What a drag
FanDuel’s parlay success acting as a drag on handle
FanDuel’s lagging handle likely down to leading parlay performance.
In +More: Sportradar’s IMG Arena deal receives competition scrutiny.
Markets: Cirsa will hope to emulate Lottomatica’s post-PE performance.
The teardown: GenZ’s gaming consumption habits examined.
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Drag racer
Leading from the back: A matter of days before Flutter Entertainment secured 100% control of FanDuel, a note from Jefferies suggested the decline in US OSB handle seen in Q4 last year and Q125 was largely down the US market leader’s own anemic growth rates.
While the market as a whole saw the handle growth rate shrink to the mid-teens for the two quarters, it was being dragged down by FanDuel where growth slowed to just 8% in Q1.
In comparison, rival DraftKings managed to outpace the market overall over the two quarters, with growth rates of 15% and 16%.
Decline and haul: FanDuel leads the market south in handle
You can do it in the mix: Worries over any decline in handle growth rate are offset, however, by the likely cause – FanDuel’s market-leading parlay mix which the analysts say (paywall) produces higher-margin but lower average wager sizes.
I told you I was IL: Looking at the data from Illinois, where handle by product is broken down, Jefferies showed that FanDuel’s parlay penetration is far higher than the competition, at 37% of handle vs. 25% for the rest of the market.
In terms of GGR, FanDuel saw 72% come from parlays vs. 49% for the rest of the market.
At the same time, Jefferies said FanDuel’s handle growth in the state has fallen from 20%+ over the first three quarters of 2024 to just 5% in Q1.
“This pattern suggests that the product mix shift towards lower-wager, but higher-margin products, is potentially a key explanation for the slowing handle growth trend,” the team added.
Staying on top: The slowing handle growth does not appear to have done anything much to hurt FanDuel’s market leadership by GGR.
According to Citizens estimates, it led the way with just over 42% share QTD including May, albeit down 140bps YoY, with DraftKings second with 33.5%.
Nothing can stop us now: Any worries about handle have not stopped Flutter’s share price from setting new highs in recent weeks. Although there was a muted reaction on Friday to the news of the Boyd stake purchase, with the share price effectively flat on the day, it is now up nearly 7% in the past month and sitting at an all-time high of $290.
Route 66: This equates to a market cap of $51bn. The Jeffieries buy note set a price target fo $380, equivalent to a market cap of over $66bn
Lever pull: CBRE estimates that the bridge loan taken out to fund the $1.76bn purchase will increase Flutter’s leverage to about 2x from its previous 1.5x level.
“This still leaves plenty of firepower for FLUT to repurchase shares, invest in growth markets, and pursue M&A,” the team added.
E+M correction: In Friday’s edition, we mistakenly ascribed an implied value of $61bn to FanDuel vs. the actual figure of $31bn. We apologize for any confusion caused.
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A hitch: Sportradar’s plan to acquire IMG Arena has hit a roadblock after the UK’s Competition and Markets Authority announced it is reviewing the transaction for potential violations of the competition law and considering whether there may be a case.
The CMA said it was inviting comment from interested parties but had not yet launched its formal investigation into this transaction.
The deal for IMG Arena was announced in March and would see Sportradar be paid $125m by Endeavor to take over the rights portfolio.
Puts+takes
Back on the beat: DraftKings is likely to beat expectations with its Q2 report with $260m of adj. EBITDA, according to a sector Q2 preview note from Morgan Stanley with the outperformance reassuring investors after a quarter dominated by concerns over tax increases.
Looking super: Citizens has initiated on Super Group saying they see further upside now that the US overhang has been removed following the complete exit from the US announced last week. The analysts noted that Super Group’s strength lies in it operations across Africa where it generated $759m of revenue in the last 12 months.
E+M PRO will issue a longer-form Puts+Takes edition featuring the Citizens analysis later this week.
Markets
Leaving something on the table: Recently floated Cirsa has much in common with Italian-focused betting and gaming operator Lottomatica given their previous private equity ownerships, Blackstone in the case of Cirsa and Apollo for Lottomatica.
Blackstone still owns the majority of Cirsa and will doubtless be seeking a similar path in the years to come of disposing its shares in the Spain-to-LatAm casinos and gaming entity.
Apollo exited its investment back in June last year – since when the shares have been in a tear, up 110% in the past year.
The fear with companies where a private equity owner is exiting is that nothing will be left on the table for new investors, but this is clearly not the case with the well-managed Lottomatica.
All down: As noted, there was a muted response to Flutter’s news about the purchase of the Boyd Gaming stake in FanDuel but there appeared to be more of a reaction at DraftKings where the share price fell 3.5% on the day leading to a fall of 6.5% for the week.
Boyd also fell over 6.5% on Friday, leaving it 2% down on the week.
Rival and potential takeover target Penn Entertainment was down nearly 8% on Friday, leaving it off by 2.5% last week.
On the slide: Also in the negative bucket this week is Rush Street Interactive, down 3% on Friday and off by 1% for the week.
Its case will not have been helped by recent analysis from EKG showing that its BetRivers iCasino offering has fallen back from 22% share in Pennsylvania in Q121 to ~12% in the Q225.
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The teardown – GenZ’s gaming habits
On a wavelength: Gen Z isn’t merely the next wave of consumers, it's an entirely new mindset transforming how betting and gaming content is experienced, shared, and monetised.
Such is the thesis emanating from a blog post written by startup finding vehicle Drive by DraftKings which suggests that at its core, Gen Z is rewiring expectations.
It is a generation which is “redefining how products are built, how brands are experienced, and how value is captured.”
Instant korma: Raised in a digital-first ecosystem brimming with algorithmic content and real-time interactions, this cohort demands entertainment that feels interactive, social, and personalised. Traditional triggers such as full-game broadcasts or static betting platforms no longer engage.
Instead, community-fuelled formats, whether that is Twitch commentary, Discord debate, TikTok highlights or live-streamed parlay calls – are increasingly dominant.
“This is why crash games, meme stocks, and parlay bets have gained so much traction with this generation,” the blog adds.
On the socials: This also aligns neatly with broader trends. Deloitte’s 2023 ‘Sports Fan Insights’ report concludes that Gen Z sports fans favour short-form clips, highlight reels, immersive features like alternate camera angles, VR, and integrated social overlays.
They see sports – and, by extension, betting – as shared experiences, not solitary pastimes.
More than half of them engage via social media while watching live, and many even fear missing out if they can’t connect digitally.
The Meme generation: The Drive by DraftKings blog cited a recent Morgan Stanley survey which found that 60% of bettors aged 21 to 34 have placed parlays, a rate nearly 30% higher than the overall population.
Similarly, the blog cites data showing that 30% of US stock investors aged 18 to 24 have invested in meme stocks compared to 12% of investors ages 45-54.
Viral scratch: “The appeal is simple,” the blog adds. “Put down a small amount, take a swing, and hope to hit it big. Most of these bets won’t pay off, but the ones that do tend to go viral.”
Social media then elevates these wins, creating a sense of FOMO that draws others in.
“It becomes a feedback loop of visibility, aspiration, and repeat behavior, which keeps Gen Z highly engaged and emotionally invested in the experience.”
Hub and spoke: Where once sportsbooks prospered by delivering odds, the blog suggests they now need to cultivate digital community hubs and cites such companies as Picklebet, Stake, PrizePicks and Fliff as leading proponents.
Combined, these offerings are “tapping into this shift, showing just how widespread and durable this behavioral change has become.”
However, whether all of these survive regulatory run-ins is, for now, a different debate.
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