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FanDuel CEO's departure may affect timing of spin-off

Publication date: May 12, 2021, 09: 56 hrs.

Last updated: May 12, 2021, 12: 04 h.

Todd Shriber

Flutter Entertainment (OTC: PDYPY) has announced the departure of Matt King, CEO of FanDuel. It's news that could affect the timing of the Irish gaming company's plans to list part of the online sports betting giant on a U.S. exchange. )

Matt King, CEO of FanDuel pictured at the FanDuel event above. He's leaving the company, which could have implications for the spin-off. (Photo: MarketWatch )

King had been with FanDuel for four years, joining the company prior to the 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PAPSA). During that time, he oversaw the transition from upstart Daily Fantasy Sports (DFS) to what is now the largest online bookmaker in the US. No reason was given for his decision. He is expected to remain with the company while it searches for his successor.

As previously announced, Flutter's management evaluated the potential benefits of placing a small stake in FanDuel in the U.S. " said the company in a statement.

"While Matt's departure will impact the timing of any potential US listings, the board will continue to explore this option ", the statement continues.

Flutter acquired its initial stake in FanDuel three years ago, raising its ownership of the sports betting outfit to 95 last December in a $4. 175 billion deal with Fastball Holdings LLC. Boyd Gaming (NYSE: BYD) owns the remaining five percent.

Not Best Timing for Flutter, FanDuel

King's decision to leave FanDuel comes not only as the parent company considers selling part of the company to public investors, but also comes amid a legal dispute with Fox Corp. (NASDAQ: FOXA) over that potential transaction.

In late March, the media company filed suit against Flutter in New York's Judicial Arbitration and Mediation Services (JAMS) over the valuation of the 18. 5 percent piece of FanDuel to which it is entitled to acquire .

The crux of the matter is this: Fox wants a valuation similar to what Flutter paid Fastball for the aforementioned 37. 2 percent of FanDuel. On that basis, the broadcaster would pay $2.08 for the sports betting operator's 18. 6 percent. But Flutter wants to charge fair market value - a price almost certainly higher than $2. 08 billion Fox is willing to pay.

Investors are pushing Flutter to unlock value through the FanDuel spin-off, assuming the market capitalization would be larger than rival DraftKings (NASDAQ: DKNG). That's because FanDuel has a larger share of the U.S. online sports betting market.

Although DraftKings stock is currently in a spin, 18. 6 percent of the company's current market value is $3. 48 billion, which means there's still quite a gap between where Fox and Flutter want to be on the FanDuel stakes.

Things Getting Testy

King's decision to leave FanDuel is also fierce between Fox and Flutter is increasingly palpable.

There have been recent reports that if the Irish company does not meet the media conglomerate's terms, Fox will pull FanDuel ads from its airwaves. Flutter CEO Peter Jackson fired back, saying that Fox is not the primary source of FanDuel's marketing spending.

Late last month, the Flutter boss threw more fuel on the fire, saying that the FOX Bet and PokerStars brands would not be included in a possible FanDuel spin-off. He described the businesses as "struggling".

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