The Paddy Power owner, which merged its US business with FanDuel in 2018, said it was exercising an option to buy the whole company ahead of schedule. 

Shares in the company jumped in Dublin trade after the deal was announced. The stock price was 6% higher at the close of business.

Flutter said it will raise £1.1 billion in equity to partly fund the purchase and offer US-based FOX Sports the option to buy 18.5% of FanDuel at fair market value in July 2021. 

Today's deal would take Dublin-based Flutter's stake in FanDuel from 57.8% to 95% and terminate Fastball's economic interest in online sports betting platform FOX Bet, it said. 

The deal would simplify the position of FOX Bet, in which Fastball was given an interest as part of Flutter's 2019 merger with Canada's Stars Group, creating one of the world's largest online betting and gaming operators, Flutter said. 

Flutter said it expects to pay for the stake through a combination of $2.09 billion in cash and the issue of about 11.7 million new ordinary shares directly to Fastball. 

Fox Corporation will also be participating in the capital raising, it added.

Goldman Sachs and Davy stockbrokers are acting as joint global coordinators and joint bookrunners for Flutter's placing.

Flutter said today's transaction will materially increase its exposure to US market, which it described as the "most attractive sector opportunity" today.

Flutter's operations in the US include the FanDuel Group, which operates the FanDuel sportsbook and daily-fantasy-sports brands, the TVG broadcasting and deposit wagering network and the Betfair online casino in New Jersey.

Commenting on today's deal, Lachlan Murdoch - executive chairman and CEO of Fox Corporation - said that maintaining its ownership stake in Flutter signifies its long-term commitment to the company and its ongoing confidence in management's ability to execute against the fast growing US opportunity. 

"FOX's audiences have proven to be highly engaged with free to play and wagering content, and we are excited to offer them access to products from Flutter's market
leading stable of US brands," Mr Murdoch added. 

Peter Jackson, Flutter's chief executive, said the company's initial acquisition of a controlling stake in FanDuel in 2018 was "transformational" for the shape of the Group. 

"Our number one position in the crucial US market is built on many of the assets we acquired through that transaction, supported by the broader group's capabilities," Peter Jackson said. 

"Our intention has always been to increase our stake in the business and I'm delighted to be able to do so earlier than originally planned and at a discount to its closest peer," he added.

Flutter said the deal is still conditional on shareholder approval.

Flutter Entertainment last month upgraded its full-year earnings guidance after strong customer growth across all key regions boosted third quarter revenues by 30%.  

It said its third quarter performance exceeded its expectations in both sports and gaming. 

The world's largest online betting group said in November that it expects full-year earnings before interest, tax, depreciation and amortisation (EBITDA) of £1.275-1.350 billion, up from the £1.175-1.325 billion forecast in August.  

That excluded its heavy investment into the US, where an EBITDA loss of £160-180m is expected for 2020, also up on the £140-160m previously flagged.