KEY TAKEAWAYS
- Flutter acknowledges FanDuel’s prediction markets product was subpar at first, but is confident it has grown into a competitive offering.
- FanDuel invested heavily in aspects such as parlay-style combos, switching its sports event contracts to Crypto.com, securing its own FCM, and scaling up its market-making.
- Flutter CEO Dan Taylor spoke on Nov. 4 after the company reported small FanDuel revenue growth and a major decline in U.S. EBITDA.
Flutter CEO Dan Taylor acknowledged Wednesday that FanDuel’s prediction markets product was “not competitive” at first, but said it is greatly improved heading into 2027 after sustained investments and recent pivots.
“The product, when I first went over to FanDuel in the spring, was not competitive,” Taylor acknowledged on Nov. 4’s Q3 earnings call, his first as Peter Jackson’s replacement. “I think the team have made tremendous progress on the product in the last few months, and the results we’re seeing are very good.”
Taylor cited major recent changes, including switching its sports event contracts supplier from its FanDuel Predicts joint-venture partner CME Group to Crypto.com and the expansion of parlay-style combos markets, as well as its move to an all-in-one app.
FanDuel Predicts volume soars in October
Flutter reported in its earnings release that FanDuel Predicts had 140,000 active users in October and took $119m in volume in Q3, a 102% increase on Q2. October volume was up 271% compared with July.
“Predictive markets represent a very meaningful incremental opportunity for FanDuel,” Flutter’s CEO added. “We must build a strong position now, investing with discipline and maintaining flexibility to adapt quickly as regulation develops … While we always have more work to do, our product is now genuinely competitive.”
Taylor will lead FanDuel forward in tandem with Christian Genetski. A Flutter spokesperson confirmed to SBC Americas that Genetski will become the permanent CEO of FanDuel after he initially replaced Amy Howe on an interim basis.
Flutter execs: FCM status, market making are transformative
Taylor said at the outset of the earnings call that he had four key priorities as CEO, including building on FanDuel’s U.S. leadership position in state-regulated gaming and turning the brand into a competitive, revenue-generating force in prediction markets. He suggested that Flutter has “a clear pipeline of further improvements” in that product vertical.
In particular, Taylor and CFO Rob Coldrake spoke at length about recent developments including FanDuel’s ownership of its own registered Futures Commission Merchant (FCM) and its full entry into B2B market-making. FCM status independent of the CME partnership gives FanDuel more flexibility, including the potential of offering event contracts listed by Crypto.com’s fellow designated contract markets (DCMs) such as Kalshi or Polymarket.
“We believe we are increasingly well-positioned to capture this opportunity,” Coldrake told investors and analysts. “We are linking up with more exchanges, and ultimately we do feel we have a right to win in this space in terms of our expertise, our ability to price complex products, and also ultimately with our liquidity.”
Taylor added that market making is “at the heart of Flutter’s capabilities.”
“We’ve made great progress there,” the CEO added. “We’re now trading across multiple exchanges across multiple sports. I think our ability on the complex parlays is a real differentiator for us. Market making is a really exciting near-term revenue and profit generator. The B2C side is probably longer-term, as we need to build leverage the brand for the long-term franchise.”
Flutter’s financial guidance includes a net contribution of approximately $50m in revenue and $40m in EBITDA for 2026 from market making for 2026.
Prediction company spending pushing up FanDuel costs
However, Taylor acknowledged that it is hard to get the balance right in terms of the economics of offering prediction markets. The CEO noted that while the company is acquiring event contracts customers at materially lower cost than sportsbook users, a lot of uncertainty remains around prediction markets both financially and legally.
Part of the problem from Flutter’s perspective is that the increased spending of other prediction market operators drives up Flutter’s own costs. However, Taylor is confident that is a short-term problem.
“We are beginning to see an impact on our media costs as prediction market operators increase their spend,” he said. “From a marketing spend perspective, the increase has predominantly been driven by the predictive operators. That’s a reality of where we are right now in the market, with some of the uncertainties. That will, I think, be a temporary position. We wouldn’t expect that to be forever. But it is the nature of the market we’re in today.”
Taylor added that a lot will depend on how the regulatory and legal landscape develops. In the meantime, Coldrake said Flutter expects to keep investing in the prediction markets space “at similar or higher levels, given the early momentum we are seeing.” Taylor said that approach will position Flutter well by balancing the need to operate at scale in targeted states with the ongoing regulatory uncertainty.
FanDuel’s EBITDA halves to $3m, but share price rises
Taylor and Coldrake spoke Wednesday after Flutter announced its Q3 results.
The global gaming operator’s U.S. revenue grew 6% year over year to $1.45bn, outpacing the company’s group revenue rise of 2%. FanDuel’s sports betting revenue grew 4% to $817m, while iGaming climbed at twice that rate, up 8% to $572m.
However, U.S. adjusted EBITDA almost halved, falling 94% to just $3m, which Flutter said reflected investments in its prediction market offering as well as its dual-vertical launch in Alberta’s new regulated market in July.
Taylor and Coldrake voiced optimism about FanDuel’s progress in online casino, with the CEO suggesting FanDuel Casino has grown into the “market leader” in that field. Meanwhile, Coldrake said that U.S. sportsbook performance was ahead of expectations and that FanDuel gained market share in Q3.
As for Flutter’s bottom line, overall group adjusted EBITDA fell from $478m to $360m year over year and total net losses rose 46% to exceed $1.1bn. As a result, Flutter cut its group revenue midpoint guidance by $300m to $17.6bn and its adjusted EBITDA guidance by $160m to $2.5bn.
Still, investors seemed to see enough to be optimistic. Flutter’s share price on the New York Stock Exchange crept up from $83.16 on Tuesday afternoon to $86.60 by 9:30 a.m. ET Wednesday, although it subsequently began to tail off again.
