Flutter’s US Unit FanDuel Turns Profit Before NYC Listing

Flutter Entertainment Plc turned a profit at its US business FanDuel in the first half of the year, ahead of a plan to publicly list shares in New York.

(Bloomberg) — Flutter Entertainment Plc turned a profit at its US business FanDuel in the first half of the year, ahead of a plan to publicly list shares in New York.

US first-half adjusted earnings before interest, tax, depreciation and amortization were £49 million ($63 million), it said Wednesday. That’s against an average estimate of £28.4 million according to analysts surveyed by Bloomberg, and compared to a £132 million loss the year before.

Flutter Chief Executive Officer Peter Jackson said he expects competition in the US to become more “rational” after a period of heavy investment. 

“We were at a point where people were spending more money to acquire revenues, just because they were so focused on revenue growth,” he said on a call with reporters. “That didn’t make economic sense. There’s been pressure on funding in the industry, and that means that people are having to be much more rational, and ensure that they’re spending less than the lifetime value of a customer to acquire them.” 

The company said its Australian business had been disrupted by tax increases and weakening of customer demand post-Covid, particularly in racing.

Flutter shares fell 3.1% to 14,445 pence at 8:08 a.m. in London. Despite strength elsewhere, the company’s Australian guidance was “disappointing,” Goodbody analyst David Brohan wrote in a note to clients. 

The US became Flutter’s biggest market by revenue last year, surpassing the UK and Ireland, five years after the US Supreme Court effectively legalized sports betting in May 2018. Rapid growth and acquisition of Canada’s The Stars Group in 2020 have seen the company’s market value roughly double since the court decision.

Flutter is a top player in the US, whose other biggest contenders include DraftKings Inc and BetMGM, co-owned by UK-based Entain Plc and Las Vegas casino group MGM Resorts International. It remains competitive. On Tuesday Walt Disney Co.’s ESPN signed a long-term exclusive agreement with FanDuel rival Penn Entertainment Inc.

The Dublin-based gambling giant said it expected a secondary listing in New York to happen late in the fourth quarter or early in the first quarter of next year. Flutter said previously this would boost its profile and access to talent and extend its access to capital. It got shareholder approval for the move after consulting investors in the first half of 2023. It could later move its primary listing there from London, it said.

Flutter joins other UK-based or UK-listed companies including microchip design giant Arm Ltd. and construction company CRH Plc in picking US capital markets amid anxiety over the London Stock Exchange’s attractiveness post-Brexit. 

The group’s early second-half trading in 2023 was in line with expectations, Flutter said. There is “significant further M&A potential to add market leading businesses in regulated markets” where the company doesn’t yet have businesses, it added.

(Updates with shares, context and CEO quote)

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