Gambling giant Flutter has hit back at Rupert Murdoch’s Fox in a legal row over a US sports betting firm, accusing the media mogul of trying to take a stake in the company at a cut-price rate.
Fox Corporation last night filed a lawsuit against Flutter, which owns brands such as Paddy Power and Betfair, over its option to take an 18.6 per cent stake in Fan Duel.
Murdoch’s company wants to buy the stake for the same price as Flutter paid when it increased its holding in December, giving Fan Duel a total valuation of $11.2bn (£8.1bn).
But Flutter has argued that this would represent a “windfall” for Fox compared to Fan Duel’s fair market valuation when the option becomes redeemable in July.
“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,” the London-listed firm said in a statement this morning.
The dispute dates back to Flutter’s £10bn merger with Canada-based Stars Group last year — a deal that created one of the world’s largest gambling companies.
Fox, which operated a joint venture with Stars Group, was granted an option to buy a stake in Fan Duel this July as part of the deal. In December Flutter upped its stake in the firm to 95 per cent, enlisting Fox’s help to get the deal through.
Flutter is now exploring a potential initial public offering in the US for part of Fan Duel. Executives reportedly believe that the New York-based company, which holds a majority share of the market in many US states, is undervalued by Flutter’s UK-listed shares.
The US is gradually relaxing its betting laws, sparking a race to snap up a share in what is expected to be the next big market for sports betting.
In addition to the tie-up between Flutter and Stars Group, casino operator Caesars Entertainment last year snapped up William Hill for $2.9bn.