Sports gambling has boomed in the United States since the 2018 Supreme Court ruling that eliminated a federal law banning sports gambling in most states.
States have legalized sports betting one-by-one since then, such that there are now 39 states where sports betting is legalized in some capacity, whether online or in-person. Sportsbooks have exploded with heaps of ad spend from the likes of DraftKings and Caesar Sportsbook to acquire new customers, while some like Penn Entertainment’s ESPN Bet are leaning on the iconic media brand to boost its market share.
But one brand has been at the top of the standings — or at least shared it with DraftKings — for the last few years: FanDuel.
A report by CNBC said that FanDuel owned 43% of market share for sports betting in the country in terms of gross revenue, and even 51% when looking at net revenue.
And on Monday, Jan. 29, just two weeks before the Super Bowl, FanDuel’s parent company, the Ireland-based Flutter Entertainment, debuting on the New York Stock Exchange as a secondary listing.
Mike Raffensperger, FanDuel’s chief commercial officer, told TheStreet that the move is set to help fuel the company’s expansion in the US and allow for ease of a lot of operations in this massive market.
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“Certainly it provides some advantages from 3,000 team members based in the United States in terms of equity compensation packages as as well as access to greater liquidity, global markets, and just a lot of opportunity,” Raffensperger said. “From a business to consumer perspective, we’re really excited about the brand resonance that FanDuel has here in America and now have it available to retail investors in a really simply format, the New York Stock Exchange, to purchase Flutter.”
Flutter, formerly known as Paddy Power Betfair Inc., has other brands under its name like PokerStars and Sky Betting & Gaming. But FanDuel, particularly in the US, seems to be its biggest priority at the moment.
However, FanDuel’s biggest rival, DraftKings, was way ahead of FanDuel in terms of its going public in the US, listing in the NYSE in April 2020. The stock has been on a rollercoaster ride since its debut with the $39 per share it’s currently trading at sitting well below the highs of over $70 per share that it hit in 2021.
It is performing well as of late — including up over 166% in the last year — which makes Flutter’s NYSE entry interesting. And Raffensperger explained to TheStreet a little more about why he believes his company’s in a better spot than its rival.
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“I think we’re very different companies,” Raffensperger said. “I would encourage any investor who is interested in the category to go look at the financials between the two companies. So we were the first company to, in the FanDuel Sportsbook, to be full year profitable in 2023. DraftKings lost some hundreds of millions of dollars. So I just think from between the two, the financial health of the companies are in slightly different situations. Not only are we the market leader, but we are ahead in the financial health.”
DraftKings operating at a loss was a major driver into the stock’s dip from 2021, but it has been performing better than expectations as of late, despite its Q3 2023 financials still showing a loss of over $280,000 in the quarter.
Raffensperger also explained that FanDuel has a few advantages over the up and comers who are trying to acquire market share from the two leaders. Those are the likes of ESPN Bet and Fanatics’ PointsBet.
His first claim was on the technology and user experience offered by FanDuel.
“FanDuel’s a technology company, and I think part of that is understanding that we’re not resting on our laurels,” Raffensperger said. “We’re always looking to improve the product, the customer experience. I think that puts us, as a digitally native technology company, at a really unique advantage vis a vis some of those competitors.”
He then pointed at the importance of scale in this industry as an advantage over the smaller competitors.
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“FanDuel also enjoys a really unique advantage where we’ve been running a real money gaming sports product with daily fantasy sports for over a decade,”Raffensperger said. “Whether it’s Penn and their new tie up with ESPN or Fanatics, frankly, this is an industry that is very difficult to compete in without scale. It’s not a particularly high margin business. You really need economics of scale to make it work. And then there is a really valuable flywheel effect where as you have more users on your platform, your friends are betting with somebody, you want to tail their bet, sort of referrals of people coming into the system — it’s difficult once you sort of established a lead.”
Raffensperger is clearly and unsurprisingly bullish in his own company, but only time will tell if his big bet pays off in the stock market.
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