New York City — FanDuel is aiming for a 16% US sports betting hold margin by 2030, a market its parent company, Flutter, projects will hit $63 billion by 2027, 50% larger than its previous estimate.
Flutter outlined its path to achieving that target during its Investor Day on Wednesday, as FanDuel looks to expand its market-leading position. The company also provided 2027 revenue guidance for the US, with a midpoint of $21 billion and adjusted EBITDA of more than $5 billion.
Flutter also announced a $5 billion share repurchase program.
That optimism sent Flutter’s stock soaring, up 5.3% to an all-time high of $240.36 by Wednesday afternoon, trading at 65% more than its average volume.
Market leadership and growth
FanDuel holds 38% of the combined revenue share in the US sports betting and iGaming market.
Through 2024 it had 46% of market share in sports betting revenue, versus 32% for the next closest company, according to its investor presentation. It also leads the market in the share of iGaming revenue with 25%, up from 2022 when it was third at 17%, according to the presentation.
“Our market share opportunity is still relatively small despite being the global leader in this space,” Flutter CEO Peter Jackson said.
Getting to 16% hold by 2030
Since 2020, FanDuel has grown its gross gaming revenue margin to 12% from 7%. In comparison, DraftKings’ hold rate rose to 9% from 6%, while the rest of the US market saw a decline, falling to 7% from 8%.
FanDuel CEO Amy Howe attributed the margin growth and its further protected growth to superior pricing accuracy and an evolving betting mix.
“That’s really driven by our pricing accuracy, a better product, our mix of parlays continue to grow, a higher margin product, all of that is compounded by our scale advantage,” Howe said. “We’re still very much investing but more of that is going into technology, trading sciences and pricing accuracy.”
Parlays driving value, keeping customers longer
Parlays now account for 70% of both NBA and NFL betting, FanDuel’s two most popular US sports. This shift has lowered the odds of customers winning their bets, with the average FanDuel bet’s odds up by 260% from 2019.
“Players who engage with parlays retain at greater rates than those who don’t, due to the entertainment value parlays provide,” said FanDuel’s president of sports Mike Raffensperger.
Flutter expects FanDuel’s existing state revenue to grow at a compound annual rate of 15% to 17%, reaching roughly $9.7 billion by 2027. At the midpoint, existing states are projected to deliver adjusted EBITDA of $2.4 billion, with EBITDA margins expanding by 13 percentage points to 25%, already within Flutter’s long-term target range.
More flexibility and choices
FanDuel has expanded the number of betting markets it offers on major US sports like the NBA, NFL, and MLB by 36% since 2021 and by 470% since 2019.
“Giving customers more choice, flexibility, and competitive price points means we see an increase in the number of legs per bet,” Flutter chief trading officer Dominic Crosthwaite, said.
FanDuel was the first operator to introduce same-game parlays in 2019 and became the first operator this year to bring pricing for player props, the most popular type of parlay leg, in-house for all seven major US sports.
It announced plans to soon debut its “Now Your Way” parlay product, designed to “super-charge” same-game parlays, with adjustable player prop lines and narrative-driven player performance charts to inform bets. That product is currently in beta testing, Raffensperger said.
More efficient acquisition
FanDuel’s customer acquisition strategy outpaced competition in two ways last year. The company drove 34% more downloads than its next closest competitor while spending 10% less on customer acquisition, according to the presentation.
About 26% of FanDuel’s active customers last year came through referrals, which are approximately 75% cheaper to acquire than through other marketing channels, according to the presentation.
FanDuel is also making strides in customer generosity and engagement. Promotions targeting its 20% most-valuable customers have increased by 10%, while the promotions “no-value” customers received are down 39%.
Expanding the US marekt
FanDuel projects that 80% of the US population will have access to legal sports betting by 2030, and 25% will have access to iGaming. Player values are expected to increase by 45% over that time, driven by higher parlay penetration and structural improvements in hold margins.
“In order to get to 80%, you have to get two of the three big states,” Howe said, referring to California, Florida, and Texas. “We feel at some point it will happen, but we’re not going to put a date on [California].
“There’s a lot of hard work the team is gearing up to do to make sure we can legalize some of the biggest states in California and Texas,” Howe said. “We know we’re going to need a much more proactive public affairs strategy going forward.
“As you can imagine, doing this effectively is going to require significant investment.”
