Flutter Entertainment is “very excited” about its subsidiary FanDuel, CEO Peter Jackson has said in his half-yearly report.
And why not! June’s results indicated that FanDuel captured some 50% of the New Jersey sports betting market in that month.
As the first sportsbook to go online in Pennsylvania, it’s now also set for success in this state. Along with three other Casinos, FanDuel earlier this month began operating online sportsbooks there too. All have Android apps. FanDuel is the first with an iOS app from the Apple store.
At least 80% of New Jersey first-year handle haul of $3.2bn came via in-state online betting. And Pennsylvania with some 12m has an even bigger population than New Jersey (around 9m).
It’s no wonder then that Flatter, owners of betting giants Paddy Power and Betfair, have expressed satisfaction with subsidiary FanDuel.
Flutter has been so impressed in fact it is revising its initial sports-betting estimate of $6bn for the US market. No figure is available yet, but it will be considerably higher as more and more States open doors to sportsbooks.
Profit down because marketing investment has been heavy
Jackson made this observation while reporting on the company first-half performance in 2019. Profits were down, he said, but largely because Flutter was busy investing heavily in sports betting marketing.
It would pay-off in the long run for already, ahead of the NFL kick-off next month, FanDuel could claim to have 8.5 million registered users. And this at a time when it had been operating online in Pennsylvania for less than a month
FanDuel already had millions of daily fantasy sports (DFS) gamers when it opened its first sportsbook in New Jersey. And that, said Jackson, gave it a “huge head start” over most rival sportsbooks in the Garden State. DraftKings, a fellow NJ operator of DFS, was the exception. Not surprisingly its NJ sportsbook is the second biggest in the state.
Presently FanDuel employs 800 staff, including 300 developers.
Just days after its launch of online apps, he said, Pennsylvania was already taking 20% as much in online sports bets as New Jersey.
Flutter excited about momentum behind US sports betting
“We’re keeping a very close eye on the size of the prize,” he said. “It’s fair to say that we’re very excited about the momentum behind online sports betting.”
In the short term, Jackson added, the US sportsbook operation is expecting to lose about £55m this year. Mostly this will come through marketing expenses as FanDuel engages in growing its US presence and market share
“Fortunately, we’re a big business with lots of resources,” Jackson added.
He said that getting legal sportsbook up and running was not a straightforward business. “It can take an awfully long time,” he warned, “given the political process and a final veto that state governors have.”
Needless to say, FanDuel expects to be going live in a number of other states in 2020.
“We can cope with the level of investment that would be required if more states come online quicker than expected,” said Jackson. “Clearly, it would make the investment we’d have to put in that much greater, but then the returns would be much greater.”
Flutter’s reported that its first-half results showed that its profits were hit by regulatory changes. New taxes and duties costing £47m across a number of jurisdictions also contributed to the loss.
Overall, the company’s pre-tax profits dipped by 24% to £81m in the six months to June
Underlying earnings before interest, tax, depreciation and amortization were down 10% at £196m.
In Ireland, however, where Paddy Power has long been entrenched, its retail chain’s first-half revenue rose by 6%.
