Flutter announced today that it hopes to list its shares on a US stock exchange. The Dublin-based company is among the world’s largest online gambling conglomerates and owns the leading US sportsbook brand, FanDuel. Its shares currently trade on the London Stock Exchange. However, a dual listing would add liquidity and make investing in the company more accessible for US traders. The board said on Feb. 14 it would consult with existing shareholders on the possibility.
Three brands dominate the US sports betting and online casino space:
Of those “Big Three” brands, only DraftKings makes its shares directly available to investors. The only option for those interested in BetMGM is to buy shares in one of the joint venture’s two parent companies: MGM Resorts International 32,33 +1,44% or Entain PLC 624,20 -3,79%.
Those who want a piece of FanDuel need to buy shares in Flutter Entertainment 25,49 +0,04%. That means investing in several other brands at the same time, including Paddy Power, Betfair, Sky Betting & Gaming, and PokerStars.
It’s unclear exactly which of the two US exchanges Flutter would be looking at. Other gaming stocks can be found on both Nasdaq (e.g., DraftKings and Caesars) and the New York Stock Exchange (e.g., MGM and Rush Street Interactive).
Still No FanDuel Spinoff on the Horizon
US investors may not have much interest in those other brands, except PokerStars. Paddy Power, Betfair and Sky are all important brands in the UK and Ireland. None are active in the US, though Betfair had a small presence in New Jersey before withdrawing its sports betting product and rebranding the gaming component to Stardust Casino.
For a time, there was hope that Flutter would spin off FanDuel as a separate publicly-traded entity. However, various factors have put that plan on indefinite hold. Those include Flutter’s dispute with joint venture partner Fox Sports and economic headwinds in the US market.
Flutter hasn’t taken that possibility off the table entirely. However, the board told investors that a US secondary listing for the whole company would take precedence over a FanDuel spinoff.
What’s the Point of a Dual Listing for Flutter?
You don’t have to be a UK citizen to trade shares on the London Stock Exchange. So, North American investors can already acquire a position in Flutter if they want one.
What’s the advantage to the company of creating a secondary listing on a US exchange, then? In a nutshell: time and money.
Markets don’t operate around the clock. For an American trader in the Pacific Time zone, London’s trading hours work out to be from midnight to 8:30 a.m. In other words, they’re likely to make their buying and selling decisions after hours and put in orders to take effect at the following day’s opening bell.
So, firstly, a secondary listing would allow US traders to make decisions in real time and react to intraday price shifts. Each market’s prices will reflect movements in the share value on the other. If there were to be a significant difference between the two, arbitrage trading would quickly bring them back in line.
The other issue with buying and selling securities on foreign markets is the currency difference. Fluctuations in the exchange rate add to the volatility of such investments. Moreover, the need to change currencies adds to the cost of transactions. For instance, a retail customer with a USD trading account must buy GBP to acquire Flutter shares. Selling those shares will automatically reverse the exchange and deposit USD to the account. The bank or trading service will be charging a small premium on each of those transactions, cutting into the profitability of the investment.
The other advantage of a dual listing is allowing traders to buy and sell shares in their own currency. In the case of US markets, this also helps Canadian investors, as Canadian banks allow registered or unregistered USD trading accounts.
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