17th Nov 2022 16:00
(Alliance News) - Analysts at UBS said Flutter Entertainment PLC's US arm could be more successful than investors expect, as the US sports betting industry expands amid a more relaxed regulatory environment.
After a landmark Supreme Court ruling around four years ago, the US has turned into the land of opportunity for betting firms. In the US, Flutter owns a majority of FanDuel, a sports betting and fantasy sports services provider.
Flutter Entertainment talked up the strength of its US business at an investor day on Wednesday, as FanDuel continues to gain traction.
The Paddy Power owner said FanDuel is the "number one" sports betting operator in the US, with a 42% share of the online market.
"This leading position is underpinned by a range of sustainable competitive advantages, alongside access to unique benefits enabled by the Flutter group," the gambling firm said.
"We are confident in a path to a 2030 total addressable market of more than USD40 billion in gross gaming revenue which represents growth of 4.5 times the size of the market today."
There is "perhaps a bigger US opportunity than investors expect", analysts at Swiss bank UBS said.
"Flutter continues to expect its US business to be profitable in 2023 and sees FanDuel's long-term Ebitda margin at 25-30%," UBS added.
"We forecast the US market to reach USD19 billion by 2025, Flutter to retain a 30% market share in sports betting and 20% in iGaming by 2025, the business to turn profitable in 2023 and 15% Ebitda margin in 2025."
Flutter said that 25% to 30% margin target for the US arm would place it in line with its existing divisions.
Deutsche Bank said that target is achievable.
Analysts at the German bank explained: "Ebitda margin targets of 25% to 30% look sensible, at 5% below the DraftKings/Entain target, despite FanDuel's superior scale."
Flutter Chief Executive Peter Jackson added: "The US market represents the single biggest opportunity in our sector today and we are proud to own FanDuel, the premier asset within this market. The business has transformed the Flutter Group, performing better than we could have hoped and growing tenfold since [Professional & Amateur Sports Protection Act] was repealed in 2018."
Sports betting is being legalised in many US states for the first time following a Supreme Court ruling in 2018, allowing bookmakers to tap into the lucrative market there.
Flutter shares were 0.7% lower at 11,215.00 pence each in London on Thursday afternoon.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Flutter Entertainment