Following in the footsteps of archrival DraftKings, FanDuel announced Wednesday that it will offer sports event contracts in states without legal sports betting.
Addressing analysts on a third-quarter earnings call, Flutter CEO Peter Jackson noted that the company will launch a prediction market, FanDuel Predicts, at some point next month. Just about five minutes before the call began, Nevada regulators issued a statement that the company had agreed to surrender its gaming licence due to the leap into prediction markets.
FanDuel has only one retail sportsbook in Nevada, a small book in partnership with Boyd Gaming at the Fremont Hotel and Casino in Las Vegas. The company does not have any online sportsbook offerings in the state.
As with DraftKings, FanDuel intends to accept trading on sports event contracts in states that have yet to legalise sports wagering. That covers just 11 states, but they represent a large portion of the US population.
While Jackson acknowledged that Nevada regulators needed to “protect their interests,” he emphasised that FanDuel must also do so. He said that FanDuel Predicts will allow the company to go after “half the market,” which has previously been untapped. Without mentioning the names of any states, Jackson hinted that FanDuel will target California and Texas as primary markets for event contracts on sports.
Quarterly earnings
For the three-month period that ended 30 September, Flutter generated revenue of $3.79 billion, a decline of 5% from the year-ago quarter. Flutter failed to meet analysts’ estimates of $3.9 billion. The company blamed a series of customer-friendly sportsbook outcomes at the start of the NFL season for the decline in revenue.
However, Flutter still reported adjusted earnings per share of $1.64, far above per share estimates of $0.79. In the US, a metric for FanDuel’s volume of sportsbook customers per month rose by 5% on average for the quarter.
Despite the revenue decline, FanDuel still maintained a 38% share of the US sportsbook market by gross gaming revenue and remains the top company in the US by market share, according to Flutter. In terms of net gaming revenue, FanDuel’s share ticked slightly higher at 41%.
By 2030, Flutter projects that the total addressable market for US gambling will balloon to $63 billion. An analyst from Third Bridge finds the projection credible, supported by new state openings and further expansion throughout the market.
Elevated spending abroad
With the launch of FanDuel Predicts, Flutter anticipates an EBITDA cost of $40 million to $50 million for the fourth quarter, said Flutter Chief Financial Officer Rob Coldrake. Flutter is also allocating about $200 million to $300 million in investments into the prediction market for full-year 2026.
In August, Flutter bought back a 5% stake in FanDuel from Boyd Entertainment for $1.8 billion. Outside of the US, the company has also invested heavily in Brazil and Italy in recent months, Citizens JMP analyst Jordan Bender wrote in a research note. The spending spree has dampened available resources, with free cash flow down 43% year-to-date, according to Bender. In response, Citizens has lowered its 2026 EBITDA model for Flutter by 7%.
Jackson also expressed disappointment with the enactment of the Promotion and Regulation of Online Gaming Act in India. The act led to the shutdown of real-money operations at Junglee, an Indian subsidiary. Flutter acquired Junglee in 2021 for approximately $200 million.
FanDuel Predicts launch
During an earnings call on 7 November, DraftKings CEO Jason Robins noted that he sees prediction markets as a significant incremental opportunity for the company. While DraftKings has not set an exact launch date, Robins indicated that it will occur in the coming months.
Flutter predated DraftKings’ entry into prediction markets with the announcement of a partnership with the CME Group over the summer. However, at the time, Flutter did not indicate if it planned to offer event contracts on sports.
Under the terms of the deal, the CME Group will receive 50% of gross revenue from FanDuel Predicts, Truist Securities analyst Barry Jonas wrote in a research note. FanDuel will be responsible for 100% of costs to support the FanDuel Predicts app while CME will be responsible for all exchange-related costs, according to Jonas.
Over the last year, prediction markets have generated considerable buzz throughout the gambling industry amid concerns that sports event contracts could threaten the commercial interests of legal sportsbooks. Bender, the analyst from Citizens JMP, wrote Wednesday that he views prediction markets as a meaningful earnings driver for Flutter in 2027.
Lower guidance
Jackson indicated that Flutter will not have a parlay offering for FanDuel Predicts upon the initial launch. Instead, he anticipates that a pre-packaged offering will be available by early 2026. With the added investment in FanDuel Predicts, Flutter now expects full-year 2025 EBITDA in the range of $2.8 billion to $3.1 billion.
Flutter also lowered its full-year revenue in part due to the unfavourable sports outcomes. The company now expects full-year 2025 revenue to fall within the range of $16.4 billion to $17.3 billion.
In pre-market trading on Thursday, Flutter fell 3.4% to $226 per share. Since clearing $300 a share in July, Flutter has dropped by nearly 25%.
Flutter CEO Peter Jackson says the company is prepared to branch out starting next month.