Flutter CEO: California failure not “unhelpful” for US sports betting market
Peter Jackson suggests big Golden State push would have ultimately caused problems with spending discipline among operators
Flutter Entertainment CEO Peter Jackson has said the failure of the Proposition 27 campaign in California could be a blessing in disguise for the US sports betting market.
Jackson was speaking as part of Flutter Entertainment’s Q3 earnings call, a call which came just hours before California exit polls suggested the multi-operator backed Proposition 27 campaign and its rival Proposition 26 had both overwhelmingly failed to attract California voters.
For Jackson, however, California and its position of prominence make it too good a market to miss.
“It’s such an important market for us in this part of the US that we have to push hard to try and win in the long run,” Jackson said.
“Now, I’m pretty confident that at some point, California will pass legislation to allow online sports betting and as the number one player in the market, it’s really important that we are able to support those initiatives,” he added.
Proposition 27 garnered just 16.7% support in the Golden State, slightly below Proposition 26, which had a yes vote percentage of 29.6%. The defeat marks the end of both campaigns and a multi-million-dollar effort to change sports betting regulation in the state.
Flutter’s involvement in the campaign comes through its FanDuel sportsbook, which has contributed $35m over the life of the initiative with much more being spent on a flashy but ultimately doomed TV and radio advertising campaign.
Despite this failure, the Flutter Entertainment CEO expressed his belief that the temporary absence of sportsbooks from California would avoid a potentially expensive marketing gold rush in the state for new players similar to that experienced in New York earlier this year.
“The silver lining, from my perspective, is that if California is not able to launch next year, I think it’s going to maintain a high degree of discipline in the sports betting market in America,” he said.
“People could have used a big splashy launch in California as an opportunity to explain away big losses.
“We’re still very focused on our business being profitable next year and I know that other competitors are also trying to be more disciplined. If California doesn’t pass the initiative this time, I think it’s probably not unhelpful for the sector,” Jackson added.
Outside of the California failure, Q3 proved to be a very positive one for the US sportsbook market leader and Flutter’s US division which saw revenue jump 82% to $700m. US operations now account for Flutter’s biggest operational division.
This was buoyed by a 36% uptick in gaming revenue and an 106% jump in sports betting revenue, arising from strong customer acquisition during the start of the NFL season in September.
In its release Flutter confirmed an average of one million players log onto the FanDuel sportsbook app every NFL Sunday, as well as improved take up of its single-game parlay products during the quarter.
Speaking about the US success, Jackson suggested a key part of it was down to the “disciplined” approach to investment and marketing spend employed by the firm across the US particularly in the run up to the new NFL season to ensure FanDuel maintains its hold on the US market.
“We’ve always been very careful to make sure that the assets were acquired from a marketing perspective, and investments that are put into that deliver us a good payback within a target of about 12 to 18 months,” Jackson said.
“We’ve always maintained a very high degree of discipline, ever since we launched the business in the US and that’s something that we’ve continued.
“We’re always conscious that there’s a lot of customers we need to reacquire and get onto the platform. There’s always a big push from competitors with new products and initiatives to launch and we do the same thing. We were obviously pleased with the how the season started for us,” he added.
Jackson’s sentiments were echoed by Flutter CFO Jonathan Hill, who suggested the start of the new NFL season was “no different” than any other in terms of competition among sportsbooks.
“The competition levels were probably what we had expected before the run up to the season. Some of the more aggressive activities that we saw the year before, which we felt were very ill disciplined seem to have come out of the market a little bit,” Hill added.