Flutter Entertainment Consolidates FanDuel Stake, Raises Guidance Amid Regulatory Scrutiny

Flutter Solidifies FanDuel Ownership and Boosts Financial Outlook

Flutter Entertainment (NYSE: FLUT), a global leader in online sports betting and iGaming, announced its intention to acquire the remaining 5% stake in FanDuel Group from Boyd Gaming Corporation for approximately $1.755 billion. This transaction will increase Flutter's ownership of FanDuel to 100%, valuing the U.S. sports betting and iGaming leader at an implied $31 billion. The agreement, which includes the extension of a strategic partnership with Boyd Gaming through 2038, is projected to generate annual market access cost savings for Flutter of approximately $65 million beginning July 1, 2025. The acquisition consideration comprises roughly $1.55 billion for the equity stake and $205 million for the revision of existing commercial terms, and will be financed via a $1.75 billion senior secured first lien term loan. Peter Jackson, CEO of Flutter, emphasized the strategic importance, stating, "Our acquisition of FanDuel in 2018 is one of the most transformational events in our group's history... I am really pleased to drive future value for our shareholders by increasing our ownership of FanDuel to 100%."

In a further move to enhance shareholder value, Flutter completed a share buyback program, repurchasing 2.59 million shares for $651.27 million, representing 1.46% of its total shares. The company has also earmarked up to $245 million for further buybacks between October and December 2025, anticipating returning approximately $1 billion to shareholders this year as part of its multi-year $5 billion share repurchase program.

Strong Q2 Performance Underpins Upgraded Guidance

Flutter Entertainment delivered a robust performance in the second quarter of 2025, surpassing analyst expectations. The company reported adjusted earnings of $2.95 per share, significantly exceeding the $2.08 estimate from LSEG's analyst survey. Quarterly revenue reached $4.19 billion, a 16% year-on-year increase, outperforming the consensus estimate of $4.13 billion.

The U.S. market, particularly FanDuel, served as a key growth driver. U.S. revenue climbed 17% year-on-year to $1.79 billion, with sportsbook revenue advancing 11% and iGaming revenue soaring 47%. U.S. adjusted EBITDA reached $400 million, a notable increase from $260 million in the prior year, with margins expanding to 22.3%. The month of June marked a "best-ever" gross revenue margin for FanDuel at 16.3%. International operations also contributed meaningfully, with revenue growing 15% to $2.4 billion, bolstered by strategic acquisitions in markets such as Italy and Brazil.

Following these strong results, Flutter raised its full-year 2025 guidance. Revenue is now forecast at $17.26 billion, an increase from the previous $17.08 billion projection, while adjusted EBITDA is anticipated to reach $3.295 billion, up from $3.18 billion. This upward revision reflects favorable U.S. sports results, renegotiated market access terms, and the strategic timing of state launches. However, net income for the quarter experienced a sharp decline to $37 million from $297 million a year earlier, primarily due to non-cash charges associated with Fox's option to acquire an 18.6% stake in FanDuel and the amortization of acquired intangibles.

Navigating a Shifting Regulatory and Tax Environment

Despite operational strengths, Flutter faces increasing scrutiny and potential headwinds from an evolving regulatory and tax landscape in the United States. Peter Jackson, CEO of Flutter, voiced concerns regarding recent state tax changes.

"If you look at Illinois," he said, "we're very disappointed what they've done now. We think the taxes that they brought in will have a really, sort of, negative impact on the very recreational, super casual users."

Illinois recently introduced a per-wager tax of $0.25, which doubles to $0.50 after 20 million annual bets. Flutter anticipates an estimated $40 million annual impact from new taxes across Illinois, New Jersey, and Louisiana. To mitigate the effect of the Illinois levy, FanDuel plans to introduce a $0.50 transaction fee on all online wagers in the state starting September 1.

The broader 2025 state legislative year is expected to be highly active for tax policy, with all 50 state legislative bodies in session addressing budget challenges stemming from slowing revenue growth. This environment suggests a continued potential for increased state-level taxation and legislative changes that could affect corporate earnings. Examples include Maryland's proposed mandatory combined reporting and Virginia's discussion of market-based sourcing for corporate income tax. These legislative shifts could alter how multi-state corporations calculate taxable income, increase operational costs, and impact effective tax rates, introducing ongoing uncertainty for the sector.

Analyst Perspectives and Valuation Adjustments

Analyst sentiment surrounding Flutter Entertainment remains mixed, reflecting both the company's strong operational execution and the emerging challenges. On October 1, 2025, JMP Securities lowered its price target on FLUT to $340.00 from $345.00, while maintaining a Market Outperform rating. This adjustment followed a 17% decline in Flutter shares during September, a period when the Russell 3000 index gained 3%. Online gaming competitor DraftKings (NYSE: DKNG) experienced an even steeper decline of 22% in the same month. JMP analyst Jordan Bender suggested that without headline risk from prediction markets, these companies' shares might find a bottom as they increase share buyback activities. The revised price target for Flutter is based on 13.4x the firm's 2027 estimated EBITDA, a slight reduction from the previous multiple of 13.5x, and 20x its 2027 estimated free cash flow.

The consensus analyst price target for Flutter Entertainment has also experienced a slight decrease, moving from $345.10 to $341.53. While revenue growth expectations have risen marginally to 16.53% from 16.44%, the net profit margin forecast has decreased modestly to 10.24% from 10.53%, and the future P/E ratio has increased from 30.66x to 31.14x. These adjustments highlight analysts' cautious incorporation of potential regulatory impacts into future earnings estimates.

Strategic Initiatives and Future Trajectory

Looking ahead, Flutter continues to pursue strategic initiatives aimed at long-term growth. The company is actively evaluating entry into the emerging U.S. prediction market space, leveraging its two decades of experience with the Betfair Exchange. Its partnership strategy is viewed as efficient, with potential developments regarding DraftKings' entry into prediction markets following Flutter's collaboration with CME Group. The company's diversified offerings and superior pricing, particularly across parlays and player props, are seen as crucial differentiators in a competitive market. The complete integration of FanDuel is expected to further consolidate Flutter's market leadership and drive future expansion.

The success of these initiatives will be crucial in mitigating the potential impact of heightened state taxes and regulatory changes, which remain significant factors for the online sports betting and iGaming industry. Investors will closely monitor legislative developments, Flutter's adaptation to new tax structures, and its continued operational performance in both its established and emerging markets. The company's ability to balance aggressive growth strategies with effective navigation of regulatory complexities will define its trajectory in the coming quarters.