Better-than-expected hold in the fourth quarter should lead both FanDuel and DraftKings to beat fourth-quarter earnings estimates.
The outperformance should net FanDuel parent company Flutter between $100 million and $200 million in additional quarterly EBITDA, Chad Beynon of Macquarie said in a Friday note. DraftKings should see an extra $50 million to $100 million in EBITDA, he added, basing the call on New York‘s results.
Beynon said he recommends owning online casino and sports betting stocks headed into earnings season. The consensus estimates for DraftKings and Flutter are not reflecting the strong online sports betting hold seen in November and December, he said.
Genius Sports and Sportradar have also been “unfairly hit despite insulation from hold volatility,” though both should benefit from growth live betting as a percentage of total handle, Beynon said.
FanDuel, DraftKings Q4 by the numbers
Based on fourth quarter guidance, Beynon says Flutter gave an implied hold of 10.9%, though FanDuel held 12.1%. Consensus calls for $343 million in Q4 EBITDA, but Beynon expects $450 million.
DraftKings implied it would hold 8.5% in the quarter but held 9.2% in New York. While the consensus expects $237 million in Q4 EBITDA, Beynon increased his estimate to $273 million.
Most other operators saw little or no changes. The only exception was Penn Entertainment, where a 0.11 percentage point bump to 7.1% hold should save the company $4 million in adjusted EBITDA losses, Beynon said. He expects a loss of $50 million in adjusted EBITDA compared to a consensus estimate of a $54 million loss.
Penn also ended its relationship with Disney early and shutdown ESPN Bet on Dec. 1, reverting to its own theScore Bet brand.
Calendar, soft NFL matchups hurt December
Along with losing an NFL Sunday in December last year compared to having five the prior year, a lack of exciting marquee matchups also likely contributed to December handle falling 2%, Beynon said.
For the fourth quarter, he expects online sports betting revenue to haven grown 51% compared to 2024, with hold sitting at 10.3%.
Growth of online casino also likely decelerated in the quarter, though revenue should still have grown 24%, Beynon said.
