Rupert Murdoch sues Flutter in row over US sports betting firm

A view of the field and the fans and the ballpark and the players during the playing of US and Canadian national anthems before the game between the Texas Rangers and the Toronto Blue Jays at Globe Life Field

Rupert Murdoch is suing one of the world's biggest bookmakers in a row over FanDuel, America’s market-leading sports gambling firm.

The media billionaire’s empire Fox Corporation claims that it is entitled to buy a significant stake in FanDuel at a price that current owner Flutter Entertainment says is heavily discounted to its real value.

Flutter, which also owns UK brands Paddy Power and Betfair, claims Fox is trying to lock in a "windfall" - with analysts saying this could be worth up to £1bn.

The battle stems from an agreement which Fox had with Stars Group, FanDuel's previous owner, which merged with Flutter in May last year.

Fox previously had a joint venture with Stars which entitles it to buy an 18.6pc stake in FanDuel - now majority-owned by Flutter - this July.

Lawyers for Fox claim that under the terms of its deal, it can pay Flutter the price that this stake was worth in December last year.

However, the American sports betting market has continued to grow at a rapid pace since December and Flutter argues that Fox should pay a “fair market valuation” for part of FanDuel.

It said: "It would represent a windfall to Fox compared to the fair market valuation as of July 2021, to which the parties had previously agreed."

Analysts said that paying December prices could hand Fox a £1bn profit.

Following Flutter's opposition, Fox filed legal proceedings in a New York arbitration court.

Flutter said: "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 US is repealing a decades-long ban on sports gambling on a state-by-state basis. The relaxation of betting laws has sparked a foot race between US and non-US gambling operators to grab a share of what is expected to be the world’s biggest regulated market.

London-listed operators such as Flutter and Entain, the group behind Ladbrokes and Coral, formed joint ventures with US companies. However, some analysts believe that the US opportunity is being undervalued and weighed down by tighter regulation of operations in Europe.

Analysts highlight that US-listed operators such as Draftkings and Penn Gaming are boasting large valuations.

Flutter is exploring the possibility of listing part of FanDuel in the US – which has 40pc of the country’s sports betting market. Such a move risks being delayed by Fox's legal intervention.

Alistair Johnson, an analyst at Redburn, said that if Fox was successful in its legal challenge, it could pick up a FanDuel stake at a hefty discount.

He said: “Fox is suing to buy the option at the same price at which Flutter acquired 37.2pc of FanDuel in December, which would value the 18.6pc stake at £1.5bn, a 40pc discount to the £2.5bn we think it is worth.”