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The biggest gambling companies in the US said that a winning streak for their customers had hit profits in sports betting, amid early signs of slowdown for the sector after years of rapid growth.
Both Flutter, the New-York listed owner of online betting platform FanDuel, and Boston-based DraftKings this week lowered their full-year forecasts for the US, after favourable outcomes for gamblers hit earnings for the second quarter in a row.
Both companies said that February’s Super Bowl, won by the Philadelphia Eagles, had favoured the bookmakers. But college basketball tournament March Madness was “pretty historic” — according to Flutter chief executive Peter Jackson — as the so-called Sweet 16 and Elite 8 rounds saw favourites win all 12 games. It was only the second time in history that all four top seeds made it to the Final Four.
Boston-based DraftKings trimmed its peak sales forecast for the year by $200mn to $6.4bn. It also lowered its projection for earnings before interest, tax, depreciation and amortisation by $100mn to $900mn at the most. Flutter also reduced its guidance for US adjusted ebitda for the year by $180mn to $1.13bn.
“You get ups and downs . . . this year’s March Madness was extraordinary and that impacts our margins,” Jackson told the Financial Times.
The US sports gambling market has been growing at breakneck speed since 2018 when the Supreme Court struck down a federal law that banned such wagering across most of the country. The sports betting sector has since reached nearly $14bn in revenue last year, according to the American Gaming Association, with early entrants such as FanDuel and DraftKings taking market share.
“The extremely strong growth quarter after quarter has been a focus for investors,” said Ivor Jones, an analyst at Peel Hunt. “But as the growth has started to slow down investors have started to pay attention to the volatility in sports betting margins which has been disappointing.”
Flutter, which was founded in Ireland, nudged up its group-wide profit forecast for the year helped by exchange rates and acquisitions. But weak sports results knocked $180mn from its company-adjusted ebitda in its fiscal first quarter to March, after a $360mn hit in the final quarter of 2024.
The two companies — which together hold about 80 per cent of the US sports betting market — have both lost market share in recent quarters to smaller but well-capitalised players such as BetMGM, Bet365 and Fanatics, analysts said.
“Others are catching up. Top and second tier players have started to close the gap,” said Brandt Montour, an analyst at Barclays.
Flutter’s market share peaked at 62 per cent in the first quarter of 2023, on Barclays estimates, but has since fallen to 48 per cent in the first quarter of this year. DraftKings has also lost out, with its market share falling from 39 per cent in the final quarter of 2023 to an estimated 31 per cent this year.
“US sports betting has always been a two-horse race [between Flutter and DraftKings],” said Adrien de Saint Hilaire, an analyst at Bank of America. But especially FanDuel’s results “have been disappointing” in the last quarters despite having a bigger sportsbook than peers, he said.
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