A group of Wall Street analysts attended Flutter Entertainment’s Capital Markets Day event on September 25. They were in receipt of a bullish presentation on the prospects of Flutter and its North American subsidiary, FanDuel.

Noting Flutter’s status as a first mover in U.S. online-gambling markets, Deutsche Bank analyst Carlo Santarelli led off by opining that its moves would have an outsized impact on the U.S. market. He said Flutter’s message was one “of continued aggressiveness and leadership, as indicative of a landscape that will continue to favor economies of scale, while also making profitable market share growth challenging for most.”

Santarelli described Flutter’s strategy as built around three pillars: maintaining its number-one status (46 percent market share) as an online sports betting (OSB) provider; becoming the top igaming operator; and achieving profitability through sheer preponderance in the marketplace.

The analyst believed Flutter’s key target was achieving higher hold in its OSB revenue, something on the order of 12 percent and rising to 15 percent by 2027. This would maintain FanDuel’s status as the tightest-holding of the major OSB providers.

In this scenario, promotions would decline to 25 percent of gross gaming revenue, but increase in dollar volume. “As such, with promotional dollars remaining elevated, we don’t see the operating leverage story for FanDuel as a net benefit for industry peers, given the hold dynamics, as opposed to promotional dollar extraction,” Santarelli wrote.

Jefferies Equity Research analyst James Wheatcroft pointed out that FanDuel was enjoying 34 percent more application downloads than its closest competitor, despite 10 percent less promotional outlay. He also expected Flutter to buy back $5 billion worth of its stock. He predicted it would start “following November 3Qs and to be deployed over the next three to four years.”

FanDuel revealed to investors that parlay wagers for the first half of 2024 were 37 percent of its total handle. Of that, 50 percent were pregame parlays and 22 percent in-game wagers.

It was further disclosed that FanDuel’s parlay mix in Illinois (Santarelli’s presumed test case) were 35 percent of handle, holding at 21.2 percent. DraftKings’s parlay share was 26 percent and BetMGM’s was 23 percent. The latter two companies also held at significantly lower rates than FanDuel.

Without factoring any additional igaming or OSB jurisdictions into its mix, Flutter projected a growth rate of 16 percent over the next three years. This includes an eventual 2027 revenue of $9.7 billion and cash flow of $2.4 billion. Santarelli thought these numbers were “likely to prove conservative.”

Other Flutter predictions were for a total addressable market of $63 billion in the United States and $7 billion in Canada. The U.S. forecast was split between $39 billion for OSB and $24 million for igaming. Santarelli observed that the current addressable market in the U.S. is $19.4 billion, ramping up to a projected $26.9 billion in 2027.

The Deutsche Bank forecast didn’t assume any additional sports-betting states coming into play. It did prognosticate, however, that Illinois and Indiana would legalize igaming, bringing with them $2.1 billion in revenue, for a grand igaming total of $10.5 billion.

Hailing Flutter as a “global gaming juggernaut,” Truist Securities analyst Barry Jonas revealed that Flutter planned to grow in such emergent markets as Latin America and India through mergers and acquisitions. Flutter bosses believe such jurisdictions could yield $40 billion to $50 billion in total addressable market by 2030. Jonas deemed this “worth monitoring,” particularly as growth in the U.S. slows down.

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