Flutter: FanDuel & Rest of US Division Will Be Profitable in 2023

Gaming conglomerate says performance in more mature sports betting states like New Jersey and Pennsylvania helped offset losses in newer states like Arizona and Michigan.
Flutter Entertainment plc logo is seen on a black background. The gaming conglomerate says it expects its US division (including FanDuel) to turn a profit in 2023. Also hopes to launch in new states as more jurisdictions legalize online sports betting.
By
March 04, 2022

Flutter Entertainment plc said it is “confident” that its US division — which includes its FanDuel, FOX Bet, TVG, PokerStars and Stardust brands — will be profitable in 2023.

In an earnings call to discuss preliminary results for the full-year 2021, the global gaming conglomerate said its FanDuel brand “continues to resonate strongly with sports bettors.” FanDuel held 40% of the online sportsbook market in the 12 states where it was live in Q4 2021 and delivered a positive contribution of $14 million in 2021.

“This leading revenue share is moving FanDuel closer to a position of profitability,” Flutter said in a statement Tuesday. “Based on our current expectations relating to the timing of new state regulation in 2022 and 2023, we remain confident that our US business will be EBITDA [earnings before interest, taxes, depreciation, and amortization] profitable in 2023.”

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The company added that its 2023 profit projection was based on current expectations for future state launches in 2022 and 2023. Although Flutter did not identify what new states were on the horizon, it did state that “new state launches can be difficult to predict and any variance to our expectations across these two years could affect the timing of profitability being reached, particularly if an unexpected large state such as California launches in 2023.”

Flutter added that FanDuel Sportsbook is currently deployed in 14 states, having launched in Louisiana and New York in 2022. FanDuel acquired more than 400,000 new sports betting customers in New York alone, Flutter said.

Elaborating on details of the $14 million positive contribution by FanDuel, Flutter said the more mature states for sports betting — specifically, Illinois, Indiana, New Jersey, Pennsylvania, and possibly others — more than offset losses in states that went live in 2021 and where Flutter had to invest in attracting new customers. Those states were Arizona, Connecticut, Michigan, and Virginia.

While Flutter said it had invested more than $1 billion on promotions, sales, and marketing across its US businesses in 2021, the company said it was “encouraged” by faster adoption rates for online sports betting as it enters new states.

“This results in bigger initial losses in the early months [following] a state launch, as we acquire more customers,” Flutter said. “However, when combined with better retention rates and our product mix advantages, we now expect new states to generate positive contribution after 12-to-24 months post-launch, in contrast to the 18-to-30 month guidance we provided in 2019.”

The new 12-to-24 month guidance excludes states with high tax rates like New York, the company said.

Flutter said its US division averaged 1.6 million average monthly players in the 2021 fiscal year (FY), up 71% year-over-year (910,000). The division made just under $1.9 million in FY 2021, up 113% from FY 2020 ($931k).

Broken down by vertical, the US division grossed $1.3 million on sports betting revenue in FY 2021, up 113% from the prior fiscal year ($648k). Meanwhile, revenue from online casino gaming totaled $554k in FY 2021, up 74% year-over-year ($318k).

FanDuel was live in 12 states in 2021: Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Michigan, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia. Its sister brand, FOX Bet, was live in four: Colorado, Michigan, New Jersey, and Pennsylvania.

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