Flutter CEO Peter Jackson wasted little time Wednesday before addressing the elephant in the room.
Speaking with analysts on Flutter Entertainment’s 2023 second-quarter earnings call, Jackson acknowledged the changing landscape of the U.S.in announcing a multi-year partnership with PENN Entertainment that will result this fall in the creation of ESPN BET. Fanatics, another multi-billion dollar, globally recognized enterprise, will also be vying for the football bettor’s wallet for the first time.
Dublin-headquartered Flutter is the parent company of FanDuel Sportsbook, the definitive market leader in the U.S sports betting space. During the first half of 2023, FanDuel Group reported positive adjusted EBITDA of £79 million ($100 million), offsetting Flutter’s losses from FOX Bet and PokerStars. FanDuel Sportsbook is the only U.S. sportsbook to reach a profitability inflection point over the first six months of the year.
FanDuel is gearing up for a new set of challenges in the U.S. PENN revealed Tuesday it would be rebranding its Barstool Sportsbook as ESPN BET after reaching a 10-year deal with ESPN for exclusive trademark rights in the U.S. For PENN, the deal swaps ESPN BET to replace Barstool Sportsbook, as the gaming operator cut ties with the Barstool Sports digital media company and its controversial founder, Dave Portnoy.
Jackson is ready to compete with PENN/ESPN and with other nascent sportsbooks that are entering the market with deep pockets.
“They’re certainly going to be a formidable competitor, as well as a bunch of other people,” Jackson said of ESPN BET.
PointsBet’s U.S. assets. It is Rubin’s goal to become the world’s largest sportsbook over the next 10 years.
Intense battle for market share 471f3f
Bolstered by expansion into new online sports betting states, Flutter generated more than £1.79 billion ($2.29 billion) in revenue from its U.S. operations over the first half of 2023. The gains represent a year-over-year increase of 63% on a constant currency basis. Flutter also reported adjusted EBITDA of £49 million ($62.6 million) for the segment, up from negative £132 million ($168.6 million) for the first six months of 2022.
FanDuel acquired more than 2 million new U.S. customers over the period, an increase of 18% from the same period in 2022. Within the division, Flutter continues to speed up player growth as FanDuel saw its average monthly player base increase by 38% in the second quarter.
As with archrival DraftKings, FanDuel claims it is acquiring players more efficiently over the last year. FanDuel has been pleased with its ability to acquire customers at a high rate, while keeping the projected “payback period” on its acquisition investments below 18 months. For state launches, a payback period is typically defined as the amount of time required to recover the cost of an investment into a new market.
“This profit profile provides us with a clear platform to invest materially in the second half, as we strive to continuously improve our customer offering,” Jackson said in a published statement. “Our player acquisition strategy has consistently delivered, generating excellent returns on investment, embedding even greater value into our customer base, and increasing our future profitability.”
However, FanDuel has seen its considerable market-share lead narrow somewhat. Over the three-month period ended June 30, FanDuel maintained a 47% share of the U.S. online sports betting market, down from 51% in the year-ago quarter. Flutter gauges market share based on the online gross gaming revenue of the U.S. states where FanDuel operates. By comparison, DraftKings reported a national 32% GGR market share for the second quarter of the year.
PENN has set a target by 2027 for 20%-plus market share by ESPN BET. Some industry experts are skeptical that ESPN BET can hit the aggressive goals, given that Barstool Sportsbook has an average market share of around 5%.
Over the last 18 months, media partnerships in the sports betting space have largely underperformed, with several prominent brands bleeding cash. During that time frame, FOX Bet, Fubo Sportsbook, and MaximBet have shuttered operations.
“U.S. OSB has not been kind to the media model and it takes a leap of faith to see ESPN BET as a long-term product leader,” Eilers & Krejcik analysts wrote Thursday. “We can however see the case for a 5-10% market share by 2027 given a solid product and the ESPN brand.”
PENN has agreed to make $1.5 billion in cash payments to ESPN over the initial 10-year term and will grant ESPN $500 million in warrants to purchase approximately 31.8 million PENN common shares. ESPN BET is expected to launch in November.
Timing of U.S. listing 1d6p2c
Flutter also confirmed Wednesday that the company is working toward a secondary stock listing in the U.S. in the coming months. Flutter anticipates the listing will occur in either the fourth quarter of 2023 or the opening quarter of 2024.
Flutter shareholders in April overwhelmingly backed the listing, with approximately 99% approval. The company needed approval from at least 75% of votes cast in order to go public in the U.S. Jackson acknowledged that the U.S. listing could impact the company’s international expansion moving forward. Flutter operates in approximately a dozen countries, but it has a limited presence outside of Europe and North America.
At the moment, Flutter’s primary listing is on the London Stock Exchange (LSE). Flutter believes a secondary listing in the U.S. will be beneficial to the company in providing it with deeper access to foreign capital markets, along with access to new investors abroad.
Flutter has yet to indicate whether the listing will be on the New York Stock Exchange or NASDAQ when it comes to the U.S. Eventually, Flutter has the option of moving its primary listing from the LSE to the U.S. if shareholders deem it appropriate, the company said Wednesday.
Utilize the ESPN BET promo code for an exclusive new player offer. ESPN BET launches in 17 states on November 14th.
