contrast, FanDuel/Motor City Casino holds a significant share of 16.9 percent in Michigan.
Fox Bet takes great pride in offering odds boosts, with a particular emphasis on the NFL, NASCAR, and the UFC.
What does the ruling mean for Michigan sports betting?
Customers would receive ample notification if the sportsbook were to shut down. TwinSpires, the pioneer sportsbook and online casino to exit the Michigan market, announced its closure in February 2022 and officially ceased operations on September 6th.
If Fox Bet were to exit, it would create an opportunity for another operator in Michigan due to the availability of 15 licenses for online sportsbooks.
Odawa Casinos employs Stars Online Casino and PokerStars for its iGaming and online poker activities respectively. As there is no direct association with a sportsbook like Fox Bet, numerous potential candidates could express interest in collaboration.
Before SI Sportsbook MI replaced TwinSpires, we had previously discussed and considered various potential outcomes leading up to this collaboration.
With its strong ties to Detroit native Derek Stevens, Circa Sports is always considered a strong contender in the state. Additionally, BetFanatics Sportsbook is anticipated to experience significant expansion by the time this opportunity arises.
Operators may also benefit from the potential success in neighboring Ohio, as it prepares to launch sports betting on January 1st.
