FanDuel Becomes First U.S. Online Operator To Post Profit

August 15, 2022
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Flutter Entertainment CEO Peter Jackson lauded FanDuel's positive momentum as it claimed a 51 percent share of the U.S. online sports-betting market and positively contributed earnings in the second quarter.

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Flutter Entertainment CEO Peter Jackson lauded FanDuel's positive momentum as it claimed a 51 percent share of the U.S. online sports-betting market and positively contributed earnings in the second quarter.

“Our U.S. performance in the quarter was outstanding and continues to exceed all expectations delivering a profit in the second quarter,” Jackson said on Friday (August 12). “This was achieved despite the fact we’ve been leaning in to customer acquisition in the second quarter, acquiring over a half a million customers in the quarter.”

Jackson said FanDuel’s performance was driven by “phenomenal performance with the sports-betting market share of 51 percent in the second quarter when we are number one in 13 of 15 states.”

Projected full-year revenue in the U.S. is running ahead of expectations at £2.3bn to £2.5bn ($2.85bn to $3.1bn), and an adjusted EBITDA loss of between £225m and £275m ($300m to $360m), assuming FanDuel launches in Kansas in the fourth quarter of 2022.

Flutter and FanDuel are also expected to be licensed in Nevada later this month, with future market launches planned for Maryland and Ohio.

“The increased portion of our revenues coming from our existing customers gives us confidence that we will deliver a proper profit for the full year 2023,” Jackson said.

Flutter Ent

Jackson attributed his confidence in full-year 2023 EBITDA profit to an “increasingly profitable player base,” and FanDuel's leading position in the states it operates in.

In the second quarter, the average number of monthly players rose by 49 percent year-on-year and they placed more than twice as many bets as last year, according to the earnings report.

However, Jackson told analysts that expected profitability in 2023 does not include the prospect of California going live with mobile sports betting next year.

“If California is to launch in 2023 it will be a fantastic opportunity for us to replicate the success we are seeing elsewhere in the U.S., in the [equivalent of the] world’s fifth largest economy,” he added.

FanDuel, which has partnerships with seven U.S. professional leagues including Major League Baseball (MLB), is one of seven operators behind Proposition 27 on the ballot this November in California. The measure would allow mobile sports betting through partnerships between commercial and tribal gaming operators.

On Friday, MLB issued a statement in support of Proposition 27, arguing that the ballot initiative would create a safe experience for fans who want to wager on baseball games.

“Proposition 27 — the only measure on California’s upcoming ballot that would authorize and regulate online sports betting — includes strong integrity provisions designed to help MLB carry out those commitments,” the league said in a statement.

Among other things, MLB officials said the measure would require operators to notify leagues of suspicious wagering activity, allow leagues to propose restrictions on betting markets that are particularly susceptible to manipulation, and facilitate other forms of integrity-related cooperation between the state, leagues, and operators.

“MLB believes that Prop 27 has the safeguards to create a safe and responsible online sports-betting market in California — a state with millions of MLB fans looking for alternatives to illegal offshore betting sites.”

Overall, Flutter posted £3.38bn in revenue for its half-year 2022 results, a 10.9 percent increase year-on-year.

“The first half of 2022 was positive for the group with significant progress made against the strategic objectives we outlined in March,” Jackson said.

Revenue from the U.S. was £1.05bn, 61.1 percent higher than in the first half of 2021. Sports-betting revenue made up 73.2 percent, £770m, while online gaming revenue reached £281m.

In the UK and Ireland, revenue amounted to £1.09bn, down 3.7 percent. The company noted that its acquisition of Tombola in January added 8 percent of growth to its UK and Ireland online segment.

Jackson also added that Flutter’s acquisition of Italy’s leading online gaming operator, Sisal, helped with the group's strong first-half performance.

Flutter’s international segment produced £633m in revenue, down 6.9 percent, while revenue from its business in Australia increased 4.6 percent to £612m.

Flutter also launched its PokerStars brand in Ontario on June 28, just before the close of the first half, following FanDuel's launch in the province at the start of April.

"Our regulated mix continues to grow with 93 percent of our revenues coming from regulated markets and regulating markets bringing that up to 96 percent," Jackson said. "This proportion will continue to increase further ... as our U.S. business continues to grow."

During the first six months of the year, Flutter estimated FanDuel’s cost per player acquisition remained below $300, while more than 80 percent of FanDuel customers have played a “higher margin parlay product.”

“It is clear how our growth and particularly our U.S. expansion has transformed the group since the first half of 2019,” Jackson said. “The U.S. has transformed from our smallest division on a revenue basis to our largest.”

In the second quarter, Jackson said the U.S. represented more than one-third of the company’s entire revenues.

“The continued growth of our U.S. business will further transform the earnings and cashflow of the group once the business becomes profitable in 2023,” he said.

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