Getting the FanDuel flywheel going took time, but the online gambling operator’s net gaming revenue increased from $300 million in 2018 to $3 billion in 2022. FanDuel’s leaders said today that with that momentum, they expect the winning streak to result in $40.5 billion in gross gaming revenue (GGR) in 2030.
The leaders of the No. 1 US online sportsbook and No. 3 online casino wove those words – “flywheel,” “winning,” “edge,” and “advantage” – throughout this afternoon’s 3-hour-long presentation and audience Q&A at Flutter Entertainment‘s FanDuel Capital Markets Day.
FanDuel Flywheel Spins, Creates GGR
FanDuel CEO Amy Howe said FanDuel’s primary owner, Flutter, provided FanDuel with an edge over the US competition through a $1 billion investment that began in 2018. Plus, the Dublin-based company sent FanDuel a top product and talent to make it work.
Flutter CEO Peter Jackson said the main advantage FanDuel provided was a brand Americans recognized. So his company bought a majority ownership of FanDuel in 2018.
The FanDuel and the Flutter advantages create a really powerful flywheel.
The FanDuel flywheel is projected to create that $40.5 billion GGR in eight years. Plus, Howe estimates FanDuel Casino will hold 25% of the 2030 US online casino market, generating $17.8 billion in GGR during 2030. Then FanDuel Sportsbook will serve 80% of the 2030 US sports bettors, resulting in a $22.6 billion GGR.
So all in, a 4.5 times multiplier.
Despite this optimism about FanDuel and its future, its primary owner’s stock (FLTR.L) dropped more than 1% today.
What Does ‘FanDuel Flywheel’ Mean?
Adewale Adisa, the West African COO of B2B e-commerce platform Omnibiz Africa, writes in a LinkedIn Pulse article:
The “Flywheel Effect” as a business concept was introduced by Jim Collins in his seminal book Good To Great and it was used to state the fact that companies don’t become exceptional as a result of a single intervention or initiative, but rather from the accumulation of little wins that stack up over years of hard work until such a moment that momentum takes over to power sustained periods of accelerated growth greatly outstrip the effort being applied at that particular point in time. The underlying hypothesis underlying the “Flywheel Effect” is that there’s always a combination of elements within a business which if properly aligned over a period of time will gain significant momentum and subsequently create a self-reinforcing virtuous cycle for the company.
Using the FanDuel flywheel as a metaphor for success may be apt for FanDuel, but much of that was evident today without the catchphrase.
Perhaps that’s why FanDuel Group President Christian Genetski pointed out that in 2019 when he was the group’s chief legal officer, his presentation for the US business overview happened at the Meadowlands Racetrack in the FanDuel Sportsbook Lounge.
Today, he stood on a stage at Cipriani, a venue at 25 Broadway in New York City that costs five figures to rent for an event.
Cipriani describes the restaurant entrance as so:
Designed by Benjamin Wistar Morris and completed in 1921, this grand space features 65-foot high ceilings, soaring marble columns, magnificent inlaid floors, and murals painted by Ezra Winter.
There, Genetski spoke in front of a live audience and 600 online attendees:
We’re ahead of where we thought we’d be.
Howe highlighted the $300 million to $3 billion increase in four years:
Just a really huge transformation in a very short period of time.
Jackson emphasized that FanDuel has the capability of not only maintaining its market position, but increasing its lead over the competition to “win.”
How FanDuel Will Keep Its Momentum
Howe said FanDuel can maintain and grow its position by having “the scale of a leader; the mindset of a challenger.”
However, she said:
We want to win the right way.
Howe listed some reasons for FanDuel’s success: customer-centricity, trustworthiness, and commitment to responsible gambling.
Finally, Slide 112 summarized the “key takeaways from today”:
• FanDuel has dominant leadership position in US online sportsbook and big opportunity in iGaming
• Sustainable FanDuel Advantage, combined with unique benefits of the Flutter Edge, provide great confidence in our ability to maintain clear No. 1 position
• Our phenomenal scale powers our flywheel, allowing us to make meaningful investments in product, marketing and promotions
• Combined with superior execution and disciplined cost management, there is a clear route to significant value creation
Howe said of FanDuel’s sports betting states:
With very few exceptions, we’re leading.
That’s 12 states where FanDuel leads in market share. FanDuel isn’t No. 1 in sports betting in Colorado, Iowa, and Wyoming.
The secret to that success is being not only the first mover in a state, but launching within the first hour, said Mike Raffensperger, FanDuel’s chief commercial officer.
Once FanDuel onboards a gambler, the bettors not only stay, they refer their friends and family to the app.
“The hard part is getting the flywheel going,” he said.