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Flutter Entertainment Flexing Some Muscle

Mark Makela/Getty Images/AFP

It is becoming increasingly difficult to find any global company willing to expand while coronavirus grips the US and permeates every aspect of society. But the biggest gambling provider in the world, Ireland-based betting company Flutter Entertainment is seeking to increase their already impressive profile with a new round of fundraising and a move to rapidly expand in the blossoming US sports betting market.

Flutter has just raised $1 billion by providing 8 million new shares for its institutional investors. The reason? The still untapped markets that still exist in the US. Flutter currently has a presence in five US states – Colorado, New Jersey, Pennsylvania, Indiana and West Virginia but is after an even bigger market share that still has just 30% of US citizens eligible to place wagers legally.

The move is also aimed at continued investment in its online poker and other gambling offerings, as well as strengthening the balance sheet and help it pay down debt.

How the money is going to be used

Flutter is betting on more states in the US to welcome in a legal sports betting platform sooner rather than later. At this point it seems to be more than just a hunch that more states will welcome some sort of legal sports betting. With prospective states facing enormous coronavirus-related budget shortfalls, it is a given that they will be looking for ways to drum up more revenues for their tapped-out coffers.

California and Louisiana are two of the five biggest potential markets in the US that have not yet legalized but, thanks to some legislative wrangling, it looks like they are on their way to becoming bet-friendly. Flutter has identified nine other states for expansion besides California and Louisiana and expansion costs money.

A look at the books of some major providers the last year has given us a peek into just what customer acquisition, expansion and service implementation costs. Most big betting providers in the US reported losses last year, mostly due to the cost of opening up in a variety of states. Cash-on-hand will allow Flutter to act quickly on potential opportunities for expansion while keeping existing customers in their fold.

The Flutter clout

Flutter Entertainment is one of the top betting providers in the world and its acquisition of Stars Group last month signaled a desire to keep growing beyond their already-impressive heights. Under their umbrella is one of the two top DFS brands in the US market and huge brand names such as Paddy Power, Sky Bet and Betfair in Europe and names like PokerStars FOX Bet and TVG in the USA.

Fox Corporation, one of Flutter’s emerging brands has thrown their weight behind the company and seems to be going all-in on the company’s future plans. “FOX is bullish about the opportunities in the digital sports wagering market,” CEO of Fox Corporation Lachlan Murdoch said. “FOX Bet has shown strong growth since launching last fall, and we look forward to continuing that success with our partner, Flutter. FOX’s investment in Flutter underscores our confidence in Flutter’s business and its management’s ability to continue to drive leadership in the U.S. market”.

Reason for optimism

Flutter is out with some surprising figures that demonstrate just how popular the brand has been despite COVID-19 slowdowns. A trading update from the company shows a 10% revenue increase for April 1-May 17 compared to the same period last year. Those figures are incredible considering the state of the globe during the time period the study spanned.

The US market has shown a 61% increase for Flutter and their US brands thanks to their strong mobile presence which has flourished since the shutdown of brick-and-mortar facilities. Horse racing has also helped to keep the money flowing in to Flutter-owned books. With sports coming back online and with the logical popularity of their mobile betting platforms, the Flutter umbrella looks as though it is in great position for the second half of 2020.

For Flutter, investing in a US market that still has 70% of its citizens unable to place a legal sports wager seems like a no-brainer. With the US sports betting market ready to explode so is Flutter’s bottom line. Expect Flutter to continue to set the pace in America and around the world. If coronavirus couldn’t stop them, it is hard to imagine what could.