FanDuel Eyes Full-Year Profitability in 2023

Posted on: February 11, 2023, 04:14h. 

Last updated on: April 20, 2023, 08:19h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

FanDuel, the largest online sportsbook operator in the US, could achieve an industry first this year: Profitability on an annual basis.

FanDuel profitability
FanDuel CEO Amy Howe. She said the company will be profitable this year. (Image: Wall Street Journal)

Amy Howe, chief executive officer of the gaming company, commented on that effect in a Friday interview with Bloomberg Television.

We feel very confident about our path to profitability for 2023,” Howe told the financial news network. “Fundamentals of our business are looking very strong so we remain very confident about full-year profitability this year.”

As Howe noted, FanDuel notched the first profitable quarter in the history of the still nascent US sports wagering industry, doing so in the April through June period of 2022. The company, which controls more of the domestic mobile sports betting market than its two next closes rivals combined, previously said 2023 could be the year it’s profitable on an annual basis.

Flutter Entertainment (OTC: PDYPY) owns 95% of FanDuel, with Boyd Gaming (NYSE: BYD) controlling the other 5%.

FanDuel Profitability Highly Pertinent

Full-year profitability by FanDuel is obviously good news for Flutter investors and, to a lesser extent, Boyd, but the operator reaching that status is relevant for other reasons.

Those include a potential shifting of the profitability to burden rivals. In particular, BetMGM and DraftKings (NASDAQ: DKNG) — FanDuel’s closest competitors — are unlikely to be profitable for all of this year. BetMGM recently told investors it could be profitable in the second half of 2023, while analysts believe DraftKings will get there in the fourth quarter.

Caesars Sportsbook is another name in the space that could be profitable at some point this year, and Barstool Sportsbook eked out a fourth-quarter profit, but it remains to be seen if those companies can do so on annual basis this year.

Additionally, FanDuel’s status as a money-making firm could fuel enthusiasm for a long-awaited spinoff of the business by Flutter. Pure-play sports betting entities that previously went public weren’t profitable and still aren’t, subjecting themselves to intensifying scrutiny in the investment community. That might not be a problem for FanDuel should Flutter proceed with selling a stake in the unit to public investors.

Other FanDuel Odds and Ends

Not surprisingly, Howe also touched on the importance of tomorrow’s Super Bowl, noting that the event is a marquee customer acquisition for the company. She estimated 17 million Super Bowl wagers will be placed on FanDuel. In the Bloomberg Television interview, she highlighted increasing efficiencies in FanDuel’s client acquisition strategy, which is likely playing a pivotal role in the operator’s march to profitability.

She also touched on the contributions of same-game parlays (SGPs), which are increasingly popular among bettors and margin drivers for operators.

“Same-game parlay has been a big advantage for FanDuel,” Howe told Bloomberg Television. “It’s a product we brought over from Australia and other parts of the world. We were the first to market, and for us, it’s a much higher percentage of the overall mix. It’s driven a big structural margin advantage for us.”