Capitalizing on new markets: Are two listings better than one?

July 25, 2023

Gaming America speaks with Flutter Entertainment, Light & Wonder CEO Matt Wilson and Founding Partner & President of Innovation Capital Matt Sodl, about capitalizing on new markets with an additional public listing.

In the span of about three weeks, both Flutter and Light & Wonder announced approvals to pursue additional public stock listings.

Flutter, an industry giant that owns FanDuel, currently has its primary listing on the London Stock Exchange (LSE), but will be seeking a US listing soon; while game developer Light & Wonder has its primary listing on the Nasdaq and has been approved to list on the Australian Securities Exchange (ASX).

With the world of gaming becoming ever more connected, and nearly every operator and supplier looking to diversify into as many markets as possible, perhaps an additional listing could become a more standard industry tactic.

But what is the purpose of listing outside of a company’s ‘home country?' Every C-Level executive will tell you that additional listings, along with any other decision approved by a company’s Board, will maximize shareholder value.

Beyond this, Gaming America spoke to Matt Wilson, CEO of Light & Wonder, and Founding Partner & President of Innovation Capital, Matt Sodl, as well as obtained comments from Flutter CEO Peter Jackson.

How do these businesses plan to raise their stakes by diversifying their stocks?

The decision for Flutter to pursue a second listing – which will be on either the New York Stock Exchange (NYSE) or the Nasdaq – was approved by 99.99% of shareholders at the company’s Annual General Meeting.

Flutter owns several household-name betting brands in the UK including Paddy Power, Betfair and Sky Betting & Gaming, as well as the popular US sportsbook, FanDuel. In Flutter’s Q1 financial report, FanDuel held a US sports betting market share of 50%.

Without plans to either sell FanDuel or go through the process of an Initial Public Offering (IPO), Flutter's listing in the US gives the company opportunities for US-specific growth. Sodl said, “This listing is a means for Flutter to get more liquidity for its share trading. It provides opportunity to raise capital in a market where their sizable business operates.”

Sodl, however, said a US listing will have “no bearing” on FanDuel’s independence from Flutter. He added, “It doesn’t strengthen independence, but the overall company.”

Flutter had been considering the decision for a few months before putting a second listing to a shareholder vote; a FanDuel Capital Markets Day report in November concluded that FanDuel was Flutter’s largest business, by revenue.

The company’s view, supported by both investors and shareholders, was that a US listing would enhance the group’s US profile, enable recruitment and retention of US employees, provide overall liquidity in Flutter’s shares and allow access to new capital markets and investors. As for which US stock exchange Flutter will choose, Sodl says, “More tech businesses tend to list on Nasdaq.”

Jackson said, “From our perspective, the things that are driving us to seek the US listing are ‘pull factors.’ It is about accessing capital markets in the US with the greater liquidity pool that they have; about the opportunity to have our brand talked about in the financial media in the US and, of course, there’s a strong overlap between the retail consumer in the US and people who would like to participate in FanDuel’s success and open accounts with us.

"We’d also like to use US-based equity to reward and retain our US colleagues, and do deals with other media businesses and partners. The fact is that 60% of our stake globally is now done in America. We’re delighted with the 50% market share and we’re delighted with the 95% growth year-on-year. We’re really consolidating our leadership position in America.”

Going Down Under

Light & Wonder hopes to enhance the company’s presence within the Australian market, similar to the strategies of Flutter within the States, as well as increase the company’s profits Down Under.

The company is looking for long-term investment opportunities, but we wondered if they weren’t also looking to equate themselves with direct competitors in the Australian market, like Aristocrat, by listing on the same exchange. Sodl, however, dismissed the competition angle.

“It’s a way for Light & Wonder to provide access to share trading in Australia. There appears to be a sizable investor base for gaming tech businesses.”

Sodl was also of the opinion that an Australian listing would not create a different perception of the company in that region. Wilson, a native Australian himself, noted the country’s prominence within the gaming industry as a whole, not just Light & Wonder’s success within Australia.

He said, “You go to any gaming market around the world and you hear an Australian accent. Whether it’s on the supply side or the operator side, but also the investor side. Australian investors have had a lot of success investing in gaming businesses over the years.”

Wilson also alluded to both his own and Executive Chair Jamie Odell’s previous roles with Aristocrat and how this experience still serves as inspiration for the Light & Wonder Board, but that the listing is not necessarily linked to Aristocrat doing the same.

“We have a Chairman who was the CEO of Aristocrat through its transformation years and really took that business on an amazing journey in terms of shareholder value and gains over time. I was there for a long period of time.”

Light & Wonder’s Gaming CEO, Siobhan Lane, also previously worked with Aristocrat for over a decade. As for Sodl’s comment regarding the size of the investor base in Australia, Wilson agrees on the potential for opportunity, saying,

“Investors in Australia know the category really well. They understand the economics of how the gaming business works. I think investors love nothing more than an opportunity to invest in something they really understand. They’ve done all the heavy lifting and hard work to get their head around what drives this industry.”

While Sodl also mentioned the possibility of longer trading days by listing within vastly different timezones, Wilson also mentioned the tendency of Australian investors to pursue business interests within the country.

He said, “I think we’ve had a lot of inbound over the last three or four years, from Australian investors, who have these Aussie-only mandates. They can only invest in Australian companies. They’re saying, ‘hey, this is a really interesting story that we like, that we would love to invest in. How do we participate in the Light & Wonder story if we can’t invest offshore?’

Our main listing, or primary symbol, will continue to be the Nasdaq. We have the majority of our shareholders there, but we already have about 58% of the investor base that’s on the Australian dollar. By doing a secondary listing, they can move their Nasdaq stock down to Australia and hold their stock in Australian currency and be able to trade it on the local market.

It was a very demand-driven thing, with a lot of interest in how do we participate in this story.” Wilson said that the interest level from major and potentially Australian investors has already proven to be “very, very successful” with the amount of acquisition stocks “well above expectations.”

Sodl said that other companies operating with significant growth or presence in more than one country may perhaps consider additional listings in the future. It seems companies putting additional stock exchange entries on their 'to-do lists’ are just as interested in offering investors the opportunity to take part in a company’s progress and ‘story’ as they are in raising capital.

Any competition between either operators or suppliers within the same market isn’t fought in the arena of that country’s stock exchange. Flutter’s stock price, at the time of writing, is £160.02 (US$203.90) per share on the LSE, while Light & Wonder’s stock price is $67.30. Both brands have seen a rise since January.

It will be interesting to see how these prices are affected as the companies grow both ‘at home’ and ‘abroad’ in their new markets.


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