Flutter CFO questions state revenue reports and asserts FanDuel’s market dominance

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Flutter Entertainment CFO Paul Edgecliffe-Johnson has shrugged off analyst questions about DraftKings reportedly overtaking FanDuel and called on state regulators to report net gaming revenue – asserting it is a more reliable metric for assessing market share.

The CFO’s comments come as FanDuel revenue for Q3 reached $668m, an increase of 20% year-over-year despite unfavorable sporting results hitting the sports betting segment. 

On the sportsbook side, FanDuel responded to analyst coverage that DraftKings had taken a lead in the US by claiming that it took 47% revenue market share during Q3, including 55% share in September trading. The firm stated that it had grown its NGR share by five ppts YoY. 

Criticizing state revenue reports for not using the most reliable metrics, Edgecliffe-Johnson stated: “NGR is the right metric to look at because that doesn’t take account of generosity. It is 47% NGR for us which is up 5% year-on-year, and it’s good. 

“But now we’ve got nine states that are publishing that and we are encouraging the rest of the states to do the same because I think that’s really the metric that matters. And I think that demonstrates our strength as our NGR share is more than DraftKings – and that’s the key metric.”

This strength, the group asserted, was due to its “excellent” start to the NFL season and new product innovations such as Parlay Hub, The Pulse and the expansion of in-play Same Game Parlay prop markets. 

While Flutter remains intent on spending heavily to “acquire as much business as we possibly can”, FanDuel has reported much stronger retention rates in part thanks to these new product innovations. 

The topic of acquisition spending and promotional spending was a big talking point for analysts on the earnings call, who noted that FanDuel’s promo spend was akin to that of Q1 when the Super Bowl took place. 

Jackson conceded that promotional spending in Q3 was high but stated that this is normal at the start of the NFL season as it is the most important acquisition period of the year. 

He stated: “First of all, there’s not a lot of sports and then suddenly, it’s a step up in the launch of the NFL and the NBA, which is a very intense period from a customer acquisition and reactivation perspective. So there is actually a lot of promotional activity. I think it’s a much more important call to action for customer activation than the Super Bowl.

“We have not altered our posture in the market as a result of what other people are doing, we’ve always tended to be very focused on acquiring as much businesses as we ever can do.”

Despite this ramping up of promotional spending, Flutter leadership does anticipate that this will temper across the industry as we move into 2024 and the Super Bowl. 

Though new market entrants Fanatics and ESPN BET have indicated they will spend big in the coming months, DraftKings has indicated it will assert more discipline on marketing spend and FanDuel has indicated the same. 

Jackson told investors: “We have operated in this market for many years now and it remains incredibly intensive competition. We don’t anticipate the back end of this year being any different to any other; we’ve always been very focused on acquiring as much business as we possibly can.

“We’ve been very pleased to have been able to acquire the customers. We see some commercial spend changing, I believe the market is becoming more rational and that’s actually a positive thing for all participants.”

While reporting its results, the FanDuel parent company has stated that it has chosen to list on the New York Stock Exchange and is undergoing SEC checks to complete the listing by Q1 of 2024.

Reporting its Q3 financial report, Flutter noted that the US listing would delist from the Euronext Dublin but maintain its London Stock Exchange listing. The group is aiming to capitalize on the strong performance of FanDuel by seeking further US investors. 

A Flutter statement read: “The Board is pleased to announce that it has chosen the New York Stock Exchange as the future trading venue for Flutter’s ordinary shares in the US. The Board now believes that it is appropriate to maintain just two listings to minimize regulatory complexities and consequently has taken the decision to cancel its listing on Euronext Dublin. The Euronext delisting is expected to take effect simultaneously with, or shortly prior to, implementation of the additional US listing.”

Meanwhile, FanDuel enjoyed the vast majority of US growth from its online casino product, which enjoyed 52% revenue growth YoY, driven by an uptick in AMPs of 48% during that time. The group now states it holds 23% of the online casino market in the US, making it the second biggest player in that segment behind BetMGM. 

Online casino growth was underpinned by a 30% increase in gaming titles available on the platform in what it labels as key states, while there is a product pipeline to increase this figure further. 

CEO Jackson stated: “If you look at what we have managed to accomplish here, we’ve been really pleased that we’ve been able to grow the business in the direct casino space. We’ve taken share with the fastest growing brand and we never number to operate. Frankly, we’ve got there faster than we thought and we’ve got there off the back-end sales in the direct-to-casino space, we still have a very strong performance in terms of cross-selling into sports, you know, it’s better than we originally anticipated.”

Coming off the back of a successful third quarter, Flutter is reiterating its full-year guidance for 2023, with US revenue anticipated to be $4.7bn, while it expects FanDuel to be the first US operator to enjoy a full-year profit with EBITDA of  $180m, despite ongoing investment in new customer acquisition to drive long term growth.