Flutter Tackles Revenue Challenges Amid NFL Betting Trends
Flutter faces falling revenue forecasts, as US football favorites finish first.
Winning NFL favorites force Flutter Entertainment to warn on Q4 revenue. © Dave Adamson Unsplash
Key Facts:
- Football bettors, especially NFL bettors, continue to pound Flutter’s posted lines and parlays.
- Winning football favorites will have a $438 million impact on Flutter’s fourth quarter financials
- The company now expects a net revenue margin of only 6.6%, down almost four full points.
- Reductions in promotional spending and strong revenue in the English Football League help mitigate losses.
NFL favorites are winning at a rate not seen in over twenty years. And that 71% win rate is causing headaches for some of the world’s largest sports bet makers, including Flutter Entertainment.
Chalk is a sportsbook term for a heavy favorite, and in the most heavily wagered-on league in the US, the NFL, the chalk gets the lion’s share of the betting action. However, when these teams win almost three-quarters of the time, it can have serious repercussions.
In this case, it was about $438 million since that is the number Flutter Entertainment floated as the possible hit to GGR in a warning to investors about Q4 earnings this week. Flutter operates FanDuel in the US, the country’s second-largest sports betting operator by monthly users and first by market share. So when FanDuel catches a cold, Flutter gets a fever.
Flutter trades in the US on the NYSE. After what they described as a season of “player-friendly outcomes,” they felt compelled to issue a statement that adjusted US EBITDA for 2024 would likely come in more than $200 million short of previous statements. They put the decline in margin at 390 basis points.
Even after adjustments, the 2024 year-end projection is for $5.7 billion in revenue and $505 million in EBITDA. Q4 adjusted predictions now indicate $1.58 billion in revenue and $161 million in EBITDA.
This means that while bettors may be having a bit of luck in the NFL, the company continues to show impressive growth and generate impressive earnings margins overall.
US 2024 Football Results Likely a Hiccup
Revenue reductions of $390 million over a three-month stretch certainly shouldn’t be shrugged off, but if history is any guide, this extraordinary run of luck by bettors is unlikely to continue.
Even if NFL favorites continue to cover, spreads will adjust to take this into account. Flutter also faced headwinds from a string of costly parlay bets, but parlay long shots are just that: unlikely to repeat.
Flutter also advised that these outcomes had “no impact on the underlying assumption and guidance expectations” in the long term. With the American Gaming Association suggesting that overall wagering on the NFL will approach $35 billion this year, and more than $5 billion of that just on the Super Bowl.
It is still to be held in February in New Orleans, so Flutter still has time to salvage some of this NFL season.
The odds are that they will see their long-term revenue margin of 14.5%, which has held remarkably steady over the years, return with a vengeance. Even if the remainder of the NFL season proves problematic, their cost-cutting measures, especially the 20% cut on promotional spending, will help offset some of the damage to top-line revenue.
Of course, while FanDuel is an integral part of Flutter Entertainment, it is less than half of the company’s total revenue stream internationally. Those International markets, especially in Europe, did not favor bettors, with Flutter expecting a 10% EBITDA hike from international results YOY. Flutter specifically called out the English Premier League for increased revenue.
While the company will see decreasing growth in 2025 as the sports betting boom, now legal in over 30 states, slows substantially, the continued introduction of in-game betting and parlays is expected to still see revenue growth of close to 30% in 2025 vs. a 37% run-up in 2024.
