A new way to invest in US sports betting and iGaming launches Monday with FanDuel stock available via parent company Flutter on the New York Stock Exchange.
Flutter floated the idea of a dual listing in the US and London for a few years and received overwhelming shareholder support for the listing in April 2023.
How the FanDuel parent performs in terms of volume and interest, as well as how its listing potentially affects other listed companies including DraftKings, will be closely monitored by the gaming industry both in the US and abroad.
FLUT opened at $205 and closed up 0.78% to $206.59.
Flutter market cap could bring in bigger players
While some of the numbers thrown around the gaming industry may sound significant, in reality there are not many large-cap gaming stocks that are big enough for some of the largest institutional investors.
That changes Monday with the Flutter stock going live in New York. As of Friday, Flutter had a valuation of more than $36 billion, which means there is finally an entry point for those bigger investors.
Chad Beynon, head of US research for Macquarie, explained he previously could only point to Las Vegas Sands and its more than $37 billion market cap whenever investors asked about large-cap gaming companies with market caps above $25 billion.
DraftKings, for comparison, has a market cap just above $18 billion.
Will FanDuel stock listing help others?
Beynon sees more than just an opportunity for Flutter. The listing could improve attention on US gaming stocks and improve valuations and multiples across the board.
It could also lead to smaller companies getting more institutional investment, too, with Beynon giving an example from the lottery world.
“What we hear from a lot of investors is, ‘Well, I did all this work on this company IGT, and we no longer own IGT. But because we did so much work on IGT, we now understand the lottery space,’” Beynon said.
Those with potential spinoffs will watch, too
If Flutter helps lift the valuations of companies in the US online sports betting and gaming, there could be even more investment opportunities.
Caesars and MGM Resorts both have digital segments finally hitting profitability and could be spun off into their own publicly listed companies.
How does FanDuel stock impact DKNG?
DraftKings has been the de facto name for US investors when it comes to iGaming. That likely has to do with DKNG growing more than 200% in 2023, Beynon said.
With Flutter, investors are getting more than just a pure-play investment in the online betting space, Dan Politzer of Wells Fargo said in a recent note.
Investing in Flutter means investing in the top US online operator in terms of revenue, market share and profitability. It also means investing in a more experienced management team and a more diversified companies, with the US making up just 38% of all revenue in 2023, Politzer said.
That said, Politzer said he still prefers DraftKings, which he rates overweight, compared to Flutter rated at equal weight, given the operating momentum and profitability coming in 2024.
Investors need time to learn about Flutter
It is not as simple as selling DraftKings and buying into Flutter, though. A more diversified revenue base means more to learn about the company, Beynon said.
“I think it will take a little bit of time for people to learn the rest of the Flutter businesses,” he said.
The FanDuel parent owns other well-known brands that operate across the globe:
- Betfair
- Paddy Power
- PokerStars
- Sisal
- Sky Betting & Gaming
- Sportsbet
- TVG
