FanDuel Becomes First US Sportsbook to Achieve Profitability

FanDuel has become the first major US online gaming operator to report a profitable quarter, parent company Flutter Entertainment announced in Friday’s earnings calls. The sportsbook brand is No. 1 in the US sports betting market, with a 51% market share and the highest gross gaming revenue in 13 of 15 states where it operates.

The 2022 2Q report also shares that FanDuel plans to become EBITDA positive for the full year in 2023, which puts it significantly ahead of its competitors. Additionally, as of the recently-completed quarter, FanDuel accounts for 33% of Flutter’s revenue, compared to just 10% in the first half of 2019. 

The company attributes FanDuel’s success to customer acquisition and growth in states that went live before 2021. A third of all new customers acquired in the first half of the year were from states that launched prior to 2021, and FanDuel’s cost per player acquisition is under $300, the company said.

The company acquired 1.2 million new customers in Q1, when New York’s legal sports betting market launched, and a quarter of a million new customers in Q2.

As other operators slowed spend in the first half of the year, FanDuel took the opportunity in Q2 to lean in, Flutter CEO Peter Jackson explained.

“We saw lots of opportunities, so we pushed hard,” Jackson said on Friday’s call, “We [didn’t] feel constrained by spend because [we had budgeted] for states that haven’t launched yet. … The major point is that we’ve maintained our disciplined approach to customer acquisition. We’ve always been focused on looking at our cost to lifetime value. While other people were pulling back from the market because we saw that lifetime value was being maintained.” 

FanDuel’s NFL Season Plans

Football season is a critical time for customer acquisition, and FanDuel plans to compete for new players. 

“We expect it will be a very competitive start of [the NFL] season,” said Jackson. “While others may have pulled back earlier in the year, we expect them to come out and be competitive. We have to earn the right to win, and we won’t be complacent based on our Q2 performance.” 

The company plans to remain agile in its marketing decisions throughout the 3rd and 4th quarters, balancing the cost of bringing in new customers versus how much value they will provide as long-term users of FanDuel. 

FanDuel leadership emphasized restraint and thoughtfulness with its advertising. The company will lean on a plan to cut through the noise of the US midterm elections and other operator ads with more precision to find new customers. 

Outlook for the Rest of 2022 and Beyond

The company is budgeting for Kansas to go live in Q4 of 2022, while Ohio‘s launch date is set for Jan. 1, 2023, laws have also been passed in Massachusetts and Maryland, and California voters have the opportunity to legalize sports betting in November.

Despite the costs associated with launching in new markets, FanDuel is on track to be EBITDA positive in 2023. What might be a challenge is California.

The California market will “be a tough fight,” said Jackson.

He deferred the rest of the conversation about the state to after the midterm elections, when Californians will vote on two ballot initiatives, one of which — Prop 27 — would legalize mobile sports betting and open the market for operators like FanDuel. 

Growth Opportunities

FanDuel, like many US operators, plans to continue expanding parlay options for consumers. More than 80% of FanDuel customers have played what Flutter calls “high margin” parlay products, such as same-game parlays.

The company also has an interest in growing its iGaming market share from 20%. FanDuel is scaling up the resources devoted to the US online casino market, attempting to create a new foundation and new strategy to further that wing of the business. 

About the Author
Stephanie Wood

Stephanie Wood

Writer and Contributor
Stephanie is a New York-based writer. Following her graduation from the University of Colorado with a degree in Business Administration, she worked at The Wall Street Journal. She also holds her MFA in Creative Writing from Arcadia University. She has written for Augusta Free Press, Toronto Sports Media, CU Independent, and several other publications. When she's not writing, you can find her rooting for the Colorado Avalanche, taking care of her plants, and fostering dogs.

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