bettingmarket

Analysts are increasingly confident in the topline trajectory for the nascent U.S. online betting market space, given both the underlying kinetics of the industry ( significant and strong cross-sell pathways) and the very obvious possibilities for accelerating adoption of online sports betting such as was evidenced by the recent announcement of a strategic agreement between the DISH Network and DraftKings. The overwhelmingly positive outlook was lent significant support by the recent announcement from Flutter Entertainment to the effect that it now expects online sports betting to be available to 65% of the US adult population by 2025. (Those states that have already opened up to online betting are witnessing a dramatic surge in demand, reflecting pent-up demand and the useage of elevated savings that have been accrued during the crisis.)

Flutter Entertainment reported that for the period ending December 2020 its U.S. online betting market concern FanDuel had achieved Q4 market shares of 40% in online sports betting and 20% in iGaming. The company said that its average number of monthly players in the US was up 62 per cent yoy, whilst US betting revenues had increased 81 per cent to £695m in 2020.

Flutter Entertainment reported that as regards Total addressable market ("TAM") in the U.S. betting market space it now expected the TAM for its US brands to exceed £14bn ($20bn) in 2025, a material upgrade to its previous estimate, primarily due to: "An increase in our estimated value of sportsbook and gaming driven by the spending patterns we are seeing in the early states in which we have gone live (e.g. New Jersey, Pennsylvania and Michigan). An increase in the number of states that we expect to regulate sports betting and gaming; we now expect online sports betting to be available to 65% of the US adult population by 2025 while gaming is expected to be accessible to 16% (previously 50% and 11% respectively)."

The company announced that sports results have been favourable relative to expectations, particularly in the UK and Ireland and resulted in an increase in Group revenue of 36% in the first 7 weeks of the year (to Feb 21) versus the comparable period in 2020. On the negative side and dragging the company's shares lower Flutter said that for each month that its UK estate was shut, it anticipate an EBITDA loss of £5m whilst in Ireland, the monthly loss was expected to be £4m. It also reported that in Germany, proposals to introduce a 5.3% turnover tax on online poker and slots from July 1st this year would if implemented negatively impact between £15m and £25m in 2021 if it were to come into effect on July 1.

Chatter continues that Flutter is considering spining-off FanDuel onto a US exchange. From a strategic perspective, this would make perfect sense in that it would allow the company to capitalise upon the ridiculous valuations that the U.S. market is affording online betting companies such as DraftKings. It would also allow it to negate FX issues. Whilst this remains a possibility the company's shares are going to remain bid. Whilst Flutter has denied that it has any intention of spinning off FanDuel the prospect of it doing so is not going to have escaped the attention of the most savvy hedge fund operators - who are going to be smelling a free lunch.