FanDuel breaks through to profitability

BET IT ON BLACK FanDuel breaks through to profitability. By David McKee

The same day that Flutter announced its first-quarter earnings, Jackson dispatched an open letter to shareholders, in which he reflected on the company’s domestic performance so far. “It is now just over 15 months since Flutter listed on the New York Stock Exchange and almost a year since our U.S. primary listing became effective, making it a suitable time to reflect on Flutter’s differentiated positioning and the significant global opportunity we see ahead,” he began.

Image: Peter Jackson, CEO, Flutter Entertainment

Flutter, he said, “has access to a significant global market and runway of growth with the regulated sports betting and iGaming market expected to be worth” as much as $368 billion by 2030. “The Flutter Edge is our key sustainable competitive advantage and global differentiator which enables our local brands to both access and contribute to leading global capabilities across product, technology, expertise and scale.”

An increasingly apprehensive Wall Street was bound to raise macro-economic concerns and Jackson was ready for them. He stated that Flutter had weathered “previous periods of consumer pressure” internationally with no discernible impact to its business. Jackson added that he was convinced that i-gaming and sports betting had “strong defensive characteristics” over the long haul.

The stock market and its quarter-to-quarter (sometimes day-to-day) sensitivities were evidently of some concern to the CEO. He advised shareholders that “it is important to remember that we run the business for the long term, often making decisions that impact short-term profitability, for the greater benefit of longer-term profitability.

“The nature of sports results will also influence our quarterly results,” Jackson warned, “as we have seen in our most recent quarters, but over time these are transient and do not compromise our compelling growth model and long term value creation opportunity.
“Our basic business is resilient,”

Jackson reiterated the following day, in a conference call. He underlined that he wasn’t fazed by recent economic challenges in the U.S. Nor was he bothered by an adverse March Madness basketball tournament, even though it negatively impacted FanDuel’s first quarter.

“We had a great Super Bowl but overall U.S. sports results were customer friendly,” Jackson admitted. American betting handle, he continued, was growing in line with expectations. True, it was below projections where basketball was concerned, but the slack was being taken up by other sports. Even baseball trends were described as encouraging.

“There’s always going to be some ebbs and flows,” Jackson conceded of handle and outcomes. In the NBA, “handle was perhaps slightly softer,” due to less-competitive matchups and “some of the top teams haven’t made the playoffs. We retain the conviction that we’ve got the best NBA product in the market [and] the playoffs have got off to a good start.”

Stock analysts were full of ideas about how FanDuel might do better. FanDuel lives and dies largely on same-game parlays. Was this hurting it more than the competition? “No,” was CFO Rob Coldrake’s flat, firm reply.

Then Coldrake elaborated, “We’ve got absolute conviction our pricing. Volatility is something that will come with that. We accept that.”
Perhaps, it was suggested, that FanDuel enlarge its handle through augmented promotional activity. “We’re not going to try and generate handle that way,” Jackson responded. It was not, he said, FanDuel’s style.

Flutter, related Jonas in an investor note, “sees handle growth as just one driver of its long-term trajectory, along with margin expansion, new customer acquisition, higher retention, gaming cross-sell, wallet share gains and promo efficiency, all of which it continues to refine before factoring any new state launches.”
Coldrake jumped in, saying that Flutter was “extremely disciplined in our approach when it comes to customer generosity. We are seeing a high level of generosity in the short term” from the competition, opining that it was probably unsustainable.

Showing its diversity of offering, Flutter was going up against International Game Technology for Italy’s new lottery contract. Although IGT was perceived as having the inside track, being the incumbent, Jackson was undaunted.

“We believe the merits of this deal are compelling,” he said of Flutter’s bid. The Italian lottery market offered, he opined, low risk and high profitability, along with “unexploited growth potential.”

That doesn’t mean Flutter will be pursuing every lottery that comes down the pike. Italy is, Jackson said, a very good example of a market in which one can cross-sell lotteries, iGaming and sports betting. But it was “pretty unique,” an opportunity not available elsewhere — hardly in the U.S.

British and Irish iGaming and sports betting activity was said to remain strong. Some thought Flutter might be losing iGaming market share, to which Jackson replied, “I’m pleased with gaming year-over-year.” The competition was, he noted, benefiting from weak comparisons while Flutter was coming off a strong couple of years.

No discussion of sports betting, for better or worse, would be complete without a discussion of the incursion made by prediction markets. Again, Jackson was unruffled. After all, Flutter owns Betfair, one of the largest betting exchanges in the European market.

“We have vast experience in this space,” Jackson stated. “We operate the world’s largest sports-betting exchange, so we do know this well,” he continued. But since parlay bets are not accessible via exchanges, he doubted that prediction markets could make substantial inroads, particularly in existing jurisdictions like FanDuel’s U.S. footholds. “I’m not that confident that it will have a significant impact,” he concluded.

Jefferies Equity Research analyst James Wheatcroft agreed. Impact from prediction markets upon FanDuel was described by him as “limited … Flutter already runs the largest sports exchange in the world.”

And when you’re Peter Jackson, the world right now appears to be your oyster.

*** This exclusive article was originally published in Sports Betting Operator Magazine Issue 016 Volume 7 May 2025***