Flutter CEO Dan Taylor acknowledged during the company’s Q3 earnings call on November 4 that FanDuel's prediction markets product initially underperformed. However, he expressed confidence in the significant improvements made, marking a clear shift as the product heads into 2027. "The product, when I first went over to FanDuel in the spring, was not competitive," he said, highlighting the progress made by the team in recent months.
Taylor pointed to several key developments, including the switch from CME Group to Crypto.com for sports event contracts, an expansion of parlay-style combos markets, and the creation of an all-in-one app for users. This strategic overhaul has driven notable growth, with FanDuel Predicts boasting 140,000 active users in October and a volume of $119 million in Q3, a 102% increase from Q2 and a staggering 271% rise compared to July.
"Predictive markets represent a very meaningful incremental opportunity for FanDuel," Taylor stated. He emphasized the need for the company to carve out a strong position in the market, underscoring his commitment to investing wisely while remaining agile to regulatory changes. He noted, "While we always have more work to do, our product is now genuinely competitive."
Looking ahead, Taylor will lead FanDuel alongside Christian Genetski, who is set to take on the role of permanent CEO after initially serving on an interim basis.
As the earnings call progressed, Taylor outlined his main priorities: to strengthen FanDuel's leadership in state-regulated gaming and to establish the brand as a competitive revenue generator in prediction markets. He indicated that there are more improvements planned in this area.
During the discussion, both Taylor and CFO Rob Coldrake delved into the recent acquisition of FanDuel’s own Registered Futures Commission Merchant (FCM) license and its full integration into B2B market-making. The FCM status distinct from CME enables greater flexibility, empowering FanDuel to offer event contracts through Crypto.com’s associated designated contract markets.
Coldrake expressed optimism in capturing growth opportunities, noting, "We are linking up with more exchanges, and ultimately we do feel we have a right to win in this space in terms of our expertise, our ability to price complex products, and also ultimately with our liquidity."
Taylor reinforced the significance of market making as a core capability of Flutter, stating that their progress in trading across multiple exchanges could be a substantial short-term revenue and profit driver. However, he acknowledged the longer-term nature of the B2C side as they work to leverage the FanDuel brand fully.
Looking toward financial projections, Flutter anticipates a net revenue contribution of approximately $50 million and $40 million in EBITDA from market making for 2026.
Despite growth, challenges remain. Taylor recognized the ongoing difficulties in balancing the economics of prediction markets, citing increased costs driven by rival operators' spending. He termed the situation a short-term hurdle, noting, "From a marketing spend perspective, the increase has predominantly been driven by the predictive operators." The outcome of ongoing regulatory shifts will also significantly influence future operations.
Following news of its Q3 results, Flutter’s U.S. revenue increased 6% year-on-year to $1.45 billion, while overall group revenue rose by 2%. FanDuel’s sports betting revenue climbed 4% to $817 million, and iGaming surged 8% to $572 million. However, the U.S. adjusted EBITDA dipped nearly 94% to just $3 million due to investments in the prediction market and launching operations in Alberta’s tightly regulated market.
As the broader picture emerged, Flutter reported a drop in total group adjusted EBITDA from $478 million to $360 million, with net losses rising by 46% to over $1.1 billion. Consequently, the company adjusted its revenue guidance downward by $300 million to $17.6 billion and reduced its adjusted EBITDA forecast by $160 million to $2.5 billion.
Despite these challenges, Flutter’s share price saw a slight uptick from $83.16 on Tuesday to $86.60 mid-morning on Wednesday, reflecting a cautious optimism among investors.
