Flutter US listing: Will it boost the Flutter share price?

Flutter Entertainment mulls US listing

London-listed Flutter Entertainment has been considering an additional listing of its shares in the US since November 2022. It has been consulting with major shareholders on the plan ever since.

‘We recently announced that we believe an additional US listing of Flutter's ordinary shares will yield a number of long-term strategic and capital market benefits. We have begun an extensive consultation with our shareholders and early feedback has been supportive. We look forward to continued engagement with investors and stakeholders on this matter and we will announce the results of this engagement in due course,’ Flutter said when it released its annual results on March 2.

A US listing of Flutter would take precedent over any plans to spin-off a small shareholding in its US arm FanDuel. Management started to come under pressure to spin-off FanDuel when rival Draftkings soared in value throughout 2020 and early 2021, but this pressure has eased as valuations have fallen back. That means a FanDuel IPO should now be regarded as the backup plan should shareholders push back against its US listing. You can find out more in What is an IPO and how does it work?

Flutter could use its upcoming annual general meeting on April 27 to hold a vote on its US listing plans, which will need to be supported by shareholders. That would need shareholders with 75% of the voting rights to give Flutter the green light.

What is Flutter Entertainment?

A quick reminder about what Flutter Entertainment is before we dive in. Flutter is among the world’s largest online gambling companies, having expanded by acquiring brands across the globe over the years. Here is a breakdown of what Flutter owns and where:

UK & Ireland: The company owns Paddy Power, which has over 600 betting shops, as well as online brands including Sky Betting & Gaming, Betfair and Tombola.

Australia: Runs the market leader in sports betting, Sportsbet.

International: A portfolio of brands including PokerStars, Sisal, Adjarabet, Betfair and Junglee offering sports betting, gaming and exchange services across multiple countries, including but not limited to Italy, Spain, Brazil, Canada, India and Turkey.

US: Led by the largest sportsbook brand FanDuel and complimented by other brands including TVG, Stardust, FOX Bet and PokerStars, which offer regulated sports betting, online gaming, fantasy sports and online wagering on races across North America.

Why is Flutter considering a US listing?

The rationale for Flutter’s ambition to list in the US makes sense. The move would open up deeper capital markets and greater liquidity, and several analysts have suggested Flutter will be able to secure a higher valuation with a US listing compared to what it currently boasts in the UK. Jefferies has said it should secure a ‘premium valuation’ over rivals.

Flutter has said it could move its primary listing to the US as ‘second step’ to its plan, which would allow it to qualify to be included in major US indices to open the door to a wider pool of investors. A listing would also raise its profile in the US and help it recruit from a larger pool of talent.

Plus, Flutter’s growth has been increasingly driven by its international expansion in recent years. Its core UK & Ireland business has delivered reliable but tepid growth over the past five years. Meanwhile, revenue from overseas has grown significantly. Growth has been increasingly-led by its US division, which is now not only the fastest-growing part of the business but also the largest contributor to revenue.

(Source: Bloomberg)

Gambling is legal under federal law is the US, but it is still highly restricted pretty much everywhere apart from the renowned spots in Las Vegas and Atlantic City.

While legal at the national level, it is up to each state to decide what their rules are. That means the laws in one state vary differently to another. You can visit casinos in states like Alabama and Arkansas, but you can’t bet on sports or gamble online. Connecticut has embraced online gambling but still doesn’t allow sports betting. Hawaii, Georgia, North Carolina and Utah are among those states where gambling is pretty much banned altogether.

Still, we are continuing to see more US states liberalize their gambling laws after the Supreme Court shot down a federal ban on spots gambling back in 2018. For example, states like Kansas, Ohio, Maryland and Massachusetts have all opened up new betting markets in the last year or so, providing new markets for companies to enter. Online gambling is still banned in 24 US states, according to LetsGambleUSA, showing there is still loads of potential if more states follow. Flutter said last year that FanDuel’s revenue could rise five-fold between 2022 and the end of this decade.

‘Flutter has the highest exposure to the US opportunity, and stands to benefit the most from its significant growth,’ JPMorgan said in a recent research note.

FanDuel, the market leader that handles half of all sportsbook activity in the country, has already added 1.2 million customers in the first two months of 2023 alone. Flutter has said FanDuel’s market-leading position ‘delivers superior economics and will transform the earnings potential of the group’. FanDuel is still loss-making as it expands, but it should start delivering positive adjusted Ebitda for the first time in the current financial year.

Meanwhile, Flutter has said its international operations are have reached a ‘growth inflection point’ and says it is on a ‘more sustainable footing with minimal single unregulated market exposure’.

While the US and, to a lesser degree, other markets are fuelling growth, the outlook is more challenging elsewhere. Australia is facing some regulatory headwinds and is becoming more competitive. The mature UK & Ireland business continues to grow at a slow but steady pace, but is still providing reliable cashflow. It is also having to manage a swathe of traditional bookmakers at a time when activity is moving online. There are also risks ahead here too considering a review of the UK’s gambling industry is expected to be released as soon as this month that is expected to call for new rules to be applied to the sector and for it to pay more money to fund health initiatives.

With all this in mind, considering a US listing is sensible and could elevate its valuation and reputation in the US.

Notably, Flutter is not the only UK stock eyeing a US listing. Building materials group CRH and software firm WANdisco have both recently announced they are looking at listing in the US as they too are more geared toward the country and want to capitalize on deeper pools of capital and liquidity, higher valuations, less complex and onerous regulations, a starkly better stock market performance and more clarity on the economy. Other big names, including oil giant Shell, have also been reported to have considered a move to the US. You can read more in Why are UK stocks leaving London and opting for US listings?

How to trade the Flutter share price

You can already trade Flutter’s shares listed in London with City Index in just four easy steps:

1. Open a City Index account, or log-in if you’re already a customer.
2. Search for ‘Flutter in our award-winning platform
3. Choose your position and size, and your stop and limit levels
4. Place the trade

Or you can practice trading risk-free by signing up for our Demo Trading Account.

You can also find out more about IPO Trading and how you can take your position on major listings as they happen.