Operator News
US – FanDuel exceeds over half of sports betting market share
By William - 15 August 2022
Flutter’s FanDuel business now exceeds more than half of sports betting market share in the United States and is increasingly confident of recording a full year 2023 EBITDA profit.
According to Flutter’s interim results published on Friday, the company’s US division delivered quarterly revenue exceeding $750m for the first time in Q2 with positive adjusted EBITDA of $22m in the same period.
Claiming an online sports betting market share of 51 per cent and an overall combined online share of 36 per cent in Q2, Flutter said the growth is demonstrative of ‘significant operational and structural advantages’ over the rest of the market. This competitive lead is delivered by winning in two key areas: customer acquisition and product.
“We are particularly pleased with momentum in the US where we extended our leadership in online sports betting with FanDuel claiming a 51 per cent share of the market and number one position in 13 of 15 states, helping contribute to positive earnings in Q2. We remain firmly on the path to profitability in 2023, driven by our compelling customer economics and disciplined investment,” commented Peter Jackson, Chief Executive of Flutter.
The strength of the FanDuel brand, coupled with strategic partnerships including Turner Sports and Pat McAfee, has ensured the operator is accessing the broader population of sports bettors more quickly, leading to faster adoption curves as each state launches.
In the four years since launch, FanDuel has refined its state launch ‘play book’, converting customers from our daily fantasy sports database at a faster rate with each new state. Combined with a disciplined and efficient approach to marketing investment, FanDuel’s cost per acquisition11 has remained under $300.
Penetration of higher margin parlay products was over 80 per cent of customers in Q2 and is a major factor in FanDuel’s successful monetisation of customers. Flutter stated that US customer cohorts are ‘exhibiting reassuringly familiar characteristics to those in our existing established businesses’, with each cohort’s revenue growing year-on-year as the customer base matures.
Earlier this year, FanDuel launched branded live dealer tables as well as adding new content to its platform. Through leveraging its gaming capabilities across the Group, Flutter said it is focused on growing its market share across the existing five iGaming states and ensuring the company is well positioned to leverage its sportsbook penetration as future states regulate.
Execution across customer acquisition and product continues to deliver attractive customer economics with payback periods of 12-18 months. Customer acquisition is now being funded by profits from existing customers.
As the existing customers continue to become an increasingly large proportion of FanDuel’s total customer base, profits will increase, delivering an expected EBITDA profit for the full year 20238. This pattern can be evidenced in H1, where sportsbook and iGaming contribution was more than three times greater than for the entire year in 2021.
In states that launched before 2021, bonus and marketing spend is reducing toward levels observed in existing businesses and profit margins are increasing. Flutter estimates that New Jersey EBITDA margin is already 17 per cent despite the early stage of the market and continued disciplined investment behind the strong customer economics we see.
