Flutter raises $1bn for US expansion

Flutter Entertainment has its eyes firmly set on the US gambling market.

Flutter Entertainment, the company behind Paddy Power Betfair, FanDuel and Fox Bet, has raised $1bn through an investment from Fox Corp to take advantage of the opportunities presented by the coronavirus pandemic.

In a statement made on Thursday (28 May), Flutter said it placed 8.05 million new shares at a 4.7% discount to Thursday’s closing price, raising £812m ($1bn). The placing price for each share was 10,100 pence.

This news comes after Flutter closed its $6bn merger with The Stars Group (TSG) last month to create the world’s largest online gambling company.

The Fox Corp investment

In the statement, Flutter said that Fox, which bought a 4.99% stake in TSG in May 2019 for $236m, would increase its investment in Flutter as part of the placement but did not reveal how many shares it would be purchasing.

Flutter also said that its Q2 revenue so far had increased 10% year-on-year despite the impact of the sports shutdown.

CEO of Fox Corporation Lachlan Murdoch said: “FOX is bullish about the opportunities in the digital sports wagering market.

“FOX Bet has shown strong growth since launching last fall, and we look forward to continuing that success with our partner, Flutter. FOX’s investment in Flutter underscores our confidence in Flutter’s business and its management’s ability to continue to drive leadership in the US market.”

Accelerating US market access

The key reason that Flutter wants to raise more cash is to accelerate its US sports betting strategy as more states authorise sports wagering. Both FanDuel and Fox Bet are live in New Jersey, Pennsylvania and Colorado, while FanDuel is also live in West Virginia and Indiana.

Flutter wants to secure entry into other states to establish a stronger presence in the US market with its brands. The company is hoping to use sports betting to help fill gaps in its budget from the coronavirus shutdown.

At the time of writing Flutter, already has first-skin access in 11 states, in addition to the ones they are already live in:

  • California
  • Illinois
  • Iowa
  • Kansas
  • Louisiana
  • Maryland
  • Michigan
  • Missouri
  • New York
  • Ohio
  • Texas

Flutter will also have the opportunity to launch its sports betting brands in Virginia and Tennessee as both of these states will allow untethered sports betting licensees to serve customers. This means that operators will not need to secure market access deals for these states.

As more states open up and launch legal and regulated sports wagering customer acquisition will increase. Flutter said that with the cash generated from this, the company will have much more financial flexibility to quickly move on market access and customer acquisition opportunities.

The online gambling company also said that it has experienced “strong growth” in its online customer base as land-based casinos, sportsbooks and racetracks have been closed due to the pandemic.

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