Flutter released its third-quarter results on 13 November, with results indicating what we all expected; the industry giant overall is on the up, and the US is leading the charge.
This is not to say Flutter’s other location segments – Australia, UKI and International – are not continuing to develop, with year-on-year growth of 12%, 18% and 15% respectively. However, with US year-on-year revenue up 51% year-on-year, and accounting for close to 40% of Flutter’s $3.25bn quarterly revenue, it is as if someone has brought an F1 car to a horse race.
The market is simply operating at a different level.
But growth in a market goes both ways. When a market shows value, an operator will invest to capture and accelerate that growth, which in turn will allow the market to grow even faster. This can be seen with Flutter’s cost of sales this quarter.
Indeed, US cost of sales was up 48% to $737m, Australia’s was up 14% to $207m, UKI was up 13% to $321m and International was up 22% to $374m; a push to close the gap between the UKI and International vertical, with less than $70m difference between them.
But is putting so much money into the US worth it? Are US customers just that much more valuable they justify the cost? Gambling Insider investigates...
Flutter: AMPs vs quarterly revenue
Average monthly players (AMPs) across all of Flutter’s geographies totalled 12.92 million in Q3, up 16% from the 11.14 million AMPs reported this time last year. Of this, there were 7.75 million sportsbook AMPs, 6.62 million iGaming AMPs and 883,000 AMPs playing with Flutter’s other products, which include exchange betting, parimutuel (pool) wagering and daily fantasy sports (DFS). Combined, sportsbook revenue across all locations came to $1.71bn, iGaming revenue came to $1.41bn (the biggest contributor to which was neither the US or UKI, but Flutter’s International segment at $589m) and other revenue came to $128m.
Revenue by vertical and geography breaks down as:
Looking at AMPs by geography, and aside from Australia, where Flutter only offers sportsbook products, it is actually the US that comes out with the lowest AMPs, at 3,211,000; 890,000 less than the UKI and 1,200,000 less than the international segment. But, despite this, the US earned 47.8% more than the UK and 60.1% more than international operations.
By vertical and geography, the breakdown comes out as:
The US came out second in terms of sportsbook AMPs and last in its number of iGaming AMPs. This is surprisingly low, considering the population of the US compared to that of the UK and Ireland.
Average population
Legal online/mobile sportsbooks are live and legal in 30 states plus DC, with Missouri set to make this 31 when its market becomes operational. In the case of iGaming, it is legal in seven states as of writing. According to statistics from the start of 2024, the US population sits at 334.9 million, the third-highest in the world behind India and China.
Crunching the numbers, we find that the population of the 31 legal sports betting territories totals around 195 million. Compare this to the UK and Ireland, with a combined population of around 74 million, and this difference in AMPs becomes even more notable; in the US, only 1.33% used Flutter’s sportsbook (FanDuel), while 4% of UKI players used a Flutter sportsbook product each month during the quarter.
If the UKI has a more active betting population, why target the US?
Maybe it has something to do with how much players are betting?
Average income
Statistics place the real median household income in the US at $80,610, while in the UK this totalled £34,500 ($43,545) and in Ireland totalled €55,149 ($58,112). With such a gap in income, it is likely that US players have more disposable income and thus are able to bet in higher denominations and at a higher frequency; something confirmed by the population density of players in contrast with the revenue made from sportsbooks from the US.
Betting odds layout
Another factor worth considering is how the bets themselves are laid out in the US compared to the US, and whether this formatting encourages higher spend. US betting odds, otherwise known as Moneyline odds, use a three-digit system to denominate chances of winning and odds of making a return. This, inherently, makes understanding winnings using a round, three-digit number like 100 much easier; on a –150 bet, you would need to bet $150 to make $100, while a +350 bet would net a player $350 on a $100 bet. As such, American players may be more likely to bet using such denominations.
A similar “all or nothing” approach can be seen in the Australian market, as was explained by Bluberi VP of Product & Marketing Christiam Smith in his latest appearance on The Huddle, with the changing habits of US players being described as the “Australiafication of the US” by Smith. No wonder the two share similar sports betting spending habits (see the graph below).
The UK, however, uses a fractional system. For example, odds of 10/1 mean for a £1 bet, players stand to win back their stake plus £10 in profit, totalling £11. Using smaller numbers may therefore encourage placing bets in smaller denominations.
Culture also plays a part in this, with these systems following the cultural norms of the nations they are used in. For the US, gambling big has been solidified into the cultural language since the proliferation of Vegas casinos, or even before that; that placing a big bet with the chance of making a small fortune in the way to go. Meanwhile, the UK has a longstanding culture of working-class horse betting as its foundation for betting play in the modern age, with people betting what they could afford in the hopes a return may yield a small reward; some new clothes, a small holiday or a few pints at the pub, perhaps.
As such, how much it is socially acceptable to bet also becomes a relevant factor.
Quarter revenue per average monthly player
By taking revenue from each vertical in each geography and dividing it by the number of AMPs in each, we found:
Indeed, US AMPs placed higher bets by a significant margin in both sportsbook and iGaming compared to the UKI and international players. Though, this only slightly surpasses Australia, which has a population of 26.6 million and thus a player population density of 4.5%, and a real median household income of AU$95,371 ($61,519); giving it the benefit of a high number of active players with the income to bet at higher denominations and frequencies.
Of course, these numbers equate to the average spend made by players over three months. Per month per AMP, revenue comes to:
Compared to the UKI, sportsbook monthly spend is 161.2% higher in the US; iGaming presents a similar difference, with US players spending 160% more than UKI players. Compared to the International segment, sportsbook AMPs were 100.9% higher and 214% for iGaming. To put into more perspective: Even combined, US players spend more on average per month than UKI and international players.
Across the board, players spend more on iGaming per month than they do on sports betting. In the US and UKI this difference is consistent, with AMPs spending 62.3% and 63% more respectively, with factors to consider including the ease of use of these platforms, wide-ranging audience demographics and potentially less developed responsible gaming tools. However, difference in the International segment was only 3.8%, potentially due to a boost in sports betting spend during popular leagues (such as the Euros) or the increased iGaming competition in these regions.
Conclusion
All this is to say, with the amount US players are putting behind their sportsbook and iGaming play per month, and with the margin for growth in the number of active players, it is no surprise the company is shifting gears towards the territory. First, in moving its primary stock exchange from London to New York and now restructuring the business to include all non-US operations in its International division.
Likely, such efforts will result in continuous year-on-year growth for the segment. This is not to say Flutter has abandoned its International operations – far from it, considering its potential bid for the Italian primary lottery licence – but it is clear which geo Flutter is banking on to turn its quarterly net losses into income.
