What Does The Fox Say … About FanDuel | Sports Betting News
Lachlan Murdoch spoke this week about whether or not his company will exercise its option to purchase nearly a 20% stake in FanDuel before the opportunity expires. Plus, another opposition group appears to work against the Missouri online sports betting initiative, the industry pushes back against the latest version of a federal sports betting bill, and house rules remain important to read.
Full transcript
Matt Brown (00:14):
Hello, and welcome to episode number 249 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all of the gaming industry. With me, I have your friend and mine, Adam Candee. Find him on the Twitter machine, @AdamCandee, two E’s, no Y. If you hate yourself, you can follow me, @MattBrownM2. Everything we do, absolutely free, so go ahead and hit that subscribe button. Don’t be shy, and go in and leave us a rating and a review. Unless it’s not four or five stars, then you can keep it. You can keep it; we don’t need it.
Adam Candee (00:43):
Then, be shy.
Matt Brown (00:44):
Yeah, exactly.
Adam Candee (00:45):
Then you need to be very shy. Be bashful. Do not reveal yourself.
Matt Brown (00:49):
Yeah. Listen, it doesn’t feel good to leave the three anyway, or the two, or the one. Just don’t do it.
Adam Candee (00:54):
True.
Matt Brown (00:54):
It feels good to leave the four or five.
Adam Candee (00:55):
Don’t be a podcast Karen.
Matt Brown (00:57):
Exactly. That’s what we’re going with here.
We’re going to talk a little bit about Missouri, talk a little bit about a federal bill out there.
(01:02):
Let’s start things off with something that’s pretty interesting, Adam. People might remember this from a couple of years ago, that there was an option for Fox to get more involved in the sports betting space. We hadn’t really talked about that actually, over the last couple of years here. But here we go. This is pretty big news.
Adam Candee (01:24):
The news itself is that Lachlan Murdoch, who is essentially the head of Fox Corporation, the son of Rupert Murdoch, was speaking this week and was discussing the fact that Fox has this option to purchase a stake of up 18.6% of FanDuel. Now if you want to go back and understand all of the mechanics of this, you can go to legalsportsreport.com. You can read through the Stars Group acquisition, and how it fits in with Flutter, and where this all came from initially.
(01:56):
But the point of the matter is that Fox has until 2030 to choose to exercise this option. Murdoch confirmed here in 2024 that they do plan to do that sometime within the next six years. You say to yourself, “All right. Well, what’s going to determine whether they choose to do that now, or whether they choose to do that six years from now?” Within the story we have by Matthew Waters at Legal Sports Report, you’ll see that there’s a question for FanDuel, I should say on the Fox side of the FanDuel deal, to figure out. Which is that when do you want to go to get the maximum discount on what the valuation is on FanDuel?
(02:35):
Right now, you’re still looking at a multibillion-dollar discount for the valuation that they would be able to come in at, versus what the overall valuation is of FanDuel. Roughly $35 billion, from outside sources, is that valuation on FanDuel. You would be looking at getting a discount of a couple billion dollars in current day value if Fox were to exercise that option right now. Now is FanDuel a rocket ship? Will it continue to grow at the rate it has under the Flutter brand? It’s still the US market leader, in terms of share. It certainly could. There’s been no slowing down for that company in the first six-plus years of the legal US sports betting market.
(03:20):
Interesting spot for Fox overall, of course. Because if you remember, there was the Fox Bet app from 2019 to 2023. That everyone thought, with the affiliation it had with the NFL and the availability of that app to be marketed on Sundays, that it would have been more successful than it was. That’s another whole issue and point of contention between Fox and Flutter, because obviously, both FanDuel and Fox Bet were under the Flutter umbrella. That was settled back in July 2023, as there was a legal case that was going to have to come to a head in August 2023. Ultimately, settled where Fox Bet had essentially been saying that Flutter choked it out. It didn’t allow it to succeed, it didn’t give it the right support. Essentially, it favored FanDuel over Fox Bet.
(04:10):
That, of course, has been settled, but this option still hanging out there. It is something that I’m sure, absolutely sure, that Flutter has been baking in and preparing for for a long time. But it is interesting to get that confirmation from Fox, that they plan to exercise the option.
Matt Brown (04:27):
If you’re looking over there, owning an 18.6% stake, would that have to then Fox would have to become a gaming operator. “Coming to fully monetize the option, we need to be licensed as a gaming operator even with only 18.6%. We’ve started that process with state regulators to begin the gaming licensing approval process.”
(04:51):
Adam, if anyone’s wondering if this just seems like, “Yeah, maybe I’ll just toss this out there. This will be fun to talk about.” They are saying they are already in the process of getting those gaming licenses that will be needed.
Adam Candee (05:04):
Anything over 5%, it leads to the need to be licensed. This is what we’ve talked about for the longest of times with ESPN Bet. We didn’t know if ESPN would try to actually go through this themselves and become an operator, and that would force Disney to go through the licensing process for gaming. Which we didn’t think they would want to do, and ultimately they decided not to. They went with a branding deal through Penn Entertainment.
(05:27):
For Fox to be willing to do this, they certainly have to see a significant market opportunity when it comes to that stake in FanDuel. And as you see by their message thus far, they certainly see that value.
Work against Missouri online sports betting initiative
Matt Brown (05:40):
Let’s head over to Missouri. We knew that there was going to be some ups and downs with all of this, Adam. Here’s something that I’m sure we are going to, between now and November, touch on quite a bit.
Adam Candee (05:53):
If you’re interested in this story, and if you’re in the market in US sports betting, you should be interested in this story because this could become the only state to legalize online sports betting in 2024. Then I would suggest following Pat Evans, @patevans on Twitter, and keeping up with this story for as closely as he has been following it throughout.
(06:15):
Here’s the news as we know it this week, as we get, my goodness, I can’t even believe how close we are to Election Day. We of course reported already that the effort to throw it off the ballot was denied. Now you’re looking at online sports betting being on the ballot, and you’re seeing the proponents this week go up with their first TV ad. They’re going under the name of Winning for Missouri Education. That’s, of course, the pro sports teams, and notably DraftKings and FanDuel. They have put $10 million of commitment behind it thus far.
(06:48):
On the other side, what we saw this week was the formation of a political action committee. I want to make sure I get this name right, because it is a very technical, specific name. It is Missourians Against the Deceptive Online Gambling Amendment.
Matt Brown (07:06):
Yes, yes. Yeah.
Adam Candee (07:07):
We do not know who is behind this exactly. A woman named Kathryn Drennen is listed. She owns a company called Midwest Compliance Group out of St. Louis. Similar situation to what we saw with the lawsuit, where we still ultimately don’t know who was the impetus behind that lawsuit for the two political consultants that chose to go ahead and file it.
(07:34):
We’re waiting to see what contributions come into that political action committee, and whether those are revelatory as to who might be behind it. The industry speculation continues to be that the only entities who would have the reason to want to go against this, and the pockets to want to go against this, would be land-based casinos who do not want to see DraftKings and FanDuel come in and be able to have untethered licenses in the state, and be able to continue the market dominance that they have held elsewhere. Of course, what is on the ballot is different than what was trying to get through the legislature for the past few years, which did have the requirement to tether to a land-based casino.
(08:17):
We’re, of course, going to hear a lot more about this over the next couple of months. Will this opposition be as well-funded as we expect the proponents to be? It remains to be seen. Most recent polling in Missouri suggests that we are moving toward this being a favorite on the ballot. At least in terms of the polling, to say that more than 50% either have a strong favorable or a lean favorable on this ballot measure. Will that be the case? Lots of things can change. Missouri, a state that tends to vote fairly conservatively overall. But with a presidential election on the ballot, that always changes up the math of whose going to be coming out to vote. You get people who don’t typically vote in off-year elections coming out in presidential elections, and that makes it a little bit more difficult sometimes to be able to poll and get a reasonable sample on who’s going to be out there. But the polling that has been done suggests that it is moving in the right direction for proponents of online sports betting in Missouri.
Matt Brown (09:19):
It is Missourians Against the Deceptive Online Gambling, or MAD OGs for short if you want to go with that. We can just with MAD OGs there, for future reference here.
Adam Candee (09:32):
MAD OGs sounds like we got Sugarhill Gang, and Eric B. & Rakim to form an opposition group.
Matt Brown (09:41):
Yeah.
Adam Candee (09:41):
They’re the rap OGs and they’re mad. They don’t like this.
Matt Brown (09:44):
Instead, we’re just talking about Missourians that are mad.
Adam Candee (09:46):
Who knew?
Matt Brown (09:46):
MAD OGs over here.
Adam Candee (09:49):
Who knew? Maybe we’re going to find out that Kathryn Drennen is a MAD OG. I don’t know that.
Matt Brown (09:56):
Because we don’t know her. Yeah, we don’t know for sure. Well, you know what? We will endeavor to try and have that for you next week. We’ll figure out if that’s-
Adam Candee (10:02):
The kind of reporting we do here at Legal Sports Report.
Industry pushes back on latest version of federal sports betting bill
Matt Brown (10:04):
A federal sports betting bill. We have to hit on this once, twice a year. It keeps getting brought up. People float things, people say things. Here we are again, end of 2024, Adam, and a new federal sports betting bill out there.
Adam Candee (10:22):
I don’t want to blow out our microphones when I do this, but I do feel the need to do this because it’s the third time that we’ve seen Paul Tonko, the representative from New York, file from sort of bill against, I shouldn’t say against, regulating sports betting: Remix! Because that’s what we’ve got, another remixed version of a bill to regulate sports betting.
Matt Brown (10:47):
Yeah.
Adam Candee (10:48):
Now, Paul Tonko’s been very clear in his intentions. He has said all along that the legislation that he has filed has been intended to start a discussion on what would be reasonable regulations for sports betting. Of course, the sports betting industry does not want to be regulated at the federal level. And understandably so in many cases, because it’s very difficult to paint with a broad brush, this industry that is regulated heavily already at the state level, and is dealing with unique concerns in many of those different places where a heavy hand from the federal government is not viewed as welcome.
(11:25):
Let me talk to you about what this bill actually is. This is the Safe Bet Act, which is a revamped version of the Safe Bet Act. It addresses advertising, affordability, and artificial intelligence. Paul Tonko said at the press conference that Jim Gazzale covered for us, “This bill is an effort designed to prevent harm before it occurs. To be clear, we are in no way attempting to ban sports gambling. Our goal is the opposite. The Safe Bet Act will ensure that gambling on sports is safe for the public to enjoy.”
(11:57):
What’s in the bill? The Safe Bet Act would ban college props. We know that that has been something that NCAA President Charlie Baker has been after. According to NCAA statistics, one-in-three high profile athletes receives abusive messages from someone with a betting interest. That is an NCAA statistic. It calls for restrictions on sports betting advertising, limiting ads’ times and spaces when children are not likely to be in the audience. And limiting advertising to brand awareness, rather than inducing gambling or showing people how to bet. That, of course, was in the Betting On Our Future Act that Tonko previously introduced.
(12:38):
There’s also sports betting affordability checks. Saying that deposit limits, no more than five deposits in 24 hours, no more than $1,000 in 24 hours. No more than $10,000 over 30 days. Then of course, the use of AI is addressed as well.
(12:56):
Unsurprisingly, Matt, pushback very swift. Beginning with Representative Dina Titus from Nevada, who co-chairs the Federal Gaming Caucus. She said, “While the Safe Bet Act is perhaps well-intentioned, preempting state gaming regulators by outlawing most forms of advertising, and restricting the types and methods by which customers can place bets is a misguided approach.” The American Gaming Association, as well as online trade group IdeaGrowth have put out statements against the bill as well.
(13:25):
Tonko is co-sponsoring this with Senator Richard Blumenthal. If that name sounds familiar to those of you listening to the podcast, Richard Blumenthal is also someone who has dug into college partnerships with sports betting entities over the last couple of years and has also asked companies to explain more about what they’re doing to encourage responsible gambling. You have two sponsors who are not particularly surprising in introducing this bill.
(13:54):
Now it is currently Friday, September 13th, as we introduce this to you on the podcast. If that’s when it’s going into Congress, you can feel pretty safe that nothing is happening on this prior to the election. Nothing much is going to happen in Congress at all prior to the election at this point. It’s not something we expect to see any immediate attention. We have no idea if it’ll actually gain any real traction. But you certainly know that the sports betting industry will be watching and likely pushing hard against any form of federal regulation in the wake of the fall of PASPA.
Matt Brown (14:33):
Adam, we look at some of this stuff, and some of this stuff is things that you and I have touched on on the podcast over the years. Certainly, stuff that we’re saying, hey, there’s merit to some of the things. Certainly, there’s probably a middle ground between everything. You and I said, is there really a need for college props? If there is, then can’t we just put a hard cap on the limit pretty low? Then we don’t have to worry about nonsense, and things like that. I think there’s a happy medium. Yeah, you don’t have to ban it. Just put a limit on it that doesn’t really affect things out there. We’ve talked about the deposit stuff, and the loopholes that make this super tricky. No more than five deposits in 24 hours. What if it’s five $10 deposits?
(15:14):
There’s all kinds of things that go on with all of this where it’s like there’s something to be had here, somewhere along the way. The legislators are going to work with the books, and there will probably be a framework at some point in the next couple of years, where everybody adopts their own policy here as opposed to needing a federal bill with all that, Adam. Again, you can poke holes into all of this stuff because no more than $100 deposited in 24 hours. Well, for me and you, maybe that’s a good idea. But for some hedge fund manager who makes $1,000 a minute, it doesn’t matter. There’s just all kinds of things that go into all this, you can just put it all and lump it into one thing.
(15:54):
There’s merit to some … There’s starting points here. They’re talking points, I think, to get things going. But you can’t just go, “Oh, yeah, here’s what we’re going to do.”
Adam Candee (16:03):
No, you simply can’t. That wouldn’t be a wise approach from either side.
Matt Brown (16:09):
Yeah.
Adam Candee (16:09):
It wouldn’t be a wise approach to pretend that this isn’t a discussion that can be had. There’s absolutely room to talk about this. To come hard from one side and say, “No, we don’t need to do anything different,” or to come hard from the other side and say, “Here are your rules from the federal government,” I don’t think most reasonable people within the discussion would say that’s the best way to go about things. I don’t think anyone would say that what has happened to some college athletes, in terms of the attempts to influence, and what has happened with the Jontay Porter situation is OK. There are lots of things that have happened that I think plenty of people would say, “This isn’t OK, and we need to talk about better ways to,” whether it’s self-regulate, whether it’s house rules, whatever the case might be.
(16:55):
But I think what the industry is saying with one very clear, loud voice is that a set of one-size-fits-all regulations coming from the federal government is not going to help anyone at all. It’s not the right approach. It’s going to stifle the market with ways that are unintended. I think that’s what Dina Titus was essentially saying is, “Look, I get where you’re coming from. You’ve seen a lot of scandals this year.” Let’s be clear that some of those had to do with offshore gaming.
Matt Brown (17:22):
Right.
Adam Candee (17:22):
And bookies, and things that have nothing to do with the regulated market. But, perception being reality, you can understand how legislators would react.
(17:32):
That being said, there’s a way to go about this that I think involves the industry choosing some self-regulation in some ways. We’ve seen the Responsible Online Gaming Association, I might have gotten the name wrong there. Basically, the collective of online gaming operators who formed this year, and talked about the fact that they’re talking about best practices at their own level. They’re reviewing the situations that have happened.
(17:58):
Because the one thing that you and I, Matt, try to make clear over, and over, and over again is that it’s not like sportsbooks want these things to happen either.
Matt Brown (18:08):
Right.
Adam Candee (18:09):
They need people to trust in the games. They need people to leave athletes alone to be able to run a successful, profitable business that keeps regulators off their back. Yes, they have their own responsibility in that, but that responsibility for that goes far beyond what they do, and far beyond the scope of what they can regulate themselves. However, the answer is not, in their view and understandably so, to have one big set of regulations dropped on them.
Matt Brown (18:39):
Yeah. It’s the deal, like you just said, you said it so perfectly. The books, deep down, want what we want, too. It’s one of those things. Bad optics are just not good for anybody. It is one of those things where I think people look at this and be like, “Ah, I see the books are always doing all this stuff.” Yeah, they want the same thing we do because they need to keep people interested, and they need to keep business flowing in and out of there.
House rules remain important to read
(19:04):
Adam, we’ll close things down here with a them’s the breaks. I’m glad that you said house rules, and things like that. Quick reminder out there, guys, as South Alabama beat Northwestern State in football, 87-10. The two football coaches got together at the start of the fourth quarter and said, “Hey, this is out of hand. Why don’t we just cut time in half, and let’s just play a six-minute quarter as opposed to a 12-minute quarter?” They shake hands, they agree on it. Everything is fine and dandy, right, Adam?
(19:34):
Well, except you have to play 55 minutes in a game in order for your bets to get home at most sportsbooks out there. Despite the fact that this 36-and-a-half point spread was being covered by 77 points at the time, 55 minutes of the game didn’t actually get played, so therefore those bets get voided. Now the overs all hit, obviously, and most of those books honor those because you can’t take points off the board. That was already unconditionally settled.
(20:06):
But listen, if we’re being fair, Adam, yes. Was the 77 going to get cut to 35 in this thing? No. But you can’t just assume anything, you can whatever. Had this gone the other way, people would be screaming that they should have done it as well. Here it is, it’s the read the rules, understand the rules, and don’t complain about the rules, because them’s the rules.
Adam Candee (20:30):
We talk so much, Matt, and we say it repeatedly, know your house rules.
Matt Brown (20:34):
Yeah.
Adam Candee (20:34):
It sounds cliché. “Oh, there’s your little throwaway. Know your house rules.” That’s how these things get determined.
Matt Brown (20:42):
Yeah.
Adam Candee (20:43):
You agree to those house rules when you chose to place your bet with that house. They have to post them, they have to make them clear, and they have to follow them. If they don’t follow them, then state regulators can get involved, and they have over this last six-and-a-half years, got involved when sportsbooks have not honored the house rules that are posted. That is why the legal regulated gaming market exists in some way.
(21:08):
Matt, just for those who are wondering about, “Oh, are they going to talk about the discussion of Massachusetts trying to talk to sportsbooks, and limiting bettors,” and so on, like that? We are.
Matt Brown (21:18):
Yeah.
Adam Candee (21:19):
We need a little more time to get into that discussion than we have for this week in particular. If you’re looking at it and saying, “I’d love to hear them talk about that.” Well, just exercise a little patience. There are lots of podcasts out there. Maybe go listen to one of those podcasts until we come back at you with a little more time to discuss that in the following week.
Matt Brown (21:37):
Yes. It’s an interesting thing that we just continue … Little quirks will happen throughout the course of this industry. The two coaches decided to play six minutes instead of 12. You never know. It’s a thing you don’t even think about, Adam. You don’t even think about this being a thing that could possibly happen. It’s like, “Oh, that actually affects the betting markets.” Just one of those things to throw out there. Unfortunate for those that did have South Alabama.
Adam Candee (22:01):
Well, I have talked about this. My friends who are college basketball referees, and how it came out before the NCAA tournament a couple of years ago, that it’s not just reviewing last-second shots if they’re going to affect the outcome of the game. You are now required to review every last-second shot. It could be 87-10 in a basketball game. If someone shoots a three at the buzzer, you’ve got to go look at that and review it on the monitor, because they’re aware of the fact that gambling is involved. You also want to say the NCAA might want to make its officials aware that you might be affecting some other things here, if you allow that game to be shortened.
Matt Brown (22:44):
Guys, everything we do here, absolutely free. Do appreciate the support. Go ahead, subscribe, rate, review. We do appreciate all that type of stuff. Head over to legalsportsreport.com if you want the full written breakdowns on all the stuff we talked about here on the podcast. Plus, much, much, much more over there from Adam and team. Please go ahead, take in all the great words and all the great work that Adam and team are doing. They go read the stuff, they go listen to the stuff, they go do summaries of the stuff so that you don’t have to. For Adam, I am Matt. Talk to you guys next week.