US investors have been putting increasing pressure on operators to lower promotional spending and take profits

FanDuel Comes Out $14 Million Ahead In 2021, Becoming First Major US Brand To Turn A Profit

Without much fanfare, FanDuel achieved in 2021 something its major competitors have yet to accomplish. It turned a profit.

Flutter Entertainment made the announcement yesterday. The tidbit was part of the 2021 annual report published by the Dublin-based primary owner of FanDuel.

Just last month, BetMGM, the US online casino market leader, appeared to be ahead of US online casino operators by planning to turn a profit during 2022.

At the other end of the spectrum, DraftKings leaders seemed unapologetic about being in the red during its Q4 2021 earnings call in February. That brand expects its costs to decrease in 2023, Play Pennsylvania reported Monday.

However yesterday, Flutter claimed FanDuel, the company’s biggest US online gambling brand, has already won the race.

FanDuel, US Flutter brands, performing well

The report said of FanDuel:

“In 2021 FanDuel became the first large scale online brand to generate a positive in-year contribution from sports betting and gaming in the US. FanDuel generated contribution of £9m ($14m) in 2021, with the positive contribution from more mature states (such as New Jersey, Pennsylvania, Indiana and Illinois) more than offsetting the material investment in large states newly launched in 2021 (Michigan, Virginia, Arizona and Connecticut).”

That’s despite spending more than $1 billion during 2021 on its US brands’ promotions, sales and marketing. In addition to FanDuel, Flutter’s US brands include FOX Bet, online horse and greyhound racing app TVG, PokerStars US and Stardust Casino. 

Further, Flutter said:

“Based on our current expectations relating to the timing of new state regulation in 2022 and 2023, we remain confident that our US business will be EBITDA profitable in 2023.”

While Flutter’s brands are slated to enter Ontario‘s expanding iGaming marketplace in April, the annual report concentrated on US growth.

The report said:

“The US is the single biggest market opportunity for Flutter.”

FanDuel Sportsbook dominates US market share

Fewer states offer legal online casino marketplaces vs. online sports betting, but FanDuel Casino is firmly in place in five. As a result, FanDuel’s iGaming offerings held 20% of that online gaming market share during Q4 2021, Flutter said.

However, having FanDuel Sportsbook in 14 states is what lifts Flutter’s “combined overall leadership position in the US online market” to No. 1, totaling 31% of the Q4 2021 market share, the 272-page annual report said.

As US online gambling grew 120% from Q4 2020 to Q4 2021, FanDuel’s “leading revenue share is moving FanDuel closer to a position of profitability.”

Flutter continued to sing the praises of FanDuel, the brand it owns 95% of the shares in.

“Our sports betting share in Q4 [2021] was 40%.”

US FanDuel IPO timeframe still elusive

Originally, FanDuel had three obstacles to creating a standalone US FanDuel IPO during 2021:

  • Matt King resigned as FanDuel CEO.
  • Flutter had an ongoing legal battle with Kentucky over PokerStars
  • The parents company has also been in private negotiations with its media partner, Fox Sports, over a disagreement about FanDuel

Flutter resolved two of those issues that same year. Firstly, it appointed FanDuel’s new CEO Amy Howe. Secondly, it settled the decade-long PokerStars lawsuit for the not-insignificant sum of $300 million.

However, Flutter CEO Peter Jackson said in the annual report that the dispute with Fox may have to go to arbitration on June 20, 2022. He expected to see ” a binding decision by the arbitrator in Q3 2022.”

The companies are fighting over what Fox needs to pay to acquire an 18.6% stake in the US operations of FanDuel.

Flutter stock rose 2.3% yesterday.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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