Flutter CEO hails FanDuel scale and product impact on US financial growth
Peter Jackson suggests PENN/ESPN tie-up could lead to “formidable” challenge to FanDuel’s US dominance, pledging to ramp up investment in product during second half of 2023
Flutter Entertainment CEO Peter Jackson has paid tribute to the dominance of US sportsbook market leader FanDuel, lauding the brand’s scale and product as the best in the US.
Speaking as part of the London-listed operator’s H1 2023 financial earnings call, Jackson gushed about FanDuel’s $100m adjusted EBITDA return, which marked the first instance where the business turned a profit in the US and six months ahead of schedule.
Central to this, Flutter has long said is the interaction between the FanDuel advantage and the wider Flutter flywheel in acquiring customers efficiently, while retaining them and improving their lifetime value to the business.
“We always thought as soon we reached the tipping point where we had sufficiently large customer numbers generating enough contribution to cover our fixed costs, and the customer numbers required in the year, then the business would make money and that’s simply what happened in the first half,” Jackson said.
“It was never something we engineered to try and happen, it’s because we’ve got the best product in the market. We have the biggest customer database and they’re sticking with us for longer than we originally anticipated. I think the team did a brilliant job for us,” he added.
Addressing FanDuel’s priorities in H2 2023, Jackson suggested the business was a “moving target” from a product prospective, with plans to substantially accelerate its investment in the FanDuel product ahead of the traditional busy season in the US.
“We captured 50% more revenue for every dollar of handle bet with us than the rest of the market and it does put us in a powerful position,” he remarked.
“Having said that, we’re very humble and hungry to take more share in the market and we’re very pleased to see the progress we’re making on igaming, which is a strong focus for us.
“We anticipate a renewed set of interests in this new season. I’m not sure that the Barstool Sportsbook will be rebranded [to ESPN Bet] in time for the start of the season, but they’re certainly going to be a formidable competitor as well as a bunch of other people,” he added.
Flutter US’ sales and marketing costs grew 15% to $616.1m during H1 but actively reduced as a percentage of its overall revenue by 11 percentage points to 27%.
Previous years have seen a flurry of expenditure in both marketing and promotion by operators eager to capture market share, both for themselves and at the expense of FanDuel, however this has lessened in recent financial reporting periods.
“We’ve seen for quite some time now that a lot of our competitors seem to be focused on trying to buy future revenue streams for less than the present value,” Jackson explained.
“We were at a point where people were spending more and more money to acquire revenue just because they were so focused on that target any resulting growth didn’t make any economic sense, as they would lose more than they had gained.
“I think there’s been pressure on funding the industry and that means that people are having to be much more rational with their spend and show that they’re spending less than the lifetime value of a customer to acquire them.
“We’ve got a much bigger scale business than anybody else in the US. We’ve got more money to invest in accelerating our product, investing in marketing, building out our capabilities around things like safer gambling, and improving our generosity approach so the flywheel is really spinning fast for us,” he added.