Breakingviews – Flutters UK wobble adds to U.S. IPO logic – Reuters

People watch the game after making their bets at the FANDUEL sportsbook during the Super Bowl LIII in East Rutherford, New Jersey, U.S., February 3, 2019. REUTERS/Eduardo Munoz

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LONDON, March 1 (Reuters Breakingviews) – Flutter Entertainment (FLTRF.L) had a bad year at home. EBITDA in the Dublin-based bookie’s UK and Ireland online-betting business was roughly flat year-on-year in 2021 at 626 million pounds, sending the group’s market value down by 12% to 17 billion pounds. It’s not that people stopped laying wagers: sportsbook stakes were up 25% compared with 2020. Rather, a string of victories by heavily favoured teams, such as European soccer giants, inflicted losses on the group. It’s generally bad for bookies when favourites win, especially so when they all do at once.

Arguably investors are overreacting. Over time, punters tend to recycle their winnings until they end up losing them. The risk, however, is that such wobbles obscure the value of Flutter’s crown jewel – U.S. business FanDuel, which is the leading player in the burgeoning American sports-betting market. Valued on the same 13.9 times 2021 revenue multiple as rival DraftKings (DKNG.O), FanDuel would be worth $25 billion – roughly the same as Flutter’s total enterprise value. The parent is mulling an initial public offering of the U.S. business to unlock some of that value. Wobbles in its home markets make that case even stronger. (By Liam Proud)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by George Hay and Oliver Taslic

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