FanDuel CEO Amy Howe has called for greater industry cooperation to combat the growing threat posed by cybercriminals after recent attacks on MGM Resorts and Caesars.
Howe, who was interviewed by CNBC‘s Contessa Brewer at the Global Gaming Conference in Las Vegas this week, said: “I think this is a moment in time for us to come together as an industry.
“This is a battle that you’re fighting every single day and you’re fighting it on multiple fronts. The bad actors are sophisticated and they’re getting more sophisticated all the time.”
Howe explained that FanDuel dedicates a substantial portion of its resources to safeguarding consumer information and upholding the stability and resilience of its systems.
She also noted that the firm actively collaborates with leading tools and providers to proactively identify potential threats.
“There are lots of ways that we compete with one another, but I think this is an area where we need to come together, collaborate, and make sure that we’re sharing the learnings and the trends that we’re seeing,” said Howe.
“It’s the right thing for the customer and it’s important for the longevity of the industry.”
Both MGM Resorts and Caesars were hit by cyberattacks last month.
Taylor Swift impact
Howe also discussed the meteoric growth of sports betting in the US and the profound influence of celebrity involvement:
“Nowadays you can’t watch football on a Sunday without hearing about Taylor Swift and the impact that’s having on Travis Kelce. And we’re certainly seeing it in the betting numbers as well,” she said.
Regarding FanDuel’s position as the market leader in US sports betting, Howe acknowledged growing competition in the space.
“I think there are a lot of very well-capitalised competitors that are already there or are entering the scene. At the end of the day, we think competition is a great thing,” said Howe.
Nevertheless, Howe emphasised that, ultimately, “scale is going to matter”. Howe also recognised the significance of offering a distinct product.
“We have a tremendous amount of respect for some of the current competitors and some of the guys that are coming on the scene,” she stated.
“But I think at the end of the day, you will likely have a handful of scale players.”
The journey to market leader
Howe also delved into FanDuel’s journey to becoming a market leader, pointing out the firm’s head start in sports betting thanks to its background in daily fantasy sports (DFS).
“The brand really resonated with the sports betting consumer, and we’ve had a phenomenal product launch thanks to the Flutter engine,” she said.
FanDuel’s recent investments in building a top-notch team, combined with product development and marketing strategies, have further strengthened the firm’s position, she added.
Based on data provided by Eilers & Krejcik Gaming, FanDuel, which is owned by Flutter Entertainment, dominated the market with a substantial 44.6% share of GGR during the 12-month period to May 2023.
Close behind was DraftKings, securing second position with a 27.3% share, while BetMGM claimed third spot with a GGR share of 11.1%.
US listing excitement
Finally, Howe shared her perspective on Flutter’s plans to list shares in the US by the end of this quarter and how this development might impact investor enthusiasm:
She said it was an “incredibly exciting time” to be with Flutter, emphasising that FanDuel is the largest and fastest-growing division within the wider business.
Howe believes that an additional listing in the US will significantly elevate the company’s profile and further enhance the firm’s position in the market.
NFTs Now Fiddle Taxes
Investors who got caught up in (the now-renowned mug’s game of) NFT trading over the past couple of years may yet find some value in their newly worthless digital assets, after all.
An article published recently in the Guardian shed light on a new service set up by non-fungible enthusiasts, which is offering to buy up worthless NFTs from their owners at a penny a go, allowing individuals to register their losses on the assets and write them off against their tax bills.
The aptly named platform, Unsellable, allows investors to sell up to 500 NFTs at a time, according to its Twitter bio, and currently holds a collection of around 5,000 items according to the Guardian.
That number is expected to grow to 15,000 in the near future, as ever more scorned investors try to figure out what to do with the pixelated images of monkeys which, inexplicably, nobody seems to want to pay a million dollars for any more.
For the sake of clarity, it should be pointed out that Unsellable is not hoarding the assets in the hope of a genuine turnaround in their value.
Unsellable founder Skyler Hallgren said the digital collectibles “are an interesting artefact of a period of time in the market,” but are “likely to continue to be worthless.”
A visit to the firm’s website offers some clues into how it plans to make money by spending money.
In addition to offering to buy up worthless assets, Unsellable offers links for investors to schedule ‘NFT and crypto tax consultations’ with Chicago-based tax-specialised law firm, Gordon Law.
Consultations are set at the princely sum of $295 for 30 minutes.
While the NFT market collapsed in flames in quite spectacular fashion, it appears there are now at least some ways for businesses and investors to capitalise on its demise.
Your loss is Neal Berger’s gain
Speaking of markets collapsing, one fund that’s doing particularly well out of waning asset prices across the global economy is Neal Berger’s Contrarian Macro Fund.
According to a profile in Bloomberg, the fund launched in 2021 to capitalise on Berger’s decades of experience running hedge funds in New York.
After launching, the firm “loaded up on bets that the Federal Reserve would unwind a decade of stimulus,” Bloomberg said, shorting American and European assets as well as Japanese bonds.
“The $19tn of sovereign debt trading at negative yields, the SPAC boom, the crypto boom, private equity valuations and public equity valuations – they’re all stripes of the same zebra,” said Berger.
“The zebra being the ocean of liquidity, first in response to the Great Financial Crisis and then to Covid.”
Obscure safari metaphors aside, Berger was right to put his money where his mouth was, as the fund’s value soared 163% in 2022 as the price of different assets collapsed rapidly.
Elucidating his strategy somewhat more clearly, he told Bloomberg: “The reason why I started the fund was that central bank flows were going to change 180 degrees. That key difference would be a headwind on all asset prices. One had to believe that the prices we saw were, to use the academic term, wackadoodle.”
While Berger is likely not the only fund manager to have thought this, he continues to double down on his opinion.
He plans to hold his short positions for years, suggesting further doom and gloom for the economy if his predictions turn out to be right.
“You have your variations, your rallies day-to-day, month-to-month. But big picture, everything is going down. Price action is ultimately the bible,” Berger concluded.
Well, investors, hold onto your hats. You have been warned.
Howe does she do it?
A Business Insider profile on FanDuel CEO Amy Howe suggested she has been directly responsible for the brand’s impressive growth in recent years and for helping it to become the first US online sports betting operator to declare a profit in the country.
To achieve that, Howe is focused rigorously on the firm’s bottom line, BI said, while also holding the creativity to make savvy business moves.
“Howe has managed to strike a delicate balance between continually reinvesting in the business while also recognising that the market is calling for profitability,” said Chris Grove, partner emeritus at Eilers & Krejcik Gaming.
“That’s an intricate waltz and she is managing it to perfection,” he added.
As the only female CEO of a major US sportsbook operator, Howe has also led the charge to encourage more women to wager on sports, bolstering the size of FanDuel’s customer base as a result.
The market of women bettors is an “untapped opportunity,” Howe has said previously, adding that: “By no means have we cracked the code on this, but I think supporting female athletes and advocating for equity with female athletes is really important.”
Grove went on to suggest to BI that Howe “could have come into FanDuel and said, ‘I want to do things my way,’ but instead she looked around at the market, talked to consumers, and listened to her internal team.”
“By virtue of her humility, she’s been able to blend those competing perspectives into a coherent and successful vision for the company.”
Whatever the determining factors in Howe’s success, shareholders in FanDuel owner Flutter Entertainment will certainly be hoping she keeps up the performance long into the future.
Top executives from the nation’s two leading online sportsbook operators are subtly shifting hopes toward California online sports betting legislation in 2024 after a 2022 push seems increasingly out of reach.
LAS VEGAS – Though neither DraftKings CEO Jason Robins nor FanDuel CEO Amy Howe would dismiss hopes a 2022 online sports betting ballot measure would pass, the pair said Tuesday that their companies would still push for legal wagering in California two years from now if – or when – the initiative is rejected.
Speaking alongside each other at a Global Gaming Expo panel, the pair said they would continue fighting for legal sports betting in 2024, implicitly indicating they were bearish on legalization efforts for 2022.
“I think the more time people in California get exposed to the messages, the more they’re able to sift through what’s true and what’s not,” Robins said. “I think you’ll see more momentum toward ’24, hopefully, maybe even in ’22, but probably more likely in ’24 when that’s getting passed.”
DraftKings and FanDuel have teamed up with a handful of other leading operators to spend more than $100m on a 2022 ballot measure that would amend the state constitution and permit licensed operators to accept bets statewide. Recent independent polling shows the measure is heading for defeat.
“We believe there is a path to get there,” said Howe, a Los Angeles resident. “Whether we get there in ’22, hopefully, or we get there in ’24, we believe it is the right path.”
Combined, DraftKings and FanDuel have the majority of US sports betting gross gaming revenue. The two sportsbooks have been the largest contributors to the initiative.
With roughly 40m full-time residents, California is far and away the nation’s most populated state and most significant remaining sports betting legalization target. More than 30 states have some form of legal sports betting, more than 20 of which allow at least one statewide mobile wagering platform.
The major online operators’ supported measure only has 27% support against 53% opposition, according to the University of California Berkley poll released earlier this month. The lopsided opposition less than a month before Election Day has hampered expectations despite the massive spending in the state on the measure’s behalf.
Among the issues hampering the online sports betting proposal is a competing initiative on the 2022 ballot that would only permit in-person sports betting at certain tribal gaming facilities as well as horse tracks. This measure, backed by many of the state’s major gaming tribes, also appears headed for defeat, according to the recent poll.
FanDuel CEO Amy Howe: “We believe there is a path to get there. Whether we get there in ’22, hopefully, or we get there in ’24, we believe it is the right path.”
California gaming tribes have been the biggest financial backers opposing the sportsbooks’ statewide mobile initiative, spending more than $100m. The tribes have feared statewide mobile wagering would take away money from the dozens of tribal nations in the state, many of which depend on casino dollars as the largest or sole major financial driver for their respective communities.
“California is usually on the leading edge, not the last state to embrace new innovations,” Robins said. “That said, if an opposition side is willing to spend over $100m, it’s just tough, it doesn’t matter what your issue is.”
The two sides have combined to spend more than $600m both in favor and in opposition to each measure, far and away the most expensive ballot inactive spending in US history.
Industry observers believe the competing measures have confused voters and led many to oppose both. Nationwide, sports betting legalization has majority support; all six states that previously had yes-no sportsbook approval votes on their respective ballots have approved the measure.
Robins Tuesday also acknowledged that the massive advertising blitz both for and against both measures generated by the hundreds of millions in campaign contributions may have inadvertently turned off many would-be supporters.
With the online measure seemingly headed for defeat, the industry’s major sportsbooks appear to be already gearing up for 2024. Along with California, leading operators seem inclined to support a similar ballot measure push in Florida and potentially Texas that year.
Combined, the three states make up more than one-fourth of the US population.
“We’ll absolutely live to fight another day,” Howe said. “It is hard to imagine the (total addressable market) ultimately won’t include the state of California.”
FanDuel has set its sights on becoming the “first watch and wager” network in the US, as it prepares to launch its cable channel FanDuel TV in addition to an over-the-top platform to be known as FanDuel+ in September.
The Flutter Entertainment-owned US market leader promises to deliver more live sports programming than any other network in the country, as part of a move that will see it develop into more of a sports media company.
FanDuel TV will emerge from predecessor TVG, the group’s horse racing network, and has signed Kay Adams to host an hour long live morning show every weekday.
Adams, who previously served as a host of Good Morning Football on the NFL Network, will present the show from FanDuel TV’s Los Angeles studios.
FanDuel’s CCO Mike Raffensperger commented: “FanDuel TV is the first network designed from the ground up to be watched by viewers with their phone in hand.”
“We intend for FanDuel TV to sit at the intersection of live sports and interactive content and believe Kay is the best example of an on-air talent who can bring fans closer to the narratives of the games they care about most. Our goal is to provide fans compelling programming to watch and wager on in tandem with our mobile app,” he added.
FanDuel CCO Mike Raffensperger: “FanDuel TV is the first network designed from the ground up to be watched by viewers with their phone in hand.”
In July, FanDuel promoted former CMO Raffensperger to the newly created role of CCO and announced that he would be overseeing the brand’s content and programming assets, including its cable network TVG.
Meanwhile, FanDuel TV has agreed with Pat McAfee’s PMI Network to produce content as part of the network’s weekly block of programming.
The company has also reached a programming agreement with The Ringer, providing FanDuel TV content from one of the industry’s most listened to and followed sports and pop-culture podcasts and digital networks.
FanDuel’s signature sports betting show More Ways to Win will continue to be hosted by former ESPN SportsCenter anchor Lisa Kerney, bringing sports betting analysis and insight into the major sports leagues to viewers each week.
FanDuel CEO Amy Howe: “Having proven on-air talent, live content from the most influential name in sports media in Pat McAfee and the industry’s best team covering horse racing today demonstrates that FanDuel TV will be a dynamic network from day one.”
More Ways to Win has been a cornerstone of FanDuel’s digital programming with Kerney covering a variety of sports content focused on the sports wagerer in her high energy style.
“Having proven on-air talent, live content from the most influential name in sports media in Pat McAfee and the industry’s best team covering horse racing today demonstrates that FanDuel TV will be a dynamic network from day one,” said Amy Howe, FanDuel’s CEO.
As part of a licensing agreement with Sportradar, FanDuel TV and FanDuel+ will air more than 3,000 hours of live sports including international basketball league action from Australia’s professional league, the Chinese Basketball League, as well as the French and German pro leagues.
In keeping with its TVG lineage as the home of horse racing, FanDuel TV will feature a stacked lineup of coverage from respected experts including Christina Blacker, Britney Eurton, Gabby Gaudet, Mike Joyce, Todd Schrupp and the rest of TVG’s award-winning on-air talent roster.
“TVG has been the undisputed leader in the horse racing space for the past 20 years and the launch of FanDuel TV creates an exciting new platform for the next 20 years,” said Raffensperger.
“FanDuel TV and FanDuel+ will accelerate the renaissance racing is enjoying and repackage the sport for a new generation of mobile enabled fans, while also bringing new leagues and sports to the US market. We plan to offer more live sports than any network in America,” he added.
FanDuel TV will be broadly distributed on linear television through its relationships with the industry’s leading cable and satellite distributors including Comcast Xfinity, Spectrum, Verizon FIOS, DirectTV, DISH, Cox Communications, FuboTV, YouTubeTV and Hulu.
FanDuel+ will also be widely available on direct-to-consumer OTT platforms including Roku, Apple TV, and Amazon Fire, and will be free to download for existing FanDuel customers with accounts on any of its sportsbook, casino, horse racing or daily fantasy platforms.
FanDuel has promoted former chief legal officer Christian Genetski to the role of president and former CMO Mike Raffensperger to the newly created role of chief commercial officer, effective immediately.
The Flutter Entertainment-owned brand said that the appointments would help provide long-term leadership continuity to the business, while recognising the duo’s longstanding contributions to the success of the business to date.
In his new role as president, Genetski will oversee all of FanDuel’s business development, partnership, corporate strategy, and government affairs units, in addition to driving the firm’s vision and execution of strategic partnerships and new business initiatives.
In his former role as CLO, Genetski worked with legislators, regulators and industry figures to help influence the development of the regulated North American online sports betting and iGaming market and helped to secure FanDuel’s leading position within it.
FanDuel said Genetski has played a critical role in the development of daily fantasy sports, sports betting and iGaming markets across the US.
FanDuel CCO Mike Raffensperger: “[I feel] humbled at the opportunity to lead this incredible company and hungry that the best is yet to come for the far and away #1 online gaming company in America.”
Notably, he brokered an agreement with the New York State Attorney General that paved the way for New York to legalise and regulate DFS along with more than 20 additional states, FanDuel said.
It was also his work that helped build a bridge for the company’s entry into sports betting and iGaming following the repeal of PASPA by the United States Supreme Court in 2018, the firm added.
Former CMO Raffensperger, meanwhile, will oversee revenue generation across FanDuel’s sportsbook, casino, racing, daily fantasy and free-to-play platforms in his new role as CCO.
The position sees Raffensperger take on an expanded role including commercial leadership, a responsibility previously overseen by CEO Amy Howe.
Raffensperger will also continue to steer FanDuel’s marketing unit, while assuming oversight for the brand’s content and programming assets, including its broadly distributed cable network TVG.
FanDuel said that during his tenure as CMO, Raffensperger’s leadership had helped fuel the explosive growth and market share dominance the brand enjoys today.
In a post shared on LinkedIn, Raffensperger said: “One of my favourite cultural principles at FanDuel is the idea that we want to stay Humble & Hungry – and that is exactly how I feel taking on this new role. Humbled at the opportunity to lead this incredible company and hungry that the best is yet to come for the far and away #1 online gaming company in America.”
Both executives will continue to report directly into FanDuel CEO Howe. She said: “It cannot be overstated how seminal both Christian and Mike have been to not only the success of FanDuel, but to the industry more broadly.
“Each has helped nurture and evolve FanDuel from innovative upstart to the dominant market leader in sports betting and iGaming. I am delighted to expand their roles as we continue into the future.
FanDuel CEO Amy Howe: “It cannot be overstated how seminal both Christian and Mike have been to not only the success of FanDuel, but to the industry more broadly.”
“Keeping Christian’s deep institutional knowledge within FanDuel was critically important to me. In his expanded role, Christian’s expert voice will impact decisions that are vital to creating a sustainable long-term business, while providing critical continuity for FanDuel to thrive in the future.
“Similarly, Mike’s leadership of our revenue producing commercial units and marketing is a structure we believe best positions us for growth and reflects how important his performance has been to our success,” Howe concluded.
Recent data from across the US online gambling market laid out the extent to which FanDuel has carved out a dominant market position in recent years.
According to the June edition of Eilers & Krejcik Gaming’s US Sports Betting Market Monitor, FanDuel accounted for more than half of all nationwide online sports betting GGR in the month of April at 53%.
That means the brand generated more revenue than the other 54 online sports betting brands that are currently active in the US, combined.
The unregulated offshore sports betting market needs to be countered by increased regulation and legalization, FanDuel CEO Amy Howe said during an industry conference Wednesday (July 13).
In a wide-ranging 40-minute conversation with CNBC correspondent Contessa Brewer, Howe repeatedly stressed the importance of the legal market and the dangers of wagering offshore.
“Twenty-five percent of (offshore) consumers will never be paid out by some of those sites,” Howe said during a session at Wednesday’s SBC Summit North America conference. “So they’re betting and a lot of times they’re… at least in the legal states, they’re moving over to the regulated operators because they were oftentimes scammed by some of those illegal operators.”
Regulation’s importance carries over to online casino gaming as well, Howe said. Like DraftKings CEO Jason Robins at an industry conference last week, Howe touted the benefits of a regulated online casino gaming market to a group of several hundred industry figures.
Additional regulated sports betting and iGaming markets would arguably benefit FanDuel more than any other company.
A subsidiary of European gaming giant Flutter Entertainment, FanDuel is the regulated US market’s largest sportsbook by handle and is one of if not the highest grossing operator by gaming revenue in more than a dozen states. In New York, the nation’s largest market, FanDuel consistently generates more weekly gross gaming revenue than the state’s eight other legal sportsbooks combined.
FanDuel’s sportsbook app is perennially the most-downloaded gaming app in the US, Howe said Wednesday. She said her company’s app was the second-most downloaded app overall during this year’s Super Bowl behind only Peacock, which streamed the game.
FanDuel offers mobile sports betting in 15 states and online casino games in five. In Connecticut, the company’s most recent iGaming launch, Howe said more than 50% of customers used both FanDuel’s digital sportsbook and casino.
Howe said the company’s success is predicated on product design and innovations such as single-game parlays, which generate more operator hold than typical single-game bets. FanDuel’s complete integration of its in-house tech stack is another catalyst of its success, Howe said.
“It’s not necessarily ‘am I going to be able to entertain you better at a sporting event’ but I think it’s really about a superior platform that is reliable, stable and safe,” Howe said.
Howe joined FanDuel last year after a stint at Live Nation Entertainment, where she served at TicketMaster COO. At FanDuel, Howe has overseen the company’s online sports betting rollout in New York, as well as the launch of single-game parlays.
FanDuel CEO Amy Howe: “Twenty-five percent of (offshore) consumers will never be paid out by some of those sites.”
Like much of the rest of the industry, FanDuel is closely monitoring two competing sports betting legalization ballot measures in California, far and away the nation’s most populated state. Along with rivals DraftKings and BetMGM, FanDuel has contributed tens of millions of dollars to an initiative that would allow statewide mobile wagering. The other measure would limit betting to retail sportsbooks at certain tribal casinos and horse tracks.
“I’m very cautiously optimistic that this referendum is going to pass,” Howe said. “The way this has been set up and architected, I think there’s a win-win on many levels.”
Howe said the FanDuel-backed ballot measure would generate more money for homeless prevention and mental health aid in California than any other voter initiative in state history. She said these benefits in California and across the country are additional key reasons why states need to embrace legal, regulated gaming.
“If you look at the research that the American Gaming Association and others have done, over 90% of consumers want sports betting to be legalized,” Howe said. “And they should, because it protects our consumers at the end of the day, and it actually creates great revenue for the state and the constituencies that should be getting that money, as opposed to the illegal operators who are benefiting from not having to pay tax dollars.”
While the future of sports betting – in what would no doubt become one of the world’s largest markets – is undetermined, Howe said FanDuel remains positioned to be a US gaming leader, regardless of the outcome in California. Even as the industry and overall economy face headwinds from rising inflation and a possible broader economic downturn, Howe said her company is set up for future success.
“I don’t really know how inflation is going to impact us,” Howe said. “But what I can tell you is right now the fundamentals of our business are still very strong.”
What a difference a year makes.
In March of 2021, Flutter Entertainment first announced it would explore an IPO for a small stake in FanDuel. That is no longer on the agenda, according to sources.
Why was Flutter considering a FanDuel IPO?
Flutter investors were pulling their hair out at the time. The market cap of number one rival DraftKings had just hit a record high of $28.5bn, overtaking Flutter in the process.
Flutter had already merged with The Stars Group and DraftKings had no international business to speak of, but Jason Robins and his team were stealing the show, onboarding A-list athletes and celebrities as the stock surged. Even Michael Jordan was advising the board.
Flutter investors demanded answers, and one came in the form of a potential public listing of a shareholding in FanDuel.
And then the bubble burst. It would be an understatement to say there has been an adjustment in the market since the lofty heights of last spring. The hype around US online sports betting has largely disintegrated, accelerated by an avalanche of well-documented macro factors.
DraftKings dropped through a trap door and has just kept on falling. The stock closed at a record high on 19 March 2021, just two cents short of $72 per share. Fast forward one year to 14 March 2022 and the stock closed at just $15, before stooping even further to a previously unimaginable close of $10.27 on 11 May. This represents an 86% decline.
Flutter has also fallen 59% over the same period, from a March 2021 high of £119 per share to a £49 close on 9 May, but their respective market caps have corrected to some degree.
On 10 May, London-listed Flutter Entertainment was worth £17.9bn, while the market cap of Nasdaq-listed DraftKings came in at $5bn. Both companies have since rebounded to £20.7bn and $6.2bn respectively. The chasm between the two remains.
Why did a FanDuel IPO make sense at the time?
Put simply, Flutter needed to act because the value of FanDuel was not being factored into its overall share price while DraftKings was fast becoming a stock market darling.
Investors thought Flutter should be trading at least equal to DraftKings, or even at a premium considering its brand portfolio which includes Paddy Power, Betfair and PokerStars.
Goodbody gaming and leisure analyst David Brohan says: “For better or for worse, a lot of the valuation of FanDuel is tied to DraftKings since it IPO’d.”
He explains what many were thinking at the time: “DraftKings was trading at 15x forward sales and you were looking at that and thinking FanDuel is a better business, it has a bigger market share, a bigger revenue pool and is losing less money. It also has a better management team.”
Brohan’s view is shared by an individual who played an influential role at FOX Bet while it was being incorporated under the Flutter umbrella.
Speaking on the condition of anonymity, they said: “One of the struggles for value in the US is the fact that the market really looked at DraftKings as the poster boy. The two businesses were tracking at equal pace even back then, but all anybody saw was DraftKings, DraftKings, DraftKings.”
The source concedes that DraftKings is still a barometer, for metrics both good and bad.
“DraftKings made the whole public market – not just strategic investors – believe that sports betting was amazing. All the focus then turned to DraftKings, but their drop was precipitous and fast.”
“You could say it is because of DraftKings that everyone looks at profitability with all those worries about how they are going to get there. DraftKings made the whole public market – not just strategic investors – believe that sports betting was amazing. All the focus then turned to DraftKings, but their drop was precipitous and fast. That kind of brought the whole market down with it, whereas they all would have come down eventually anyway.”
Flutter’s management team may have understood that March 2021 was the peak of bullishness in the US sports betting space. An IPO of FanDuel, or at least the exploration of that option, could not have come at a better time if the company was ever tempted to cash in on its most attractive asset.
“In the States now, that frothy bit of the market has unfortunately gone,” says the former FOX Bet employee. “There was that period in 2021 when things were selling like crazy and for money that seemed insane.
“People will look back and think there was a window there to get maximum value. If you were trying to sell during that period, you aren’t going to get the same value today, that’s for sure.”
Why did the IPO never materialise?
So far however, Flutter appears to have chosen the long game, and that could still pay off if FanDuel reaches profitability in 2023 as anticipated, before its competitors and ahead of DraftKings, which racked up operational losses of $1.56bn in 2021. DraftKings is also guiding to negative EBITDA of up to $925m for full-year 2022.
But even when an IPO looked optimal, several factors conspired to make a public listing difficult.
Chief among them was the exit of former CEO Matt King, who jumped ship to build a sports betting operation from scratch at merchandising giant Fanatics. He left in part because he could not foresee a smooth exit for FanDuel, iGaming NEXT has learned.
The other sticking point is the ongoing legal battle between Flutter and Fox Corporation over the latter’s option to acquire 18.6% of FanDuel. The parties are locked in a dispute over the payment required by Fox to exercise that option, with arbitration scheduled for June.
“Once there is clarity on that, if there ever was appetite for an IPO, then they would do it then, but I just don’t think there would be at the current valuations,” says one source who became part of the Flutter Entertainment juggernaut following its acquisition of Sky Betting & Gaming.
How can Flutter realise the true value of FanDuel?
Most industry observers would agree that the value of FanDuel – which is the undisputed market leader in the US from both a revenue and product perspective – is still not represented in the current share price of Flutter.
However, that share price is also being dragged down by regulatory uncertainty in Europe and the costs associated with implementing pre-emptive responsible gambling measures in the UK, which remains a crucial – and therefore exposed – market for the operator.
But if there is no longer an appetite for a FanDuel IPO, what can Flutter realistically do to realise the true value of America’s leading sports betting brand?
“Wait,” says the same source in no uncertain terms. “Their point of inflection is a lot earlier than literally anyone else’s. On DraftKings, out of the 500 biggest companies in the US, they were one of the top three most exposed in terms of stock options based on revenue targets. All of their senior management were told to just drive the top line.”
Goodbody gaming & leisure analyst David Brohan: “Any of the longer-term guys we speak to on Flutter looked at it on £81 [per share] and thought it was crazy cheap. I think in time that will prove to be the case.”
Patience is also the right strategy in the mind of Goodbody’s Brohan. He says: “You’re going to be profitable next year, and profits are going to grow over the next couple of years as the crown jewels of the Flutter business. If prevailing market conditions change, you could look at an IPO again, but I think investors don’t see that as critical now in terms of realising the value. Most people tend to think that once you get to next year, and you start to see FanDuel profits turn positive, that will be reflected in how Flutter can rearrange from here.”
However, we are living in a time where retail trading has been introduced to the masses at the touch of a button by mobile TradeTech apps like Robinhood. Attention spans are dwindling and short-term action is sometimes seen as sexier than long-term perspective. Flutter’s best play might be to sit on its hands and wait, but will investors afford it that luxury?
“Any of the longer-term guys we speak to on Flutter looked at it on £81 [per share] and thought it was crazy cheap. I think in time that will prove to be the case, but current headwinds are holding that back, alongside obviously a very weak general market,” says Brohan.
The easiest conclusion to draw is that FanDuel does not need to look over its shoulder in the US.
DraftKings is burning cash and is no longer adored by investors, while BetMGM is facing an uncertain future due to an inevitable custody battle between its joint venture owners. Fanatics, meanwhile, is yet to even take a legal sports wager in the US.
For Flutter boss Peter Jackson and current FanDuel CEO Amy Howe, it is simply business as usual.
US market leader FanDuel is seeking similar success north of the border and has unveiled its Canada expansion plan, starting with the province of Ontario.
Ontario’s regulated iGaming and online sports betting market will go live for the first time on 4 April 2022 and is set to be extremely competitive from the get-go.
FanDuel is hoping to join a host of domestic and international operators, subject to successful registration with the Alcohol and Gaming Commission of Ontario (AGCO) and an operating agreement with iGaming Ontario.
Once those regulatory hurdles have been cleared, the Flutter Entertainment-owned brand will launch a sportsbook app to Ontario customers and a separate mobile casino app.
FanDuel will lean heavily on B2B providers to facilitate its launch in Canada. The sportsbook will be powered by IGT’s PlaySports platform, which includes same game parlay functionality and live streaming options.
The operator’s player account management system (PAM) and casino offering will be provided by GAN, boasting more than 250 titles across live casino and slots.
Finally, FanDuel has teamed up with Nuevi for payments processing and Napier for AML solutions and compliance procedures.
FanDuel CEO Amy Howe said the group would be opening its first Canada office as part of the expansion. iGaming NEXT has reached out to the company for more details on this.
Howe said: “We’re so thrilled to bring FanDuel’s world-class sportsbook and casino to Canada’s passionate sports fans.
“This is a huge moment for the industry and we look forward to providing Canadians with entertaining and responsible sports experiences,” she added.
Both FanDuel and DraftKings have pulled their daily fantasy sports (DFS) products out of the Ontario market ahead of launching regulated online sports betting.
Earlier this week, US operator Rush Street Interactive revealed the appointment of former AGCO legal chief Bruce Caughill in the newly created role of MD for Canada.