The US online sports betting market often experiences shifting leadership at the state level, but what remains consistent is the dominance of DraftKings (NASDAQ: DKNG) and Flutter Entertainment’s (NYSE: FLUT) FanDuel. Recent financial reports reveal that FanDuel might extend its lead in the industry.
Flutter’s second-quarter earnings report highlighted several factors suggesting FanDuel’s stronghold in domestic sports betting could grow. One significant metric was the average revenue per monthly active user (ARPMAU). According to Eilers & Krejcik Gaming (EKG), FanDuel’s ARPMAU for the first quarter was $134, slightly lower than DraftKings’ $137. However, in the June quarter, FanDuel surged ahead.
EKG attributes FanDuel’s improvement to enhancements in its Major League Baseball (MLB) parlay offerings, which the company specifically noted in its earnings. Additionally, there’s been a shift in its player base from daily fantasy sports to the casino sector, leading to a 30% rise in monthly unique players (MUPs). On the other hand, DraftKings’ dip in ARPMAU was likely influenced by including Jackpocket customers in its MUP calculations, according to EKG.
The timing of these improvements is crucial as the 2024 football season approaches, with studies indicating NFL bettors plan to wager more frequently. Parlays, known for driving higher stakes, are essential for operators during football season.
FanDuel benefits from its association with a larger, mature company, allowing it to focus on long-term goals. Unlike rivals who seek short-term profits to gain favor among analysts and investors, FanDuel can emphasize sustainable growth. This approach has caught the attention of institutional investors in the US, many of whom have eagerly bought shares since Flutter listed on the New York Stock Exchange in January.
FanDuel’s profitability stems from solid execution and reinvestment in areas like customer acquisition and technology. EKG noted a rise in payment costs to around 6% of NGR, partly due to an improved deposit/withdrawal system that increased transaction frequency. CFO Rob Coldrake emphasized that although this feature costs money, it significantly enhances customer satisfaction, contributing to FanDuel’s consistent top rankings in OSB app testing.
In a strategic move, FanDuel opted not to follow DraftKings in imposing a surcharge on winning sports wagers in high-tax states. When FanDuel refrained, DraftKings had to retract its surcharge plan. This decision likely earned FanDuel favor in public opinion and avoided potential backlash from customers and policymakers, who might have viewed such surcharges unfavorably.
Overall, FanDuel’s strategic decisions and continuous improvements position it well to maintain and potentially expand its leadership in the competitive US online sports betting market.
