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Flutter expects to more than double its core profit by 2027, as the FanDuel and Paddy Power owner bets that most Americans will eventually engage in sports betting as more states liberalise the sector.
The group said on Wednesday that it now expected its adjusted core profit to hit “over $5bn” in 2027, compared with this year’s estimate of $2.5bn. The US will account for nearly half, generating approximately $2.4bn of adjusted core profit that year.
Flutter also predicts that the size of the US sports and online casino market will reach $63bn by 2030, up more than 50 per cent from its previous forecast in 2022, fuelled by rapid growth of sports betting.
“Around 50 per cent of Americans can place bets on sports. By the time [the market] reaches a more mature steady state, that will get us around 80 per cent in the penetration rate,” chief executive Peter Jackson told the Financial Times.
Legal sports betting in the US 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. Decisions on legality are made on a state-by-state basis, with 38 and the District of Columbia allowing it, and “states are hungry for further tax revenues”, Jackson added.
Flutter also said that group revenue was expected to reach $21bn by 2027, a 50 per cent increase compared with this year’s outlook of £14bn.
The upbeat outlook sent its shares up 10 per cent in afternoon trading in London. The company also announced a $5bn share buyback programme.
The group is holding an investor day in New York on Wednesday following the recent switch of its primary listing from London to the US.
As the owner of FanDuel, in which it first acquired a majority stake in 2018, Flutter had the greatest market share for online sports betting in the US in the three months to June at 53 per cent, according to Jefferies. This was followed by DraftKings with a 31 per cent share, while BetMGM had a 7 per cent share.
“We’re confident that we’ll continue to see growth in the penetration rates that we have in the market, irrespective of whoever wins [the presidential election],” Jackson said.
FanDuel, which posted its first profit last year following years of heavy marketing spending, expects to record $740mn of adjusted core profit for the business this year.
Beyond the US Flutter is also bullish. This month it agreed to buy Italian gaming business Snaitech from London-listed Playtech in a €2.3bn deal, while it recently acquired a majority stake in the operator of Brazilian gaming brand Betnacional for about $350mn.
“We operate in an incredibly fragmented market globally, so M&As are going to remain part of our strategy in the future,” Jackson said.