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DraftKings Sports Betting Rival FanDuel Considering IPO

By Rich Duprey - Updated Mar 22, 2021 at 8:33AM

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The global online betting giant's parent company says only a small portion of its business would go public.

The world's largest online gambling operator is considering an initial public offering for its U.S.-based FanDuel daily fantasy sports and sports betting operation.

After media speculation that a listing was possible, Flutter Entertainment (PDYPF 3.35%) announced earlier this month it was considering putting up a small portion of the business, but had not made any determination.

A hand holds a smartphone with a sports betting app in front of a crowd of soccer fans cheering.

Image source: Getty Images.

Sports betting is getting big in the U.S. and analysts are expecting it could grow to more than $19 billion annually by 2025, a fast leap forward after a ban on such wagers was declared unconstitutional in 2018. Analysts think it could go significant higher if micro betting, or betting on outcomes as an event is in progress, becomes as big in the U.S. as it is in the U.K.

FanDuel is the largest sports betting operation in the U.S. with a 40% share of the market, and Flutter says the service generates more revenue than the next two biggest competitors combined. 

DraftKings (DKNG 4.59%), which itself went public last year through a reverse merger with a special purpose acquisition company, or SPAC, is the second-biggest sports betting site with about a 25% share. It generated $614.5 million last year, up 90% year over year.

Flutter increased its FanDuel stake in December to 95%, but Fox (FOX 2.57%)(FOXA 2.49%), which owns about 2.6% of Flutter, will have a chance to take an 18.5% stake in FanDuel in July. Boyd Gaming (BYD 5.83%) owns the remaining 5% of Fanduel.

Analysts estimate there is a 35% potential gain for Flutter's valuation with a FanDuel IPO and are assigning it a valuation similar to DraftKings.

Allowing just a small portion of FanDuel to be publicly traded, however, means Flutter would still control the operation.

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Stocks Mentioned

Flutter Entertainment PLC Stock Quote
Flutter Entertainment PLC
PDYPF
$115.75 (3.35%) $3.75
Boyd Gaming Corporation Stock Quote
Boyd Gaming Corporation
BYD
$55.55 (5.83%) $3.06
Fox Corporation Stock Quote
Fox Corporation
FOXA
$33.30 (2.49%) $0.81
Fox Corporation Stock Quote
Fox Corporation
FOX
$30.77 (2.57%) $0.77
DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.13 (4.59%) $0.62

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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