The international gaming company that owns the United States sports betting platform FanDuel expects its massive investment in customer acquisition the past few years to pay off in 2023.
In announcing its financials for the first half of 2021 Flutter said a strong customer base, more states legalizing sports wagering, and the sports calendar returning to normal after the massive changes during the COVID-19 pandemic will all help its U.S. division see positive adjusted earnings next year.
Flutter, which offers sports betting and gaming in Europe, Australia, and a number of other countries around the world, has put a lot of focus on its U.S. operations since a 2018 Supreme Court decision paved the way for states to allow sports wagering.
In announcing its financial results for the first half of 2021, the company also offered a deep dive on its U.S. operations that include FanDuel sports wagering, FanDuel daily fantasy and racing, and the pari-mutuel advance-deposit wagering site and racing channel TVG.
Not that it should be needed at this point, but that deep dive provided another reminder of why racing needs to be part of this massive emerging market.
Getting back to that prediction of profitability in 2023, it might be surprising to some that while 10 states allowed sports wagering in the second quarter of 2021 and the company said it accounted for 45% of that sports betting share, Flutter U.S. lost $149.5 million in the first six months of the year. That loss is attributed to the massive amount of money the company is spending on customer acquisition, which should tell us something about where this company—and many others—think sports wagering is heading in the U.S.
Flutter said to date the FanDuel brand has spent more than $1 billion on marketing investment. In the first half of 2021 alone, FanDuel spent $311.5 million on marketing. The company said it has acquired 2.2 million sportsbook and gaming customers to date at an average cost per acquisition of $291. Flutter has been willing to spend this money in an effort to become the market leader, betting that as more states come online and the opportunity expands customers will flock to the most-established platform.
Flutter believes this investment will begin to pay off next year.
"We now believe that we will reach the point in 2023 when the positive contribution from customers acquired pre-2023 will more than offset the cost of ongoing customer acquisition," the company predicted. "We therefore expect that the U.S. division will generate positive (adjusted earnings) in 2023."
In terms of this massive investment in player acquisition, DraftKings has taken a similar approach. With its sports betting platform, Churchill Downs Inc. has taken a less aggressive approach in this regard.
Racing already is benefiting from all of this investment to some level as FanDuel does have a site that is marketed to sports bettors and daily fantasy players, FanDuel Racing. FanDuel also has contributed money to racing through a number of sponsorships. It has sponsored the Breeders' Cup Mile (G1T) and other prominent races, industry awards, and the Kentucky Downs meet. It even purchased the naming rights to Fairmount Park, now FanDuel Sportsbook and Horse Racing.
Sports wagering figures to continue to be a fast-evolving market and racing will have to work hard to ensure it benefits as the gaming landscape, specifically the online gaming landscape, continues to change.
