With FOX Bet Folding, Flutter Might Invest Millions in PokerStars With FOX Bet Folding, Flutter Might Invest Millions in PokerStars

The question is how much we want to invest in PokerStars and the fact that we’ve got shared liquidity across multiple states. How much do we want to try and drive that growth and build that liquidity? Flutter Entertainment could invest up to $50 million into PokerStars US to attract more players in Michigan and New Jersey now that FOX Bet has stopped accepting wagers and will cease operations at the month’s end.

That’s according to CEO Peter Jackson, who mused during a call with analysts last March that the company could invest savings from no longer having to run FOX Bet into PokerStars, which combined its player pools in Michigan and New Jersey on January 1.

Flutter had just reported US losses of $75 million for Q4 2022 at the time. It also reported that FOX Bet and PokerStars combined for 3% of US revenue for the quarter, but they also represented 30% of quarterly losses in the US.

“We would expect between half and two-thirds of that $75 million [loss] to go away if FOX Bet was no longer operational,” Jackson said during the call. “The question is how much we want to invest in PokerStars and the fact that we’ve got shared liquidity across multiple states. How much do we want to try and drive that growth and build that liquidity?

“We’ll have an equation of how much we invest to grow and build that liquidity pool versus how much we decide it will depend on LTV-CACs [customer lifetime value to customer acquisition cost ratios] in those markets at the time. [We’ll decide] how aggressively or not to reinvest behind the PokerStars liquidity pool.”

Jackson’s comments are believed to be the most recent on a future either with or without FOX Bet.

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FOX Bet Will Shut Down on August 31

As it turns out, FOX Bet doesn’t appear to have much longer of a future.

In a joint statement Monday, Flutter and Fox Corporation announced FOX Bet had stopped accepting wagers and would end its operations entirely by August 31.

The mobile sportsbook is live in four states: Colorado, Michigan, New Jersey, and Pennsylvania.

An FAQ released in tandem with the shutdown announcement informed FOX Bet customers that they will continue to have access to any funds on the platform until August 31. After that, they will need either the PokerStars or PokerStars Casino app for access using the same login.

According to the FAQ, FOX Bet customers without a PokerStars or PokerStars Casino app are encouraged to download them in order to keep access to their funds. Customers not interested in downloading the app were told to contact customer service.

There were no plans to directly migrate FOX Bet accounts to FanDuel. The FAQ said FOX Bet players interested in placing immediate wagers should consider “our sister brand, FanDuel Sportsbook, where available.”

Flutter Could Return Licenses

It’s unclear what Flutter will do if anything, once FOX Bet exits the four states.

Colorado is a sports-only state, so PokerStars wasn’t there offering online poker. Flutter could return its sports betting license with Lady Luck Casino Black Hawk, enabling the tribal casino to partner with another operator for sports betting in CO.

A similar situation could unfold in Michigan, where FOX Bet had a partnership with the Little Traverse Bay Band of Odawa Indians, which owns and operates casinos in Mackinaw City and Petoskey. Flutter could return its license and open an opportunity for another operator in the Wolverine State.

FOX Bet was under the Mount Airy Casino Resort license in Pennsylvania and the Resorts license in New Jersey. Both casinos have multiple sports betting partners, so the loss of FOX Bet is likely negligible.

Another possibility would be for Flutter to give PokerStars customers in Michigan, New Jersey, and Pennsylvania a link to FanDuel in those states in order to place online wagers.

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The End of a Long Breakup

Flutter and Fox were expected to go their separate ways and fold FOX Bet this summer.

Last November, an arbitrator in New York ruled that Flutter and Fox could end their partnership this month. Fox Sports, a Fox Corporation subsidiary, launched FOX Bet with The Stars Group (TSG) in May 2019. Flutter bought TSG five months later.

Things quickly soured. Fox sued Flutter in April 2021, arguing that the price it should pay for an 18.6% stake in FanDuel should be based on an $11.2 billion valuation from December 2020. But the arbitrator disagreed and set the valuation at $20 billion, meaning Fox would need to pay $3.72 billion with a 5% annual escalator for the stake, which was worth about $4.1 billion at the time.

In its joint statement with Flutter, Fox said it would “continue to hold its option to acquire 18.6% of FanDuel.” Fox added that it currently holds a 2.5% stake in Flutter.

Flutter said it still plans to have an IPO for FanDuel later this year. Its shareholders approved a plan to list FanDuel in April.