Barclays: Flutter ‘winning all legs of global parlay’
The note highlights Flutter’s position as the ‘undisputed leader’ in the US, achieved via M&A, ‘best-in-class’ product and superior global scale, according to Barclays.
British investment bank Barclays has published a note on the recent performance of Flutter Entertainment, which owns FanDuel Sportsbook.
Due to what Barclays described as “methodical M&A, best-in-class-product and superior global scale,” the bank believes Flutter is well-positioned to continue its success in the future.
“Through this formidable combination of advantages, we believe Flutter is positioned to systematically continue winning in gaming markets around the world,” Barclays said in the note.
“Flutter is the undisputed leader in the fast-growing US digital sports betting space, as well as in several large markets globally.”
The note also included insight into FanDuel’s leading parlay product, which “allows it to both price and reinvest in players more aggressively, supporting outsized market share and reinforcing the flywheel.”
Through data supporting how FanDuel offers higher payouts on same-game parlays (SGPs) and how the operator has now surpassed DraftKings in online sports betting share, the bank included in the note that it believes FanDuel’s “dominance” will continue in the near future.
Barclays also spoke on how FanDuel was late to the ascension of iGaming, but has now vaulted itself into the top tier of competitors in the online space.
“FanDuel was late to the iGaming party, and yet is now tied for number one market share. Our proprietary iGaming content tracker, showing 438% lift to Flutter’s game count over the last five quarters, has mirrored the company’s market share climb,” the note stated.
“Encouragingly, this progress preceded FanDuel’s recent completion of the move to its own iGaming tech stack, which opens the door for smarter bonusing, smoother cross-sell from online sports betting and more in-house content.”
Recently in the US, some states have begun discussing, or even implementing, higher tax rates for sportsbooks such as FanDuel and DraftKings. At first, DraftKings responded to the tax hikes by saying it would be placing a surcharge on large payouts, but quickly reversed its decision after FanDuel stated it would not be introducing a surcharge of its own.
Barclays spoke on the potential tax increases being placed on FanDuel, and Flutter indirectly, believing that with such dominant market share, the ultimate size of the operators will outweigh the dangers of any spikes.
“Judging by the experience in other mature markets, like UK and Australia, we ultimately believe the only viable path for tax rates in the US are higher over the longer term, albeit in a staggered, bumpy and potentially modest way (on a blended basis), given the inherent idiosyncrasies between states,” Barclays said.
“However, we fundamentally believe that the combination of the large potential size of the market and the way the competitive landscape has evolved (the big two already appear to have locked in sizable, defensible, market share) far outweighs the long-term risk of taxes migrating higher.”
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