Boyd Gaming’s 5% ownership in sportsbook operator FanDuel gained a little more value Thursday according to one analyst.
Flutter Entertainment said it would spend $4.18 billion in cash and stock to purchase a 37.2% stake in the sports betting and daily fantasy company from Fastball Inc. Flutter, which owns European igaming properties Paddy Power, Betfair and PokerStars, already controlled 57.8% of FanDuel.
Boyd and FanDuel stuck a partnership deal in 2018 for sports betting and igaming in the U.S. FanDuel operates eight branded retail locations at Boyd properties in Iowa, Indiana, Illinois, Mississippi, and Pennsylvania. Boyd has partnered with FanDuel to offer mobile sports-betting in Illinois and Pennsylvania.
Macquarie Securities gaming analyst Chad Beynon said Flutter’s deal suggests a FanDuel valuation of $11.2 billion, with Boyd’s 5% equity stake worth roughly $560 million.
“This announcement implies that (Boyd’s) value should be higher than our current estimate,” Beynon told investors.
Boyd Gaming utilizes its own sports betting product in Nevada, the regional casino operator’s primary market. The company has 29 gaming properties in 10 states.
According to Beynon, Boyd can operate its own online sports betting skin separate from FanDuel in various states, but the company pays a revenue share to leverage its partner’s technology and games content. Otherwise, Boyd owns essentially all the economics for real money igaming.
“We view Flutter as a long-term strategic partner and intend to maintain our ownership stake and our strategic partnership,” Boyd spokesman David Strow said in an email Thursday.
Shares of Boyd, traded on the New York Stock Exchange, closed at $40.14 on Thursday, up $1.11 or 2.84%.
FanDuel currently operates sports betting in nine states with different casino partners including Boyd – Colorado, Iowa, Illinois, Indiana, Michigan Tennessee, West Virginia, Pennsylvania, and New Jersey.
Beynon said FanDuel has spent more than $800 million of cumulative marketing to date to build its brand. Year to date, the company has acquired more than 800,00 customers across sports betting, daily fantasy sports, online gaming, and online horserace wagering.
“The company expects its U.S. business to generate over $850 million in 2020 net revenue,” Beynon said, which implies a great than 70% year-over-year growth.
In a statement, FanDuel CEO Matt King said he expects the company’s online sportsbook to be available in 14 states and its online gaming products to be in four states, all by the end of 2021.
“Today’s news affirms FanDuel’s market-leading position in the U.S. and our meaningful growth trajectory,” King said. “I look forward to leading FanDuel into the future under a clear ownership structure and at a time when the regulation of sports betting and online gaming continues to accelerate in the U.S.”
Flutter will pay $2.09 billion in cash and issue about 11.7 million new Flutter ordinary shares to Fastball under the conditional agreement.
According to Bloomberg, Dublin-based Flutter, formerly known as Paddy Power, has leapfrogged competitors like GVC Holdings in market value after buying Canada’s The Stars Group earlier this year.
The legalization of sports betting in the U.S. in May 2018 has fueled numerous partnerships and acquisitions in the sports betting space, including Penn National Gaming’s $163 million purchase of 36% of sports media platform Barstool Sports. Last month, Bally’s Corp., said it was buying sports betting platform Bet.Works for $125 million and reached a partnership agreement with Sinclair Broadcast Group.
Meanwhile, Caesars Entertainment is spending $3.7 billion to acquire all of sports betting operator William Hill, including William Hill US.
Flutter also owns Fox Bet, which has an exclusive license to use the trademarks of Fox Corp. for up to 25 years. Fox has a 2.6% stake in Flutter with options to acquire more Flutter shares.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
