Boyd is selling the 5% stake in FanDuel it received in its market access deal for nearly $1.8 billion.
According to a Thursday release, FanDuel‘s parent company, Flutter, will buy the stake. The deal gives Flutter 100% ownership of one of the top US sports betting brands and should close in the third quarter.
“This transaction unlocks the tremendous unrealized value that our investment in FanDuel has created for our Company,” Boyd CEO Kevin Smith said in the release. “As a result, we are in a significantly stronger financial position to continue executing our strategy of investing in our properties, pursuing growth opportunities, returning capital to our shareholders, and maintaining a strong balance sheet.”
Flutter CEO Jackson: ‘really pleased’
Flutter CEO Peter Jackson said this is one way to drive future value for the company’s shareholders.
“Our acquisition of FanDuel in 2018 is one of the most transformational events in our Group’s history, with its natural competitive advantages combined with access to Flutter Edge capabilities driving impressive growth to become the well-established and clear leader in US online sports betting and iGaming,” Jackson said.
“I am really pleased to drive future value for our shareholders by increasing our ownership of FanDuel to 100%.”
FanDuel gets new market access agreement
The two are terminating the current market-access deal signed in 2018 for a new agreement that runs through 2038.
The new deal, which was live as of July 1, will give Boyd a fixed per-state fee from mobile sports betting in Iowa, Indiana, Kansas, Louisiana and Pennsylvania. Boyd will also get a fixed fee from FanDuel’s online casino in Pennsylvania.
The new terms are more attractive to Flutter and should save around $65 million annually. With the new agreement, Boyd’s online segment should generate $50 million to $55 million in adjusted EBITDA this year. That could rise to approximately $30 million next year.
FanDuel will continue to run Boyd’s retail sportsbooks through mid-2026. Boyd will then take over those operations.
Bridge credit agreement
Flutter also entered into a bridge credit agreement for $1.75 billion on Thursday.
It will be used to pay the consideration, which breaks down as $1.55 billion for the 5% stake and another $205 million for revisions to the market access deal.
The facility will mature a year after its first use and can be extended for two six-month periods.
Interest will be a rate equal to term SOFR plus 1.25%.
Smith lauds ‘remarkable success’
The market access agreement, signed just three months after the end of PASPA, has been quite significant for both companies.
“The partnership between Boyd and FanDuel has been a remarkable success for both companies,” Smith said. “FanDuel has emerged as the nation’s clear leader in online sports betting, while Boyd has been able to leverage this partnership to profitably participate in the rapid growth of sports betting across the country.
“It has been a privilege to work with the Flutter and FanDuel teams, and we look forward to supporting FanDuel’s continued growth and success through our market-access agreements across the country.”
Law firm Morrison Foerster advised Boyd on the sale.
Fox option to buy still looms
As much as Flutter might want to own 100% of FanDuel forever, that will likely not last. Fox Corporation CEO Lachlan Murdoch confirmed last September that the company will exercise its option to buy an 18.6% stake in FanDuel.
Fox has the purchase right after Flutter bought The Stars Group in 2019, which partnered with Fox for Fox Bet. An arbitrator ruled in 2022 that Fox can purchase the stake at a $20 billion valuation of FanDuel. That stake now costs $4.5 billion, according to Flutter.
Fox has until Dec. 3, 2030 to buy the stake, but has an incentive to buy sooner due to a 5% annual escalator. The company has begun working on getting regulatory approval for its gaming licenses.
At the time of Murdoch’s statements, Goldman Sachs estimated FanDuel’s value at $35 billion. That would put the 18.6% stake at approximately $6.5 billion.
