Posted on: August 10, 2021, 10:55h.
Last updated on: August 10, 2021, 10:55h.
Flutter Entertainment (OTC:PDYPY) delivered results for the first half of 2021 today, providing separate data for its US operations for the first time and the numbers affirmed the strength of FanDuel in the US online sports wagering market.
The UK-based company, which owns 95 percent of FanDuel, said that business commands 45 percent of the US online sports betting market as of the end of the second quarter. That mostly jibes with some recent data points indicating the operator is close to controlling 50 percent of the fastest growing sports betting market.
Like its peers in the US, FanDuel isn’t yet profitable here on a broader basis and it’s spending large amounts of cash to acquire customers, but the operator is quickly able to wring dividends from clients. Since the the 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PAPSA), FanDuel’s cost per acquisition (CPA) is $291, but its average return on investment in the first year after acquiring a customer is 1.2x, according to Flutter.
The customer economics we are seeing in the US bode very well for the future, with early FanDuel customers generating positive payback within the first 12 months of acquisition,” said Flutter CEO Peter Jackson in a statement.
Jackson adds the company is focusing on expanding its footprint and lead as more states sign off on mobile sports wagering. Mobile and online versions of FanDuel’s sportsbook are currently available in Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, Pennsylvania, Tennessee, Virginia and West Virginia. That roster is slated to grow in the coming months with the likes of Arizona, Louisiana and Maryland, among others, joining the live and legal list.
FanDuel Besting Rival on Margins
In the first half of the year, FanDuel spent $404 million on marketing and sales to generate $952 million in revenue while rival DraftKings spent $399 million to drum up sales of $610 million.
DraftKings has long been the second-largest online sportsbook operator in the US, but MGM Resorts recently said its BetMGM unit took that spot behind FanDuel. However, DraftKings and FanDuel could cease losing money at relatively the same time. Flutter projects FanDuel will be positive on the basis of earnings before interest, taxes, depreciation and amortization (EBITDA) sometime in 2023, which is what Wall Street expects of DraftKings.
Flutter says that forecast for FanDuel is “based on our expectations of future state openings.” The operator is aiming to be live in another nine states over the next 18 months, bringing its roster of availability to 19 states.
No Spinoff Talk
The statement issued by Flutter made no mention of the highly anticipated FanDuel spinoff. Rumors recently surfaced that transaction is being delayed until next year due to pending litigation involving Fox Corp. (NASDAQ:FOXA) and the May departure of FanDuel CEO Matt King.
Following Monday’s news that DraftKings is acquiring Tilman Fertitta’s Golden Nugget Online Gaming (NASDAQ:GNOG) for $1.56 billion, Jackson said Flutter isn’t planning any significant acquisitions.
The company is barely more than a year removed from completing a $12 billion takeover of The Stars Group (TSG).
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