FanDuel buoyed by strong NFL start and igaming growth in Q3
US market leader reports 38% player acquisition uptick in sports with 52% surge in igaming revenue as firm asserts number two position in US igaming market
Flutter Entertainment has confirmed a 20% year-over-year (YOY) increase in revenue from the US to £668m ($820.8m), driven in part by customer acquisition in the new NFL season and strong igaming revenue growth.
Delivering its latest trading update, FanDuel’s parent company reported a 52% YOY surge in igaming revenue, with sports revenue growing more modestly at 10% YOY on a constant currency basis.
US average monthly player numbers grew by 38% YOY to 2.6 million players, lifted in part by strong customer acquisition growth during the new NFL season. This included a 13% increase in states launched before 2022, as well as good momentum in older states.
FanDuel’s share of the US market fell slightly to 40% on a gross gaming revenue basis during Q3, for all states in which the FanDuel brand is live (excluding Tennessee).
Flutter attributed this slight drop to the seasonality associated with customer acquisition investment in Q3 in preparation for the launch of the NFL season and the launch of profit boost tokens in the US.
“FanDuel continues to benefit from more efficient promotional spend with a 47% share of sports betting net gaming revenue (ie, after deducting the cost of promotional spend from gross revenue) in Q3, five percentage points higher year on year,” the firm said in its results release.
Sportsbook stakes increased by 40% during the quarter, but were offset by a 170 basis point decline in net revenue margin, a drop which contributed to net revenue growth of 12%.
The net revenue margin decline reflects a swing in sports results from very favorable in the prior year to slightly unfavorable in the current year, which was partly offset by structural gross win margin improvements noted above.
Daily fantasy sports and TVG revenue declined 6% YOY during Q3 on a combined basis.
In respect of igaming, FanDuel advanced to the number two position in the US market with a 23% market share, just behind US igaming market leader BetMGM. Average player numbers rose by 42% over the same period.
FanDuel’s combined online sportsbook and igaming revenue from states launched pre-2022 increased 12% with strong growth in igaming being partly offset by lower sportsbook revenue from the significant swing in sportsbook net revenue margin.
“FanDuel continues to improve its product proposition by adding more tier-one suppliers, contributing to a 30% increase in the number of new gaming titles in key states. There remains a significant pipeline of product improvements for us to deliver for our players,” Flutter said in its trading update.
Discussing the impact of the Flutter Edge and the FanDuel Advantage, Flutter CEO Peter Jackson lauded the firm’s “structural profitability” in the US, coupled with the strong ramp in EBITDA experienced during 2023, a drive which he suggested could continue into 2024.
“The NFL season is off to an excellent start with our product leadership driving average monthly player growth of 38% to 2.6 million in the quarter,” Jackson explained.
“I am excited about our plans heading into the sport’s rich months of November and December as we execute on our winning strategy which, combined with the FanDuel Advantage, keeps us leading the industry.
“Overall, the significant potential for US growth and ability to leverage scale benefits across our diversified portfolio outside of the US underpins our confidence in our significant and sustainable long-term earnings growth potential,” the CEO concluded.
Delivering an update on its dual listing in the US, Flutter confirmed its expectation that this process will be completed during the first quarter of 2024, with the firm selecting the New York Stock Exchange as the venue for this listing following a competitive tender process.
Flutter also confirmed that in order to minimise regulatory complexity, it will delist from the Euronext Dublin stock exchange, with this process being launched once the US dual listing is confirmed.
The firm has additionally said it may choose to pursue a primary listing in the US, subject to shareholder approval.