FanDuel worth $31 billion, Jefferies analyst says
Boyd Gaming’s US$1.7 billion sale of its 5% stake in FanDuel implies a US$31 billion value for the online sports betting provider, according to Jefferies Equity Research analyst James Wheatcroft in an 11 July investor note.
“The deal with Boyd Gaming gives Flutter 100% ownership of FanDuel and improves commercial terms for market access,” wrote Wheatcroft. An option is still held by Fox to buy 18.6% of FanDuel for US$4.5 billion but Fox would have to apply for United States gaming licensure in order to exercise that longstanding provision.
By renegotiating and elongating through 2038 its market-access agreements with Boyd, particularly with regard to New Jersey, FanDuel parent Flutter Entertainment will save US$65 million per year, Wheatcroft reported, retroactive to 1 July. The deal is expected to close in the third quarter.
Were it not for a recent OSB-tax boost in the Garden State, the analyst continued, the Boyd purchase would represent a 1.5% cash flow gain. As it stands, Wheatcroft opined, the US$65 million savings will offset the expected US$60 million hit from the higher taxation.
Boyd gained fixed, per-state fees for the operation of FanDuel-branded sports betting in Iowa, Indiana, Kansas, Louisiana and Pennsylvania, plus igaming in the latter state. Boyd will continue operating terrestrial, FanDuel-branded sports books outside Nevada until mid-2026, at which point they will revert to the Boyd imprimatur.
As a result of the accord, Flutter’s debt load will rise to 2.9 times cash flow, Wheatcroft said. That was up from 2.4 times and outside Flutter’s preferred leverage range of 2 to 2.5 times cash flow.
Truist Securities analyst Barry Jonas called the deal a win-win scenario for all involved. He explained that Boyd would experience net proceeds worth US$16 per share. Boyd would lose as much as US$55 million in online-derived cash flow but would gain as much US$85 million in unpaid interest once debt was retired.
The deal, Jonas continued, was structured so that Boyd was receiving US$1.5 billion in cash, plus US$205 million in comped market-access services.
“We think investors had never ascribed much value,” Jonas said of Boyd’s stake in FanDuel. “That said, we think lower fees once the current agreement expired in mid 2028 were inevitable given changing market dynamics.”
What will Boyd do with Flutter’s money? Jonas thought it would go toward share repurchases, special dividends or possibly even mergers and acquisitions.
“With this transaction, we see Flutter looking to reduce ambiguity and present a cleaner story to investors,” Jonas forecast. “Flutter has now secured full ownership of FanDuel, its prized US asset, before factoring Fox’s option.”
In addition, by redoing the market-access agreements, Flutter would save US$65 million per year. That amount, Jonas said, would amortize the extra US$205 million gifted to Boyd. He added that the deal’s price tag (16 times cash flow) validated the 14 times 2026 earnings ascribed to arch rival DraftKings and shored up the value of Penn Entertainment’s ESPN Bet.
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David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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