Flutter Entertainment, the parent company of FanDuel, revealed that its projected earnings for 2024 would fall significantly short of earlier expectations.
The unexpected downturn comes as American football bettors have enjoyed a record-breaking winning streak, leading to a sharp reduction in revenue and earnings projections for FanDuel.
Flutter disclosed that its US revenue is now anticipated to be approximately $370m lower than the midpoint of its earlier forecast of $5.78bn.
Additionally, adjusted earnings for its US operations are expected to decrease by about $205m, falling to $300m from a prior midpoint estimate of $505m. The announcement caused Flutter’s US-listed shares to dip by 1.7% in extended trading.
It wasn’t all bad news, though. Flutter’s performance outside the US showed positive momentum, with preliminary results revealing revenue and EBITDA exceeding the company’s guidance range by 1% and 2%, respectively, for the quarter.
This also translates to a 6% outperformance compared to market consensus for Q4 2024. The strong results build on a 10% EBITDA beat reported in Q3 2024, reinforcing confidence in the company’s non-US operations.
These segments, which account for 63% of the projected 2025 EBITDA, appear to be on solid ground as Flutter targets strategic growth through mergers and acquisitions in key markets like Brazil and Italy.
NFL favourites dominate, challenging bookmakers
The recent NFL season has proven to be the most customer-friendly since the repeal of the Professional and Amateur Sports Protection Act (PASPA) in 2018.
According to Flutter, the rate of NFL favourites winning games is at its highest in nearly two decades, creating a challenging environment for sportsbooks like FanDuel.
Bookmakers typically benefit from unpredictable outcomes, and a streak of favourites winning heavily skewed the odds in favour of bettors.
Despite FanDuel’s challenges, the broader US sports betting industry continued its rapid growth in 2024.
According to analysis by Legal Sports Reports’ Eric Ramsey, licensed sportsbooks across 33 reporting markets collectively achieved nearly $150b in handle (total wagers) and over $14.2b in operator revenue, marking a 23% and 29% year-over-year increase, respectively.
A record-setting 9.5% hold—representing the share of wagers retained as revenue—fuelled these gains.
Of the 33 markets reporting data, 28 achieved new handle records in 2024.
Nevada, the original epicentre of US sports betting, posted the narrowest margin at 6.4%, influenced by a sharp betting base in Las Vegas and a relatively conservative menu of betting options.
Nonetheless, more than half of reporting states exceeded double-digit hold percentages, underscoring the sector’s profitability.
FanDuel and DraftKings maintain dominance
FanDuel and DraftKings continue to lead the US sports betting market, collectively accounting for over 65% of total revenue.
Flutter’s FanDuel secured a 40% national market share, generating $5.78b in gross revenue on $50.7b in wagers across 23 states in 2024.
DraftKings followed closely, earning $4.67b in revenue on $49.4b in wagers across 26 markets, including Maine, Oregon, and New Hampshire.
Both companies have leveraged their dominance in the daily fantasy sports market to convert users into sports betting customers. Their best-in-class platforms have enabled them to retain a significant share of this expanding market, even as new competitors emerge.
Flutter emphasised that the temporary challenges in the US market would not affect its long-term growth prospects. In September, the company projected that the booming US sports betting market would account for nearly half of an expected doubling in profit by 2027.
More challenges ahead
Despite the record numbers, the growth of US sports betting handle is expected to decelerate in 2025, following a robust 29% increase in 2023 and a year-to-date growth of 26% through November.
According to Jordan Bender of JMP Securities, Missouri, with a total addressable market (TAM) of $580m, is the only state anticipated to introduce sports betting this year, while Alberta’s market launch may occur in 2025.
As market expansion slows, optimising revenue will become increasingly critical for operators, particularly through enhancements in gaming margins and refined promotional strategies.
A key trend in the industry has been the emphasis on parlays, with companies not only promoting these bets but also incentivising players to include additional legs.
Recent data from JMP indicates that the average number of legs per parlay during the NFL season reached an all-time high, surpassing five. This shift not only increases the potential revenue per bet but also highlights the growing sophistication of operators in maximising profitability.
In-play betting is another area poised for growth. This product, which allows consumers to place bets during live events, is expected to play a pivotal role in expanding the average consumer’s betting budget.
Promotional optimisation will also be a major factor in enhancing net gaming revenue margins. This was underscored during Flutter’s Investor Day, where the company detailed its strategy for balancing promotional spending with long-term profitability.
In 2025, Bender expects FanDuel and DraftKings to maintain strong revenue growth despite the slowing handle. FanDuel is projected to grow revenue by 29%, following an estimated 37% growth in 2024.
DraftKings, on the other hand, is forecasted to achieve a 39% increase in revenue, building on its expected 29% growth in 2024.