Flutter Forecasts Massive FanDuel Revenue Growth, Sees $40.5B US Market

Posted on: November 16, 2022, 07:44h. 

Last updated on: November 16, 2022, 07:54h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Flutter Entertainment (OTC:PDYPY) said its FanDuel unit could generate annual revenue growth of 4.5x to 5x through 2030 while forecasting a total addressable market in the US of $40.5 billion by that year.

FanDuel forecast
FanDuel CEO Amy Howe. She said the company could grow revenue 5x through 2030. (Image: Wall Street Journal)

The Irish gaming behemoth made the comments at its annual investor day today, with FanDuel CEO Amy Howe noting the company is on pace to be profitable for the first time on an annual basis next year. FanDuel was profitable in the April through June period, notching the first profitable quarter in the history of the US online sports wagering industry.

We do believe that we’ll be on the high end of the range – five times,” said Howe regarding FanDuel’s revenue projection.

Flutter, which owns 95% of FanDuel, recently boosted the unit’s 2022 revenue outlook to $2.95 billion to $3.2 billion. The midpoint of that range is 10x the gaming company sales in 2018, when Flutter acquired a majority stake in it. Boyd Gaming (NYSE:BYD) owns the other 5% of FanDuel while Fox Corp. (NASDAQ:FOXA) has a 10-year option to acquire 18.6% of the daily fantasy sports (DFS) firm.

Flutter Confirms FanDuel Dominant US Position

In an investor presentation, Flutter noted FanDuel controlled 42% of the US online sports wagering market as of the end of the third quarter. That’s more than the 39% commanded by rivals BetMGM and DraftKings (NASDAQ:DKNG) combined.

FanDuel is also the top online sportsbook by market share in 12 of the 15 states in which it is operational. In two of the outlying three states — Colorado and Iowa — the gaming company garners still healthy market share of 28% and 29%, respectively.

The operator said it expects that by 2030, regulated sports wagering will be legal in enough states to cover 80% of the US population, up from approximately 35% today. Though not specifically mentioned in the investor deck, that projection likely assumes the arrival of California, Texas, or Florida — or all three — into legal sports betting arena.

Even on an eight-year time line, that could be an ambitious call, because tribes dominate the gaming landscapes in California and Florida — recently teaching commercial operators a harsh lesson in the former. Additionally, gaming expansion in Texas faces a lengthy uphill climb.

FanDuel Margins Could Impress

FanDuel is aiming for 12% win margins by 2025, up from 10% today. That would put the operator on par with Flutter’s Australian and European brands.

Encouraging to Flutter investors is the point that FanDuel anticipates operational and promotional spending becoming a smaller slice of revenue in the years ahead.

“Given our expectation for the size of the market, we are clearly talking about very material levels of profitability, even in the context of Flutter’s large earnings base today,” said FanDuel CFO David Jennings.

The investor presentation didn’t mention when or if Flutter will proceed with long rumored plans to spin-off a portion of FanDuel to public investors.