market.”įanduel was initially founded in 2009, offering a daily variant of the traditional fantasy sports games available. “And this transaction is really about accelerating Flutter’s investment in the U.S. “Sports betting is still relatively young as an industry, but we’ve managed to build a great leadership position being the first operator to go north of $1 billion of gross gaming revenue that we’re projected to do this year,” FanDuel CEO Matt King says. With six more states passing bills to legalize and two others with active bills on the floor of state legislatures, that number is poised to grow-and FanDuel along with it. The industry drew $13 billion from American bettors legally in 2019, according to the American Gaming Association. Assets have been flowing in the wrong direction ever since the big merger in 2017, and Tuesday was no exception: on the most flattering basis, net withdrawals were £1.9bn in the first six months of 2021.Since the Supreme Court declared the Professional and Amateur Sports Protection Act unconstitutional in May 2018, sports gambling has become fully operational in 19 states and Washington, D.C. Progress is slower at Standard Life Aberdeen, or abrdn as we may one day get used to calling the asset management firm, but then it always is. abrdn has lost its vowels but gained a positive vibe FanDuel looks the better long-term prospect. But the US markets have awarded a rip-roaring rating to share-dealing platform Robinhood, which is essentially just another venue for gambling. The lack of a US chief executive, plus a row with Rupert Murdoch’s Fox Corporation over the rights to a stake in FanDuel, probably preclude a listing for the time being. Call it a rare case of European tech beating US efforts, albeit in a socially useless field.Īn intriguing twist will come if Flutter lists a minority stake in FanDuel on the US stock markets, an idea it has already raised. The answer may be no more than the inability of land-based operators to understand that the online world is nothing like the one they know. While it is hard to believe the company will be able to defend for ever a 45% share of a market that is still in its infancy, the mini-mystery is how the Las Vegas casinos allowed a London-listed, Dublin-based company to waltz into its backyard and gain leadership. There would be a delay if big states, such as California, liberalise in the interim, necessitating another promotional splurge, but Flutter obviously hopes they do. Profits in the US would therefore appear in 2023, the first time Flutter has set a date. The point, though, is that payback on new customers is calculated to come within a year and Flutter expects ‘‘a tipping point” to be reached at the end of 2022 when profits from existing customers more than offsets the cost of acquiring new ones. The business of acquiring customers is not cheap – $291 per head, the company said, leading to likely top-line losses this year in the US of up to $275m. In a US betting market that currently resembles a land-grab, Flutter has twice the share of its nearest competitor. Its share of the online sportsbook market in the US in the last quarter was an astonishing 45%, which equates to 2.2 million people, 75% of whom have been recruited in the last 12 months. When it topped up and took its interest to 95% at the end of last year, the additional 37% cost the rather chunkier sum of $4.2bn (£3bn).Įven the later transaction, though, is starting to look good business given the US statistics that Flutter sprinkled across its first-half results on Tuesday. Back in 2018, Flutter paid $158m for its 58% stake in FanDuel and threw in a few US assets it already owned. The US supreme court indeed changed the rules and individual US states are opening up. But the bullish projection has played out in spades. It was a punt that leadership in the fantasy market could be converted into something very big if US rules were liberalised to allow locals to bet on sport for serious dollars in European style.Īt the time, Flutter, then called Paddy Power Betfair (which still describes the bulk of the company), viewed the deal as akin to “an option” on US liberalisation, says chief executive Peter Jackson. The smartest deal, in hindsight, done in recent years by a FTSE 100 company must be Flutter Entertainment’s purchase in 2018 of a majority stake in FanDuel, a US business running online sports-based fantasy games for prizes.
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