FanDuel parent Flutter, DraftKings both slump
Earnings weren’t bad, but tax risk continues to hover. And neither announced solid plans to pursue prediction markets.
Flutter Entertainment, the parent of top US sports betting company FanDuel, slumped Friday despite reporting better-than-expect Q2 numbers and bumping its full-year guidance higher.
The slump seemed to surprise Wall Street. After earnings, Citi analysts wrote, “We expect a material positive share price reaction to this update.”
Instead, the stock fell. But at least it’s not alone: rival DraftKings was also down Friday, after reporting results Thursday.
Part of the reason could be continued uncertainty due to rising state efforts to tax sports betting, a trend that may grow in the face of increased fiscal pressure on US state governments. (The giant budget bill Republicans pushed through Congress and President Trump signed into law last month also changes the treatment of gambling losses, which could impact betting activity.)
In their earnings call with analysts, Flutter executives were repeatedly asked about such efforts and whether they could offer some clarity on how taxes, including a recent surcharge on betting introduced in Illinois, stood to affect the business. Flutter responded with a new fee on Illinois bettors to offset the surcharge, but sounded unsure of how it would influence activity.
“We’ve introduced this fee, which I think is the fairest way to deal with it. And we think Illinois is an outlier. We don’t expect this to happen anywhere else,” Flutter CEO Jeremy Jackson said. “We will introduce the fee and we’ll see what happens.”
Another possible source of disappointment could be lack of concrete announcements on plans from Flutter or DraftKings to participate in prediction markets, where bettors can wager on the outcome of real-world events. Prediction markets could present a profitable new line of business for betting companies.
The Trump administration has sent signals that it will reduce restrictions on such activity, including nominating a board member of prediction market company Kalshi to lead the Commodities Futures Trading Commission. The CFTC would be a key regulator of prediction market activity. Donald Trump Jr. serves as a “strategic advisory” to Kalshi.
“We’re not going to speculate on the different ways in which we’re assessing this opportunity and what the potential costs, pros and cons of the different opportunities are,” Jackson said.
Likewise, Jason Robins, CEO of DraftKings, declined to detail any concrete plans the company may — or may not — have for the prediction market space.
“We’re evaluating,” he said. “Obviously, we have a lot of stakeholders, state regulators, relationships with tribes, others that we want to make sure we consider as we think about what our different options are. And we’re keeping a close eye on it and figuring out what we want to do.”
