FanDuel’s surging growth in the U.S. has parent company Flutter Entertainment eyeing a better-than-expected future.
The world’s largest sports betting and iGaming company revealed a board-authorized plan to investors on Wednesday for a $5 billion buyback of shares that begins after the third quarter in November and runs through the next three to four years.
This decision was based on projections that could see 2024’s $2.5 billion in revenue more than double to more than $5 billion in 2027. Half of that is expected to come from FanDuel’s market-share leading position in the growing U.S. market.
The repurchasing of shares provides Flutter with options for capital allocation and investments.
“I am very excited about Flutter’s strong trajectory and how well positioned we are to capitalize on a global regulated addressable market of nearly $370 billion,” Flutter CEO Peter Jackson said. “With our unmatched scale, diversification, and our global differentiator, The Flutter Edge, we have clear sustainable global advantages that will continue to drive sustainable growth and power our financial model with operating leverage building over time.”
Focus on U.S.
Flutter projects that the North American sector’s total addressable market will reach $70 billion in 2027, thanks to the maturation of core pre-2022 U.S. jurisdictions.
Canada is projected to contribute $7 billion while the U.S. is expected to make up $63 billion, 1.5 times the previous estimates, based solely on existing operating states.
FanDuel Sportsbook’s structural gross gaming revenue margins are projected at 16% long-term and to reach 15% in 2027.
Flutter also projects a $2.4 billion Adjusted EBITDA at midpoint with expansion of 13 percentage points to 25% by 2027 for existing U.S. markets.
FanDuel believes it will get there by increasing its addressable population targets in sports betting from 48% in 2024 to 80% in 2027 while also more than doubling iGaming from 11% to 25%.
Future expansion
Flutter is not including any of its projected 2027 figures into what might happen, but it’s confident there will be additional U.S. states to add to the market portfolio by then, which could rapidly increase both spending and profits.
California, Texas, and Florida were ambitiously included in potential growth as they account for 25% of the U.S. population.
“Our team is gearing up for that next phase of growth around advocacy so that we can open up in new states, particularly the big (three) states in sports betting, but also getting traction in iGaming,” FanDuel CEO Amy Howe said during Wednesday’s investor presentation.
Howe is “optimistic” that California, which has had numerous struggles getting sports betting legalized, will happen “at some point.” She wouldn’t put any date on when, but she also recognized that one of the big challenges in states like California that have tribal casinos already established is not cannibalizing that aspect.
Howe said FanDuel feels good about the momentum gained in Texas. She also said FanDuel will focus on educating non-iGaming states, especially ones with significant budget deficits, benefits and reasons for adding online casinos.
Rest of the world
Flutter provided projections for non-North America as well. Behind growth in major markets the U.K., Australia, Italy, and soon-to-be-regulated Brazil, the company expects approximately $298 billion TAM by 2030. A 5% to 10% of long-term revenue CAGR for the rest of the world forecasts $11.5 billion at the midpoint. Those figures include recent additions of brands Snai in Italy and NSX’s Betnacional in Brazil.
Flutter added that “sustainable revenue growth, together with these efficiencies, are expected to deliver ROW Adjusted EBITDA margin expansion of 1-2 percentage points to approximately 26% in 2027 and approximately $3 billion at the midpoint.”
Jackson said Flutter’s experience in different markets gives them confidence they can pull the right levers to navigate potential tax changes that will help them reach their lofty goals.
