NEW YORK — The current football season has proven challenging for sportsbooks.
FanDuel, alongside its main competitor DraftKings, has demonstrated to investors that even the most established betting houses can encounter unexpected losses.
Flutter Entertainment, which manages FanDuel and leads the sports betting sector with a market capitalization of $45 billion, has declared this NFL season as “the most customer-friendly” in two decades, with a significant increase in winning favorites. The resultant larger payouts for bettors are estimated to have reduced Flutter’s revenue by about $390 million from mid-November to the end of December.
DraftKings echoed these sentiments in November, noting an uptick in payouts to bettors. As the NFL playoffs approach, both companies brace for a bustling weekend, as the NFL continues to be a significant driver of viewership and sports betting activity in the U.S.
According to BetMGM, the predicted favorites for this weekend’s playoff matchups include the Los Angeles Chargers, Baltimore Ravens, Minnesota Vikings, Philadelphia Eagles, and Buffalo Bills. The Chargers stand out as the only favored road team. The Vikings were originally set to play the Rams in Los Angeles, but the game’s venue has been shifted to a neutral location due to ongoing wildfires affecting the region.
“It’s a business that is somewhat volatile in the short term, reliant on unpredictable sports outcomes; however, investors have become increasingly accustomed to this aspect of the industry,” remarked Robert Fishman, a senior analyst at the equity research firm MoffettNathanson.
The American Gaming Association reported that U.S. commercial sports betting revenues soared by 27%, reaching nearly $11.1 billion by October 2024, compared to the same period in 2023.
Previously, the organization projected that American adults would wager around $35 billion through legal sportsbooks during the current NFL season, marking it as the “most legally wagered-on season” in the history of legal sports betting since the NFL’s legalization began. Although specific projections for NFL playoffs are unavailable, it is anticipated that total U.S. sports wagers for January will surpass last year’s figures of $13.9 billion.
Both Flutter and DraftKings have been steadily expanding and integrating themselves more deeply into the sports viewing experience for fans. This transformation starkly contrasts with nearly a decade ago when sports betting was predominantly confined to licensed sportsbooks in Las Vegas and other less regulated markets.
The landmark 2018 Supreme Court ruling that overturned the federal ban on sports gambling has paved the way for 38 states and Washington D.C. to permit online sportsbooks, as stated by the American Gaming Association. Flutter’s FanDuel and DraftKings have secured the NFL as one of their primary partnerships, among other collaborations with Major League Baseball.
“With the ongoing legalization of sports betting across the nation, coupled with increasing public awareness, its adoption is on the rise,” Fishman commented.
To meet growing demand and strengthen their market position, sportsbooks have ramped up investments in enhancing the seamless integration of sports betting into the overall sports experience.
Sales and marketing represent the most significant expenses for Flutter, which increased by 25%, amounting to nearly $3.8 billion in 2023. The company, boasting a substantial international presence, reported a revenue increase of 24.6% to just under $11.8 billion in 2023.
Conversely, DraftKings focuses more on the U.S. market and has also stepped up its spending on sales and marketing, albeit at a more modest pace; this rose by 1.2% to $1.2 billion in 2023, while its revenue surged by 63.6% to nearly $3.7 billion.
Both sports leagues and broadcasting rights holders benefit from heightened advertising from companies like DraftKings and Flutter. Additionally, these entities could see increased viewership as bettors are more inclined to watch games in which they have placed wagers.
