Shares of Irish online sports betting (OSB) and gaming leader Flutter Entertainment plc (OTCMKTS:PDYPY) lept 23% to $100.23 last week in three-times normal volume. The surge came ahead of Flutter’s much anticipated New York Stock Exchange (NYSE) listing — which could happen as soon as next week.
On Thursday, the home of the FanDuel, Betfair, Paddy Power and Sportsnet brands released fourth quarter financial results that the market found to be well worth betting on. The thinly traded Flutter sparked big weekly gains in DraftKings (+14%) and other U.S.-listed gaming stocks.
Flutter reported that revenue for the quarter ended December 31, 2023 increased 15% year-over-year to £2.67 billion. The surprisingly good result was led by 19% growth in the gaming business with sports revenue growing at a more modest 13%. Average monthly players (AMPs), a key performance metric for the company, improved 12% to approximately 13.6 million.
Due to favorable results for American bettors, growth in the U.S. FanDuel business fell short of internal expectations but was still a solid 19%. CEO Peter Jackson commented that November NFL betting results were particularly “customer friendly”. This is being viewed as a non-issue, however, because U.S. profit margins came in ahead of expectations. Moreover, for all of 2023, U.S. revenue grew 38%, outpacing all other Flutter markets (including the U.K., Ireland, Australia and other international regions).
Flutter was the first online betting operator to turn a profit in the U.S. after the country’s OSB ban was lifted in 2018. In addition to FanDuel, Flutter owns online horse race betting brand TVG as well as PokerStars.
Despite the slower growth, FanDuel held onto its number one U.S. sportsbook ranking with a 43% share of Q4 gross revenue. FanDuel holds the number two spot in U.S. iGaming, an emerging growth market being spurred by state regulatory approvals. Flutter also grabbed market share in its home U.K./Ireland base as gamblers took to recent product improvements.
What is Flutter’s growth opportunity?
Today, the global online betting and gaming market is worth an estimated $430 billion. It is poised to continue to grow throughout the decade due to additional U.S. state approvals and as more countries move to regulate sports betting and gaming. As Internet access expands in developing economies, Flutter’s addressable market should only get bigger.
The U.S. OSB and gaming market alone is forecast to top $40 billion by 2030. Flutter estimates that 80% of the U.S. population will have access to sports betting by this time. By 2030, around one-fourth of Americans are expected to have access to iGaming, which encompasses online casino games like blackjack and slot machines.
Outside of the U.S., the online gaming market is forecast to grow 9% annually over the next five years. Flutter’s well-recognized brand lineup and established U.S. and U.K. presences should give it a major edge in capturing this growth.
When does Flutter start trading on the NYSE?
Flutter shares are currently available for U.S. investors to trade on the OTC Markets exchange. The NYC-based broker-dealer network provides liquidity for roughly 10,000 over-the-counter securities. OTC securities typically trade where they do because they represent a stake in smaller companies that don’t meet the listing requirements of the big national exchanges. In the case of Flutter, this may soon change.
As part of its Q4 update, Flutter noted that, subject to U.S. Securities and Exchange Commission (SEC) approval, its stock will begin trading on the NYSE on January 29, 2024. Given the recent growth at DraftKings and the long-term growth expected in the U.S. OSB and iGaming markets, the event is likely to attract significant investor attention. Flutter shares are expected to trade under the ‘FLUT’ ticker.
The timing of Flutter’s NYSE listing could prove valuable. The stock is slated to go live less than two weeks before Super Bowl LVIII. Last year’s Super Bowl was a record-breaking event for U.S. sportsbooks. At the peak, FanDuel said it took in 50,000 bets per minute.
After the NYSE listing, the next key market event for Flutter could be its March 26th report, which will include both full year 2023 financial numbers and 2024 guidance.
