![]() ![]() While we recognise the barriers of entry, if Flutter stops innovating, it will leave itself vulnerable. Exciting and high growth markets tends to attract new capital new competition may come from a business that does not yet exist. However, we believe the biggest risk is future competition, especially in the US market. While regulatory risk is always front of mind, we also need to be wary that an integration between two large businesses, such as Stars and Flutter, will always have hiccups. We agree with the market’s optimism and are bullish about the long-term prospects for this market. The initial traction of these products has materially exceeded expectations with the cross-sell from sports-betting products driving material revenue outcomes.ĭue to the impact of COVID-19, we have seen evidence that the pace of state regulation will accelerate as governments look for additional revenue sources to counter budget pressures. ![]() Alongside sports betting, New Jersey and Pennsylvania have been early adopters of legalising online casino and poker. As it stands, 24 states across the US have legalised sports betting with 19 states currently live. Importantly, the size of the market could be immense – and it’s starting from a very low base. We envisage an enormous amount of innovation occurring over the next few years. Because there is so much data captured on every aspect of sports in the US, we expect the number of bet types will grow exponentially, which should help drive revenue. We believe US sports, such as American Football or baseball, are conducive to in-play betting given their stop-start nature. ![]() An extremely popular form of sports gambling is in-play, which is illegal in Australia. However, this doesn't tell the whole story. Australia has about 10 percent of the adult population of the US and has a sports/horse betting size of A$4.8bn extrapolate that, and it's not hard to get a market size of US$30bn+. We believe the hype.Ĭonsider Australia, which has some similar characteristics to the US market, where there’s a sports mad population with mass smartphone usage and who don't mind a punt. There has been no shortage of euphoria about the potential growth in the US sports wagering market. How big is the US sports wagering opportunity? We hold the management team in high regard and have confidence that it will continue to deliver favourable returns for shareholders. From a financial perspective, with over 95% of revenues online, Flutter is well positioned to benefit from the ongoing shift in consumer behaviour from retail to online, and to compound revenue and earnings growth for years to come. We expect this to continue as Flutter enters other markets. We have observed this with Sportsbet’s dominance over Tabcorp in Australia and in the Paddy Power brand in the UK. is well diversified across geographies and product lines.įlutter has a proven track record of leveraging its brands, innovative product launches, unique marketing strategies and a relentless focus on investing in customers to profitably grow market share through cheaply acquiring high value recreational customers.is one of the world's largest online casino businesses.has the world's largest online betting exchange.has the leading brands in sports betting in the UK, Ireland, Australia and the US.In May 2020, Flutter completed a merger with The Stars Group to become the largest listed online gaming operator in the world. This coincided with the deregulation of sports betting in the US, providing a platform for the Flutter group to launch an entry into the nascent US sports betting market. The business has developed significantly since that time, with the 2018 acquisition of a majority stake in FanDuel, a US-based Daily Fantasy Sports (DFS) business. ![]() When we began our work on Flutter, the business was predominately a sports betting business operating under the market leading brands of Paddy Power and Betfair in the UK and Europe, and Sportsbet in Australia. Its vision is to be a global leader in online sports betting and gaming. We believe this innovative company will be the beneficiary of a trend towards online, which seems to have accelerated since COVID.įlutter Entertainment plc is a global sports betting, gaming and entertainment provider headquartered in Dublin, with a portfolio of leading international brands and operations. Our analysis of portfolio incumbent Tabcorp and the broader gaming sector led to our investment in Flutter. ![]()
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