Steve Friess: With NYSE Listing FanDuel-Led Flutter Will Take Off

State of Play is a column focusing on the trending stories in the casino and gambling space with sharp and clever insight from senior staff writer Steve Friess. Over his 25-year career, Friess has contributed to publications such as Newsweek, Time, New York Times and more.

Flutter, the parent company of FanDuel, on Jan. 29 begins being listed on the New York Stock Exchange as FLUT. From a financial and symbolic standpoint, this is one of those historic events that will be seen in decades as a landmark and breakthrough for the legitimacy of the online casino industry.

It’s not that there aren’t already publicly traded casino companies. Of course, there are many. The first was Harrah’s Entertainment, which made its initial public offering in 1971. So that’s not new.

But the rise of Flutter is different. It has been traded for years on two other exchanges, Euronext Dublin and the London Stock Exchange, where it is included in the FTSE 100, the British equivalent of the Dow Jones Industrial Average. Flutter is dropping the Euronext listing this week but will remain on the London exchange, to join the NYSE.

The broad thinking behind the move is that trading on the NYSE increases the company’s access to investor capital. As Motley Fool explains, “If a foreign business can only issue new stock and raise money on its local exchange, it’s losing out on the millions of investors in the U.S. and other developed markets.”

Really, though, this is a coronation for FanDuel Casino and Sportsbook. FanDuel is the top brand in the U.S. online gambling space and the most important growth driver for its huge and varied parent company.

Fan Duel is why the company now has a market capitalization value north of $27 billion. With the expected burst of interest and investment on the NYSE, it could, very soon, overtake Las Vegas Sands to become the world’s most valuable casino company.

And got there without ever owning a thing in Las Vegas.

FanDuel has grown into monster asset

Most American gamblers don’t know Flutter which, in May 2018 when it paid $158 million for a 58% stake in FanDuel, was still known as Paddy Power Betfair. It operated for less than three years, from 1999 to 2002, as a betting exchange in the United Kingdom. Betfair, a better-funded rival betting exchange also looking to move into the sports betting space, bought it in 2001 and soon disappeared the brand. Paddy Power and Betfair completed a mega-merger in 2016.

Yet by 2019, it had become clear that FanDuel was about to become the company’s monster asset. And so CEO Peter Jackson resurrected a vintage brand, Flutter Entertainment, to rename the whole ball of wax.

Paddy Power Betfair announced its plan to acquire FanDuel within a week of the U.S. Supreme Court in 2018 striking down the Professional and Amateur Sports Protection Act of 1992, the statute that prohibited states other than Nevada from allowing sports gambling.

At the time, FanDuel had seven million registered customers across 40 states and more than 40% of the daily format of the U.S. fantasy sports market. Now, it has about 17 million customers and 30 U.S. retail locations, plus a cable TV and streaming channel. In 2022, it was the first legal online sportsbook in the U.S. to report a profitable quarter.

In late 2022, a court estimated FanDuel’s value at about $20 billion. That’s about double the total of Caesars Entertainment, a company that operates more than 50 American casinos.

Only the beginning for FanDuel-led Flutter

I don’t remember the first time I heard of FanDuel. I know I didn’t really understand it or DraftKings and I didn’t need to. I was covering the gambling industry, which meant Las Vegas and Macau, both of which were enjoying epic building booms. Back when the brand was minted in Scotland in July 2009 with a measly $1.2 million in venture capital, it was a platform for daily fantasy sports wagering.

Even if I knew what it was then, I was busy watching MGM Resorts open CityCenter on the Strip and Las Vegas Sands feverishly building its empire in Southeast Asia. It would’ve been a bizarre notion that a mere decade later, the industry would be led by a brand nobody knew and that it wouldn’t even have actual brick-and-mortar casinos.

And that’s kind of the point. The reason any of this matters is because Flutter’s arrival and dominance in the heart of Wall Street signify that investors now put potential profits from iGaming ahead of the value of more tangible assets.

That’s an old story now in America, the meteoric rise of tech companies that rather suddenly have more value than historic name brands. It’s Tesla being five times more valuable than the Big Three automakers combined, that sort of thing.

But this came late in the Information Age for the gambling business because of the handcuffs the law put on online expansion and the application of new technology.

Now the cuffs are off. FanDuel-led Flutter becomes an NYSE stock next week. All the analysts seem to agree it’s only beginning to sow its oats.