Flutter Entertainment has warned of a revenue shortfall for its US operations, citing unfavorable NFL betting results during November and December. The sports outcomes, described as the most customer-friendly in nearly two decades, have caused a substantial hit to its FanDuel segment, forcing the company to revise its financial forecasts for 2024.
In a trading update, Flutter revealed that adverse sports betting results, particularly in NFL parlay and same-game parlay outcomes, led to an estimated gross gaming revenue (GGR) impact of $438 million. This, in turn, reduced revenue by $390 million and slashed adjusted EBITDA by $260 million for the period from November 12 to December 31.
FanDuel’s revenue for fiscal year 2024 is now projected to fall $370 million below the previously forecast midpoint. The US adjusted EBITDA estimate has also been revised downward by $205 million, bringing it to approximately $505 million.
For the fourth quarter, FanDuel’s revenue is expected to reach $1.59 billion, with adjusted EBITDA totaling $161 million. This includes the adverse impact of $643 million in GGR, which reduced revenue by $550 million and adjusted EBITDA by $360 million.
Analysts at Regulus Partners noted that parlays increase margin volatility and that the NFL, with its concentrated schedule of games, exacerbates this risk. They commented that “Black Swans,” or rare but significant events, are not as uncommon as they may seem in the high-stakes world of sports betting.
In response to the losses, FanDuel implemented a 4% year-over-year reduction in promotional spending during the quarter. This measure helped offset increased investment in acquiring new players. Despite these challenges, Flutter remains optimistic about its long-term growth, citing strong underlying drivers presented during its investor day in September.
The difficulties in the US market were partly offset by positive performance in other regions. Operations in the UK and Ireland, buoyed by favorable English Premier League results, exceeded expectations. Flutter now anticipates revenue and adjusted EBITDA for its non-US operations to be 1% and 2% higher, respectively, than previous guidance for the year.
Flutter is not alone in facing headwinds. Its competitor, DraftKings, recently reported a $250 million revenue shortfall and a $175 million EBITDA hit early in the fourth quarter, describing the period as one of the worst in its history.
Shares in Flutter Entertainment were down 1.28% in early trading on the New York Stock Exchange, closing at $251.86.