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The largest US gambling company said that winning streaks reached the profits of sports betting for customers amid the early signs of a sector slowdown after years of rapid growth.
Flutter, the New York-listed owner of online betting platform Fanduel, and Boston-based Draftkings this week, have lowered US full-year forecasts after a favorable result from gamblers reaching second-quarter revenue.
The companies said the February Super Bowl, which was won by the Philadelphia Eagles, supported the bookmakers. However, the College Basketball Tournament March Madness was “pretty historic” according to Flutter’s CEO Peter Jackson. It was the second time in history that all four top seeds have reached the Final Four.
Boston-based Draftkings raised its peak sales forecast for the year from $200 million to $6.4 billion. It also reduced its forecasts for revenue before interest, tax, depreciation and amortization from $100 million to a maximum of $100 million, from $900 million. Flutter also reduced its annual adjusted EBITDA guidance to $180 million, reducing its $1.133 billion.
“You get ups and downs….The madness this March is extraordinary and that affects our margins,” Jackson told the Financial Times.
The US sports gambling market has grown at a fierce speed since 2018, when the Supreme Court repealed federal laws that banned such bets in most parts of the country. The sports betting sector has since reached revenue of nearly $14 billion last year, according to the American Gaming Association.
“The very strong growth quarter after the quarter has been a focus for investors,” said Iver Jones, analyst at Peel Hunt. “However, as growth began to slow, investors began to pay attention to the volatility of their sports betting margins.
Founded in Ireland, Flutter has fine-tuned its group-wide profit forecast for the year supported by exchange rates and acquisitions. However, the weak sports outcome came from a $360 million hit in the final quarter of 2024, knocking $180 million from EBITDA, which adjusted the company between the first quarter and the first quarter of March.
Analysts said the companies have around 80% of the US sports betting market, but in recent quarters they have lost market share to smaller but capitalized players such as BetMGM, Bet365 and Fanatics.
“Others are catching up. The top and second tier players have begun to fill the gap,” said Barclays analyst Brant Montre.
Flutter’s market share peaked at 62% in the first quarter of 2023, Barclays’ estimates, but fell to 48% in the first quarter of this year. DraftKings is also losing out, with market share dropping from 39% in the last quarter of 2023 to an estimated 31% this year.
“American sports bets have always been a two-horse race (between Flutter and Draft King),” said Adrian Descent Hiller, an analyst at Bank of America. But in particular, the results of Fan Duell were “disappointing” in the final quarter, despite having a bigger sportsbook than the peer.
