At 8:00 AM on August 3, Flutter Entertainment’s shares will cease trading on the London Stock Exchange, concluding a journey that began with Paddy Power's IPO in December 2000. The company cited low trading volumes and the regulatory and financial burdens of maintaining a dual listing as reasons for the move. From now on, the world’s largest online gambling company will exclusively trade in New York, having established its primary listing there in May 2024.
Flutter’s exit from the UK market comes amid a difficult period; its share price has plummeted nearly 50% this year and about 60% over the past twelve months, with its market capitalization shrinking from over $50 billion last summer to roughly $19 billion today.
These developments might suggest a direct correlation between Flutter's shift to Wall Street and the decline in its stock price, serving as a cautionary tale about a company that pursued greater valuations in America but encountered volatility instead.
However, a more pressing concern seems to be whether the US market, which Flutter has heavily invested in, still delivers the growth potential that attracted them to New York: ongoing legalization, a stable duopoly, and years of anticipated profitability. Each of these elements has become increasingly uncertain.
The delisting itself may not be the primary issue.
As one senior US-based financial analyst pointed out, "There’s no reason to think any of this would be different if they were still listed in London. I don’t know how many investors would only invest in London and not in the US. The pool of capital is bigger in the US."
Historical precedents show mixed outcomes: while Light & Wonder moved to an ASX-only listing after a valuation drop, Aristocrat benefits from being valued more highly due to the limited number of quality companies in the Australian market.
Deutsche Bank, referenced in a recent column, issued a similar caution, indicating that a US listing doesn’t guarantee better results and that deeper liquidity could exacerbate negative news through increased trading and easier shorting.
Ben Robinson, managing partner at Corfai, echoed this sentiment, stating, "It’s hard to argue with the mechanics. The primary listing moved to New York in 2024, London had become a shrinking secondary line, and the volumes no longer justified the cost. The real loss is marginal and symbolic. Some UK funds with LSE-only mandates become forced sellers, and a company built on Paddy Power and Betfair has cut its last formal tie to its home market. Whether that matters depends on whether Flutter ever needs London again. My instinct is it won’t."
Chad Beynon, a senior analyst for gaming at Macquarie, sees no reason for nostalgia either. "The US has the largest and most liquid equity market in the world," he explained, highlighting the depth of institutional investment, retail participation, and the lower cost of capital in the US. All three analysts essentially agreed: the location of the listing is less significant; it’s the underlying story that matters.
However, that story is shifting. Robinson noted, "Until the prediction-market shake-up, yes" when considering if the American pivot met investors' expectations. FanDuel, for instance, captured a 39% share of the US sportsbook market, making its move to the US appear to be a wise decision at first. Since then, however, the stock has dropped about 60% in a year, as the market increasingly questions its growth narrative which relied on the opening of new states for betting.
Companies like Kalshi and Polymarket can now offer services in California, Texas, and Florida without traditional sports-betting licenses, consequently altering the perceived value of future state licenses. Robinson pointed out that Kalshi generated over $30 billion in volume in June, operating in markets still restricted to conventional sportsbooks, thereby decreasing the rarity of upcoming licenses.
Growth in regulated states has also begun to plateau, indicating more than just a temporary adjustment in the market. Beynon added that while the impact of prediction markets is minimal in states where betting is legal, investors are beginning to discount future growth within the US legal market, particularly the expected duopoly between DraftKings and FanDuel.
Investors are not only adjusting their short-term expectations but reconsidering whether a market dominated by two companies can be sustained. Concerns are also growing about the future legalization of betting in states like California and Texas. The anticipated legislative push has slowed, contrary to the initial belief that states would prefer taxing legal sportsbooks over watching money flow to unregulated contracts. For example, tax increases have been seen in North Carolina, and Ohio has introduced a bill to end sports betting altogether, which is an unexpected development given the continued existence of prediction markets.
Is Flutter then overly dependent on the US market? Robinson suggests that while reliance exists, the situation is evolving. The US accounts for around 40% of Flutter’s overall revenue but only reported a modest 6% growth in Q1, with betting volumes down 9% and US EBITDA declining by 26%. In contrast, its international business grew by 27%, predominantly driven by Snai and Betnacional, yet remained largely flat on an organic basis. The international operation that had been largely overlooked is now doing most of the heavy lifting.
The departure of Amy Howe from FanDuel in May aligns with these trends. Robinson remarked that this leadership change seemed to reflect a board preference for tighter oversight over the division.
Pressure is rising on the division that Flutter had dedicated resources to reducing over the past two years. Internationally, the company must consider whether growth can be sustained once Snai and Betnacional's numbers fully materialize. In the UK, the first full quarter under 40% Remote Gaming Duty, following nearly doubled duties in April, poses another challenge. Flutter forecasts a $320 million impact on EBITDA in 2026 before any mitigation, escalating to $540 million in 2027.
The central concern is whether alleviation will come from real cost savings or reduced marketing efforts. While the latter might protect margins in the short term, it risks stifling future growth.
Historically, increased taxes in the UK have pushed out smaller competitors, leading to consolidation among firms like Evoke and Bally’s, benefiting Flutter. The question remains whether this strategy is still viable.
Looking ahead, how will the US market progress? The analyst suggests two potential routes: either Flutter must capture market share in prediction markets—possibly as a market maker—or investors need reassurance that prediction markets will not become a significant long-term obstacle.
The upcoming launch of FanDuel Predicts by late 2025, through a partnership with CME Group, has so far had a muted start compared to a similar offering from DraftKings. Finding a profitable business model as a risk-bearing entity, rather than just a platform provider, may be crucial for success in the prediction markets.
In the meantime, Flutter awaits judicial outcomes that could dictate the future landscape. Despite Nevada's successful push against Kalshi, the Third Circuit issued a favorable ruling for the latter against New Jersey, leaving numerous uncertainties. The stakes are high, especially since Nevada lacks the commercial weight of states like California, Texas, and Florida, which are pivotal in terms of revenue potential.
The analyst anticipates that the highest judicial bodies will ultimately decide the fate of prediction markets, with a definitive resolution unlikely before late 2027, or perhaps even into the first half of 2028. In the interim, Flutter’s stock could remain stagnant.
A concern that often goes unaddressed is whether, should courts eventually rule against sports prediction contracts, companies that previously engaged in such activities might face backlash from state legislators. The fear persists that if regulators perceive them as being on the wrong side of the debate, acceptance back into the market could become problematic.
Despite these challenges, the allure of the US market remains strong. Allwyn, which has consolidated with Greece’s OPAP and is entering the US through PrizePicks, is contemplating a secondary listing in either London or New York.
The analyst describes this move as “a bit of an arbitrage play,” suggesting it positions the company as a larger player within a smaller market—a big fish in a small pond. Beynon discredits the notion that competing listings are a zero-sum game: "We don’t view listed gaming company investments as a ‘zero-sum game.’" The analyst confidently states Flutter’s choice was valid: "I still think the US is the gold standard for capital markets."
Robinson, while cautious, concludes that while Flutter’s complete exit may seem premature, the rationale likely holds weight. He also notes the timing of this decision coincided with an increase in gaming duties in London.
His final thought cautions against Flutter becoming just another mid-tier consumer stock, regardless of the exchange. "The question isn’t about whether New York is deeper than London; it’s about which segment of the market Flutter occupies. Given its stock has declined approximately 60% in a year, there’s a danger it may simply become one more mid-tier consumer stock on a larger exchange."
Deeper waters don’t always ensure better currents.
