money FanDuel forecasts full-year profitability in 2023: 'Our base is growing'
As the mobile sports betting industry continues growing in the U.S., FanDuel (FLTR.L) has particularly seen significant success.
FanDuel is projecting full-year profitability in 2023, which would be at least a year earlier than competitor DraftKings (DKNG). The company, which is owned by European-based Flutter Entertainment, believes it can multiply its 2022 revenue by five times when the sportsbook operator reaches “maturity.”
An investor presentation at FanDuel's Capital Markets Day on Wednesday indicated that the company now accounts for 42% of the U.S. online sports gambling market in states where the sportsbook operates, nearly double the next closest competitor.
Flutter Entertainment CEO Peter Jackson stated it’s more than just the legalization of sports betting that's contributed to FanDuel's growth.
“The base is growing,” Jackson told Yahoo Finance. “That's not just for new states we are adding — that's growth and penetration in states…Revenue from each [new legalization] cohort is growing every year. So the customers we have are doing even more business with us, and we're increasing the penetration of the states and we're laying on top new states.”
The legal aspects
FanDuel reiterated its revenue projection for $3 billion in 2022 and believes the total addressable market for online gambling, including both sports betting and online casino games, could reach $40.5 billion by 2030.
That number accounts for increased legalization, which can be fluid. Currently, mobile sports betting is live and legal in 21 states and Washington D.C., though Californians recently voted against two propositions that would’ve brought sports betting to the country’s largest state.
FanDuel President Christian Genetski, who helps oversee legalization efforts, noted in the investor presentation that 2022 would’ve been earlier than expected for clearance in California.
“It's hard to predict what's going to happen in '24,” FanDuel CEO Amy Howe told Yahoo Finance. “As you can imagine, we're already regrouping on what our path would be to be successful. What we had always anticipated was finding a path that aligned tribes, racetracks, the sports betting operators, and ultimately the consumer, and we believe that path exists. So without saying more than I should right now, I think that's what we're pursuing right now.”
As Jackson stressed, FanDuel’s growth isn’t just correlated to legalization. During last year’s Super Bowl (which already included New York, the largest new sports gambling state in 2022), FanDuel reached as many as 52,000 bets per minute. During Week 9 of this year’s NFL season, the company processed as many as 70,000 bets per minute.
“Our regular Sunday,” Jackson said. “Imagine what the Super Bowl is going to be like next year.”
Multiple Wall Street analysts told Yahoo Finance they were impressed with FanDuel’s presentation versus some of the other online gambling strategies.
One analyst pointed to a chart that further highlights FanDuel’s technology advantage. According to the chart, FanDuel is providing 1.6 times the amount of pregame NBA betting choices than the next closest competitor.
And it’s not just about the further offerings — FanDuel is achieving higher margins on bets than competitors, too.
The company projects it will end 2022 with an average gross gaming revenue of 10%, while the average among competitors will be 6.8%. Those numbers correlate with October data from New York where FanDuel held 12.5 % of its handle while DraftKings, BetMGM, and Caesars (CZR) each held about 7.5% of their handles.
'No evidence' that consumers are holding back
Throughout the presentation, Howe and other FanDuel executives repeatedly touted the “Flutter Edge.”
Unlike some other U.S.-based gambling operators, FanDuel relies heavily on its parent company Flutter, which has operated under various different names for the past several decades and expanded into markets in Europe and Australia.
The worldwide exposure has provided Jackson and FanDuel with a clear view of global economic trends. While a gloomy macroeconomic outlook has taken shape faster in Europe, the gambling business hasn’t slowed yet, according to Jackson.
“We look at these growth rates in the states — people said to me last year: What's going to happen when we start lapping the impact of the [stimulus] checks? Would we see a slowdown?" Jackson said. "And we haven't seen a slowdown."
Though some analysts are still anticipating a recession to start in 2023, Jackson is confident that gambling can show similar resilience in the U.S.
“We've got real momentum in the business, and I think what we're finding when people are engaged in our product, we offer them great value entertainment, and so far there's no evidence that they're cutting spend," Jackson said.
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Josh is a reporter and producer for Yahoo Finance.
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