Flutter: US IPO to “take precedence” over any FanDuel listing
CEO Peter Jackson and outgoing CFO Jonathan Hill highlight ‘Flutter Edge’ cross-integration strategy as shifting parameters for potential listing
Senior executives from Flutter Entertainment have confirmed that any proposed IPO of the Flutter Entertainment business in the US stock market would likely scupper any potential listing of US market leader FanDuel.
Speaking as part of the firm’s 2022 financial results media call, Flutter CFO Jonathan Hill, who will soon transition to become COO, outlined the potential roadmap for the business in the US.
“The engagement that we are undertaking is about obtaining an additional US listing, something which would take precedence over any IPO of FanDuel,” Hill said.
“If we were to take these steps and our shareholders supported that I think it would be very unlikely that we would then proceed with any IPO of a small stake in FanDuel.
“We get a lot of the benefits that we outlined previously through this mechanism including an option to list in the US,” he added.
FanDuel has emerged as the sports betting market leader in the US since the fall of the Professional and Amateur Sports Protection Act (PASPA) in 2018, with the operator set to achieve profitability in 2023 – marking a significant milestone in the history of US online sports betting.
FanDuel is Flutter’s largest business by revenue and continues to represent a growing proportion of the parent company’s value as it faces regulatory headwinds in the UK and Europe.
An IPO of the FanDuel business has been in the works for several years now but has been hampered with delays, including the departure of its former CEO Matt King and a lengthy litigation with Fox Corporation over the valuation of a stake purchase option in the US market leader.
In addition, appetites towards the IPO have changed among shareholders amid changing global macroeconomic conditions.
However, the dominance of FanDuel in the US together with Flutter’s growth internationally despite these conditions has brought the issue to the fore, this time in the guise of an overall Flutter US IPO.
In the 2022 results, CEO Peter Jackson alluded to the Flutter Edge, a strategy of brand augmentation through blending experience between the firm’s international portfolio, as well as FanDuel’s “advantage” in the US market as creating unparalleled success and harmonisation in its many brands.
This cooperation, he suggested was crucial in changing the thinking on Flutter’s IPO.
“Whilst we have regularly considered different structures in the past, we always thought that moving to acquire a US listing, and then potentially even shifting a primary listing was very, very difficult and would take a huge amount of time and would be a real problem,” Jackson said.
“However now the timetable is much more condensed than we previously understood and so that, the impact of the Flutter Edge and that all the divisions support each other makes us very clearly favour the path that we’re now,” he added.
Expanding on the points made by Hill in his own remarks regarding the IPO and the benefits of doing so, as previously outlined in its initial statement, Jackson suggested that beyond the strategic and capital markets benefits, the listing would enhance its own profile in the US.
“We know that that there’s a very large retail component in in America and having our stock available for retail investors to buy and talk about and engage with them will be important and we think it helps us with recruitment and retention of US talent,” Jackson explained.
“There’s no doubt that the US capital markets are much deeper than the London UK markets and there’s a lot more liquidity there which we know is important from when we have spoken to some prospective US shareholders, they told us there’s not enough trading in our in our shares.
He continued: “It’s not an issue unique to the US but also in London, I think it is just the fact that the US market has a lot more turnover of shares, which means people feel more comfortable buying them.
“There are a number of domestic US investors who’ve told us that they would like us to have a US listing before they will be prepared to buy a stake in the business.
“Those are two important considerations that we have to look at, which is why we’re engaging with shareholders off the back of these results,” the Flutter CEO concluded.