Games of Thrones: the battle for industry supremacy

As winter rattles its final breaths in February and March, listed gambling giants lift the lid on the previous year’s operations and financial performance; the season pricked with the sounds of upbeat hold music interspersed with analyst questions.

For Flutter Entertainment and DraftKings, the powerhouse US duopoly, this results period marked yet another barnstorming 12 months for both. The headlines? Revenue for Flutter, the parent firm of FanDuel, was up 19% year on year (YoY) to $14bn while Q4 US revenue rose 14% to $1.6bn. Meanwhile, average monthly players in the US increased 15%.

As for DraftKings, full-year revenue surged 30% YoY to $4.8bn, alongside a 36% YoY jump in average monthly unique paying users to 4.8 million in Q4 alone. The pair’s first-mover advantage from their DFS days has now led to the impregnable ‘defensive moat’, as one analyst has described it.

For Macquarie’s head of US research, Chad Beynon, the duo represent the epoch of execution. “I think FanDuel and DraftKings being digital-first have done an incredible job fighting off some of the omnichannel companies. There’s always going to be competition, but it looks like a two-horse race as tier one, and then almost everyone else is tier three.”

That tier three, populated by the likes of Caesars Entertainment, Rush Street Interactive (RSI) and PENN Entertainment, are some distance away. However, BetMGM, the 50:50 joint venture between Entain and MGM Resorts International, has a solid podium position with 14% market share and can lay claim to being a tier-two operator, though the P&L underlines the chasm.

BetMGM’s full-year 2024 net revenue was $2.1bn. Flutter did more than half that in Q4 alone. Adjusted EBITDA was a loss of $244m, with 2024 having been repeated by bosses as a year of investment for the operator. The addition of Angstrom Sports-powered markets and better meshing with MGM’s land-based benefits has helped, but not enough.

Looking at the full-year 2025 guidance, BetMGM targets a $250m swing from the red to the black, leaving it with a positive $6m return. For comparison, Flutter’s “existing state” adjusted EBITDA range in the US is between $1.28bn and $1.52bn, with a $90m hit associated with the upcoming launch in Missouri. Over in Boston, DraftKings is anticipating between $900m and $1bn of adjusted EBITDA. Caesars is plugging towards its $500m goal with the same metric, having achieved $117m last year. But management has hinted at spinning the digital arm off separately, while RSI has forecast a maximum adjusted EBITDA of $135m.

Should 2025 guidance be met, it spells out another year of FanDuel and DraftKings putting further distance between themselves and the rest of the competition. But it might not all be plain sailing, as Q4 showed, with a consistent flurry of customer-friendly sports betting results bringing trepidation.

Despite the dominance, neither DraftKings nor Flutter are resting on their laurels. The ‘YourWay’ product is being hyped as a true differentiator for FanDuel. Essentially offering customers infinitely customisable prop bets, it represents the next evolution in same game parlays (SGPs), or bet builders, which Flutter cottoned on quicker than most would be a perfect accompaniment to US sports.

FanDuel’s structural gross revenue margin was 14.5% in Q4, yet the aim is to hit 15% in 2027 and 16% in the long term. The option of even more complex SGPs is a surefire way to drive this upwards. EGR understands that 5% of Super Bowl pre-game actives placed a YourWay bet despite it not being advertised. And Flutter is still tinkering with the product to ensure it sits right with both customers and its risk appetite.

Citi’s Monique Pollard, who covers Flutter and Entain for the investment bank, says: “Most importantly, what [Flutter] has done that sets them apart from the competition is understand quickly how big the parlay opportunity would be in the US. [Flutter] has used that to drive big win margin differentials versus the competition that has been sustained. All of that gives you the extra capacity to ultimately reinvest behind promotions and marketing.

“It’s about identifying the opportunity but it’s also about having the pricing and risk management that is sophisticated enough to be able to handle that level of parlay. Can they try and replicate Flutter’s YourWay product in any way? Do they have the pricing and risk management there? They’ve got best-in‑class operations, and then a scale that allows them to invest that no one can replicate.”

For DraftKings, capitalising on its existing lead in live betting will be a core focus this year. CEO Jason Robins talked up the acquisitions of odds-compiling firms Simplebet, Sports IQ and Dijon Systems on the operator’s analyst call as moves that will take its offering to “another level”. Bringing the capabilities of the trio in-house will also help DraftKings to catch up on pricing, which Flutter has consistently espoused as having the best in the game. Management suggested the UK is ahead of the US in terms of in-play betting as a percentage of handle, and while the figures are up for debate, there is clear headway for further gains. Beynon says: “I thought the Simplebet acquisition was brilliant. It’s perfect for building on top of their stack.”

But DraftKings’ structural hold was 10.5% in 2024. “If you’re just doing a single live bet, it’s going to be a little bit higher hold than a pre-match, but obviously not as high as SGPs. We are seeing some SGPs on live betting. I think [live betting] is positive on volume, probably not as positive on hold,” he adds.

The old country

Flutter’s dominance continues in the UK, too. Sky Betting & Gaming, Paddy Power, Betfair and tombola have given it a flotilla to firstly snare and then shore up its market-leading position. In fact, management noted that over the past two years, the group has taken four percentage points of market share. That is crystallised by Flutter’s full-year revenue from the UK jumping from $2.4bn in 2022 to $2.7bn in 2023 and then $3.3bn in 2024. Tack on another $304m in 2024 revenue from Ireland, and Flutter’s leading position in its home markets is ramped up even further.

Product, which was described as “compelling” in Flutter’s report, and top-range promotions drove UK gains, including ‘Super Sub’ across Paddy Power, allowing customers to keep football player prop bets live even if their initial selection is substituted. The YourWay technology in the US is also being transferred to UK football, and there are plans to use it to beef up Betfair Sportsbook. Speaking at a Morgan Stanley conference in early March, Jackson said: “We’re utilising it in our UK business as well.

“Our [football] pricing is now powered effectively by the same capability. We’re trying some stuff on the Betfair product, and we’ve also got some other concepts we’ll bring to market soon.” And given Flutter posted a 31% YoY rise in Q4 UK and Ireland (UK&I) sports betting revenue, the bells and whistles being added to an already leading set of brands could put the fear into rivals.

Full-year ex-US group revenue for Flutter is expected to rise 6%, with the mid-single digit increase accounting for the favourable sports results seen in Q4. But add in igaming revenue climbing 16% YoY to $458m, and it’s clear to see who runs the show. However, with the eye on the prize in the US, the UK is now clearly playing second fiddle to Flutter’s wider aspirations.

Entain then comes into the picture, with its latest investor presentation claiming the final podium spot in UK&I, with bet365 separating it from Flutter. Dubbed one of the Ladbrokes Coral parent company’s “must-win” markets alongside the US and Brazil, UK&I online net gaming revenue (NGR) was up in 2024 to £984.6m. Yet zoom out, and it is a recovery story. Down some 8% in H1 before exiting the second half of 2024 up 13%, Entain is now thinking about retaking market share.

Plans to improve the bet builder product were cited, as was the bedding in of safer gambling measures, for reasons to be cheerful. Speaking to EGR, Entain CFO and deputy CEO Rob Wood notes market share was lost “primarily as a result of the way we implemented things like affordability changes” and that while no targets have been set for share regains, the foundations are now far more solid.

“It’s nice to be 1-0 up after 15 minutes, but there’s a long way to go,” says Wood. “The whole market had a good quarter in Q4 helped by football results. We tried to be careful and unpick underlying versus flattened numbers. While we grew 13% in Q4, 9% is a better reflection of the underlying performance. As we look to the rest of the year, that’s the kind of run rate we’re seeing.”

From the outside looking in, Pollard says the tempering of expectations is key, considering the lower run rate when compared to the benefits derived from Euro 2024 and operator-friendly results. Flat online gaming of 1% growth will also need to be improved and plans for omnichannel cross-selling upgrades are in place.

Souring Samba

Heading back to the Americas, Brazil is the market du jour, touted by operators, both domestic and international, as a golden egg. The former grey market switched to a regulated arena on 1 January, bringing with it a host of new costs and challenges. In fact, Flutter has forecast a $100m adjusted EBITDA hit for 2025 as it gets to grips with the new regulations. The firm had been live with PokerStars and Betfair pre-regulation but is set to take a 56% stake in Betnacional parent company NSX Group during Q2 for $350m.

That deal will go some way to elevating Flutter towards its much-craved podium positions. But while Q4 revenue in Brazil leapt 19% on a constant currency basis, it was down when accounting for the impact of FX. Plus, given the fact the top football division, Campeonato Brasileiro Série A, doesn’t kick off until the end of March, the market is posing more questions than answers as it stands.

For Entain, while there was no public talk of losses for the year ahead, Brazil being another key market meant the 41% NGR jump in 2024 was music to bosses’ ears. Local management, improved product and payments plus better marketing efforts have helped reinvigorate Sportingbet. Wood says: “Sportingbet is such a strong brand. We’ve been there for 10 years or so, the brand recognition and brand awareness is really strong. It definitely lost its way. It was considered a stale brand a couple of years ago, so it needed reinvigorating and needed investment.”

That investment came from putting boots on the ground, with Brazilian operations having been run from Europe previously. A brand refresh, the acquisition of live scores app 365scores to drive traffic, and a front-of-shirt deal with Palmeiras are all cited by Wood as key differences between the old and new Sportingbet. “We are very happy with the brand legacy that we have. There were so many other aspects to the operations that needed improving, and that’s exactly what we’ve done.”

Pollard suggests that while future growth in Brazil won’t be above 40%, low-to-mid teens would be a more realistic projection. “Now it’s regulated, there’ll be a big focus on that. They’ve talked about low double digit to low teens as a reasonable starting point for growth in 2025,” she notes.

For DraftKings, with its sole North American focus, Brazil could have been a play to help diversify. Robins said at the same Morgan Stanley event it would be “irresponsible” not to explore international expansion but, at the risk of derailing gains in the US and Ontario, he wouldn’t chance it. The play to avoid the initial cash burning ritual in Brazil could be a smart move, but stay away for too long and it could become entrenched like the US, with DraftKings on the outside looking in, rather than atop the ladder.

With another year of earnings under the belt, Flutter remains the global behemoth out in front, though DraftKings has made gains on product, and is catching up on the EBITDA front, too. Entain’s hodgepodge of 30-plus brands could come good, albeit in a handful of markets. There was a time when Flutter and Entain could be compared side by side – bedfellows of a sort. But with Flutter’s US listing, future reports removing granularity on non-US earnings and Entain’s declines, the Flutter-DraftKings era is here. On Entain and Flutter, Pollard remarks: “What people are looking for from both those businesses is very different. Clearly, the valuations from both are very different.”

Perhaps for now, two old enemies are ready to face new foes.