About 10 percent of Americans claim Irish heritage, which means a heck of a lot more Irish in the U.S. than the seven million souls who inhabit the actual island of Ireland.
Thus, we welcome Flutter from the Old Sod to the New York Stock Exchange and soon, if shareholders approve, its primary listing from London to the counties across the sea.
Historical note: Flutter began as a merger of 40 betting shops in Ireland into Paddy Power, a name derived from Power, one of the founders, and Patrick, the name of another partner. It had all of 8 percent of the Irish off-course betting market before it grew into publicly owned wagering powerhouse Flutter.
So what does this have to do with investors? Jefferies analyst James Wheatcroft has an answer: FLUT (the company’s new American ticker symbol) should grow EBITDA from its U.S. operation, FanDuel, from $101 million last year to over $2.6 billion in 2030. And this is only for states where sports betting/iGaming is legal today.
For comparison, FLTR (its current London ticker symbol) generated EBITDA under $2 billion for the whole company last year. He assumes Flutter simply maintains its combined U.S. sports betting-iGaming market share of 34 percent.
And then there is potential growth globally.
Nearer term, Flutter offers a chance for investors to profit, if analysts are correct. Wheatcroft’s stock price target, for example, is £195, up from a current £163. His valuation assumptions are not rich, with enterprise value-to-EBITDA falling from 21.1 times to 11.8, and earnings per share ratio declining from 40.2 times to 18.5 times by 2026.
Finally, for those who like some money back in their pockets not just reflected on a financial statement, Wheatcroft projects initiation of a dividend that would yield 1.6 percent this year and rise to 2.7 percent in two years.
Other analysts also see Flutter progressing with earnings and free cash flow growing while debt falls.
The projections of Flutter’s dominance comes amid what, on the surface, seems a fluid North American market. Companies PointsBet and Kindred are leaving while new competitors such as Fanatics move in and others drum up major new relationships including PENN Entertainment with ESPN and DraftKings with Barstool.
But all the headlines merely distract from an ever-more clear reality: the U.S. online/iGaming market is dominated by just several competitors and, increasingly, just two—FanDuel and DraftKings.
No matter the market arrangements, no matter the new players, no matter the boasts by brick-and-mortar casino operators of their multimillion-player databases, the market remains FanDuel followed by DraftKings followed by a receding Bet MGM.
Sports betting and iGaming combined, FanDuel has 34 percent market share, DraftKings 29 percent and BetMGM 14 percent. As might be expected given its brick-and-mortar casino customer base, BetMGM is considerably stronger in iGaming at 23 percent, which follows DraftKings 26 percent and bests FanDuel’s 21 percent.
In retrospect, the reasons for the big market shares of FanDuel and DraftKings are clear. Their millions of fantasy sports players were more naturally converted to online sports bettors than the customers of the giant brick-and-mortar casino companies.
The market shares have also been influenced by heavy promotion to build those shares. The emphasis by most operators now is to cut marketing costs and become profitable. That is an easier conversion for FanDuel as parent Flutter came to North America with its own technology and was already profitable in the space.
Of course, investors still have plenty of choices, from brick-and-mortar operators turning digitally profitable like Caesars, small pure plays like Rush Street Interactive, affiliates and sports data providers, brick-and-mortar hybrids like MGM or, in the sense that it owns 5 percent of FanDuel and has its own iGaming operation, Boyd.
But there is only one global digital pure play with its own technology, existing and growing profitability and large market shares in the biggest markets—Flutter.
