FanDuel, the popular online sports betting platform, made its long-awaited stock market debut on Monday as parent company Flutter Entertainment started trading on the New York Stock Exchange (NYSE).
Flutter, which also owns Paddy Power and Betfair, is looking to capitalize on the burgeoning US sports betting industry by shifting its primary listing from London to New York.
Lead Up To Historic Listing
The move has been in the works for years as Flutter positioned itself to take maximum advantage of the gradual state-by-state legalization of sports betting across America.
Back in 2018, Flutter acquired FanDuel for $565 million to gain a substantial foothold in the fledgling US market. Since then, Flutter has continued to invest heavily in the platform.
As more and more states have legalized online sports wagering, Flutter has rapidly grown its US user base. FanDuel is now the clear market leader, available in 15 states and controlling over 50% of market share.
This growth and dominance provided the impetus for Flutter to execute its long-held plan to list in New York.
Flutter Exits Europe, Starts Trading On NYSE
Last week, Flutter delisted from the Euronext Dublin stock exchange, ending its 21-year run as a constituent of the benchmark Irish index.
Early Monday morning, Flutter founder and CEO Peter Jackson was on the podium at the NYSE to ring the iconic opening bell, officially commencing trading of Flutter shares on the Big Board under the ticker symbol FLTR.
In an interview with CNBC, Jackson said:
“It’s a hugely exciting day for the company, and really underlines our transition towards the United States”
He added that the US market now represents over 50% of Flutter’s revenue.
The initial pricing valued the gambling giant at around $27 billion. Within the first hour of trading, shares surged nearly 8% to over $140.
Flutter instantly became one of the most valuable gambling stocks listed in New York alongside Las Vegas icons Caesars Entertainment and MGM Resorts.
Battle With DraftKings Heats Up
The debut also sets up an intriguing rivalry on Wall Street with daily fantasy sports turned sportsbook DraftKings, which has been public on the Nasdaq since 2020.
DraftKings shares fell over 2% on Monday on the news of its new NYSE competitor. While DraftKings had previously cornered the market as the only pure-play sports betting stock for US investors, FanDuel’s arrival dilutes that positioning.
Both companies are still growing rapidly as more states regulate sports wagering and more fans migrate to mobile betting platforms. However, analysts expect an intense fight for market share over the coming years.
DraftKings currently operates in five additional states beyond FanDuel’s 15, but FanDuel has the edge in the three states that matter most in terms of market size: New York, California, and Texas.
What’s Next For FanDuel and Flutter?
FanDuel is still loss-making, as it continues to spend aggressively on marketing and expansion costs.
Flutter CEO Jackson was realistic about short term profitability, saying FanDuel is focused on “growing market share and growing revenues”.
However, he projected that FanDuel would turn profitable on an EBITDA basis by 2025.
As for Flutter’s future on the NYSE, Jackson confirmed to reporters that they intend to formally shift their primary listing to New York within the next year, pending shareholder approval.
This would make Flutter the latest in a series of major firms ditching London in favor of New York or Hong Kong. Flutter would become only the 4th Irish company ever to be primary listed on the NYSE.
The Wider Gambling Industry Impact
It is somewhat symbolic that just as the UK gambling industry faces tighter regulation and higher taxes, the country’s former largest betting firm has fled to the US where the market is opening up.
Flutter’s move across the Atlantic is a strong signal to investors about where future growth in the global sports betting industry will come from.
In America, gambling firms are partnering with sports leagues, teams and broadcasters, marking an unprecedented convergence of sports media and betting.
The Supreme Court overturned the federal restriction on sports betting in 2018. Since then, over 30 states have legalized it, some even moving towards allowing wagers on college sports.
With at least ten more states actively considering regulation, it is clear that the US market will become even more lucrative in the 2020s.
Contrast With Struggles In UK and Europe
Meanwhile, British betting companies are facing a perfect storm of factors negatively impacting their domestic and European revenues.
The UK government recently increased the mandatory levy on betting firms’ revenues to fund addiction treatment and grassroots sports. Germany also introduced strict licensing requirements last year after opening up its sports betting market.
At the same time, the cost-of-living crisis has led to less discretionary spending by consumers on gambling, while high inflation has increased operating expenses for the betting platforms.
This helps explain Flutter’s eagerness to shift its focus to the US while reducing reliance on its mature UK and Irish markets that now contribute far less to its bottom line.
|Flutter FY2022 Revenue
|% of Total
|Rest of World
As the table above shows, the US now generates almost half the group’s total annual revenue and contributed nearly 90% of revenue growth last year.
Although online sports betting still only accounts for low single digit percentages of the total US gambling industry when compared with land-based casinos, its growth trajectory over the past few years has been extremely impressive.
With FanDuel’s NYSE listing and Flutter’s impending shift to a New York HQ, expect the fight for American bettors’ attention (and wallets) to become even more intense.
FanDuel enjoys first-mover advantage and has an established brand name in the arena of fantasy sports. However, rival DraftKings has also built considerable brand recognition with its early move into sports betting and higher marketing budget.
Nonetheless, FanDuel remains the undisputed industry leader for now and Flutter’s listing on the world’s largest stock exchange solidifies its leading position as the top dog in global sports betting headed into 2025 and beyond.
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