Flutter Revises Revenue Forecast Due to Poor NFL Betting Results

Shares of Flutter Entertainment saw a dip of nearly 2% in after-hours trading on Tuesday after the company lowered its revenue and earnings guidance for 2024, citing unexpectedly poor results in NFL betting. 

The Most Customer-Friendly NFL Season in 20 Years 

The company now expects its 2024 revenue to reach $5.78 billion, down from the prior range of $6.05 billion to $6.25 billion. 

At the same time, EBITDA is projected to be $205 million lower than the previous midpoint of $505 million. 

For the fourth quarter, Flutter anticipates an EBITDA of $161 million on sales of $1.59 billion, indicating challenges in the October-December period.

Flutter explained that the current NFL season, which has been the most customer-friendly in nearly two decades, is largely responsible for the disappointing results. 

NFL favorites, the teams that most recreational bettors typically back, have won 71.8% of games so far this season, the highest rate in 20 years. 

ESPN data confirms that NFL favorites have covered the spread at an impressive 54% rate through week 17, the best since 2017 and also the seventh-highest in the Super Bowl era. 

This unusually high success rate for favorites has hurt sportsbooks.

Wider Implications

This update from Flutter could have wider implications for the gaming industry, particularly for other sports betting companies. 

Flutter’s warning suggests that the performance seen in the NFL season may not be unique to the company. 

Other operators, including DraftKings, saw stock declines in after-hours trading as well amid reports of Q4 losses, with long-term growth staying on track.

On the other hand, companies like Penn Entertainment and Rush Street Interactive saw their stocks rise. 

Flutter is the first major operator to update investors regarding the fourth-quarter impact, with BetMGM scheduled to announce its results in early February.

Despite the short-term challenges, Flutter remains active in repurchasing its own stock, signaling potential support for its shares. 

The company is committed to buying back at least $350 million worth of its shares by the end of the current quarter.

Looking to the future, Flutter remains confident in its long-term growth prospects. The company views the current performance of the NFL season as temporary and has reaffirmed its previous outlook provided at its investor day in September.

Then, Flutter projected that the total addressable market for global gross gaming revenue would grow to $368 billion by 2030, with a compound annual growth rate (CAGR) of 8%. 

During the same month, Flutter announced it would acquire Playtech’s consumer arm in an important expansion move.

Furthermore, Flutter expects revenue of $21 billion by 2027, representing a 14% CAGR over the next three years. 

The company’s strong presence in markets like Australia and Europe provides a buffer against fluctuations in U.S. sports betting results. 

For example, favorable sports outcomes in the UK and Ireland, particularly in the English Premier League, are expected to help Flutter meet its 2024 revenue and EBITDA guidance, which is projected to be about 1% and 2% higher than previously anticipated.

In December, Macquarie and Deutsche Bank analysts expressed confidence in the long-term prospects of FanDuel’s parent company despite the challenging market environment.