iGaming Daily

Andrew McCarron (00:00.199)
It's earnings season and today on iGaming Daily we've got a powerhouse in the hot seat as we break down the Q4 and year-ending earnings call from Flutter, which generated $162 million in profit, but faced some tough questions from analysts on whether its US returns are sustainable. And in the back half of the show, we'll shift from wins to losses and talk a little bit about DraftKings pwning up $10 million to settle its NFT dropper. I'm Jessica Wellman, editor of SBC-

America's welcome to iGaming Daily brought to you by OptiMove, the number one CRM marketing solution for the iGaming market. And joining me today, we're changing it up. I've got the payment expert and insider sport editor, Ted Oram Clay, fresh back from Rio. I hope you had a great time in Brazil and that you're ready to chat it up with me as we change things up today. Yeah. Thanks Jess. Good to be here. Good to speak about some more betting.

orientated news as you said I've been on the payment side of things for quite a while now so it's not very often that get to check out some of the stuff with some of the public companies in the betting side of things which there's always some interesting goings on there and yeah it's interesting change of pace to being back in Manchester of all places after being in Rio de Janeiro for a week.

which was a great trip there. The conference was really good. A lot of very interesting talking points there, as expected. was mainly on the payment side of things, but did manage to check out some of the speeches from the regulators and Ministry of Finance representatives and some of the leading betting companies as well. I'll do a bit of shameless shilling. I've put an article out on SPC News for Ted Memmier earlier covering one of the leadership panels, which had a few interesting comments on from some of the big operators. Yeah, overall it was a solid event and Rio with

Yeah, probably one of the most beautiful places I've ever been to, I've got to say. I was about to do what I hate because I've chastised people before and asked about the weather and just, I'm just going to say I bet going from Manchester to Rio, was ungodly hot for you and then I'm moving on. We're not going into a weather conversation. You're very correct. But yeah, let's move swiftly on.

Andrew McCarron (02:14.799)
All right. So don't worry, I'm going to make you talk money and numbers this entire time so that you will feel right at home. Flutter did its year ending earnings today. If you want all of the top line numbers, I'm just going to be honest, you need to go read Ted Menwear on SBC News. He does great recaps that focus on the financials of that. I will fully admit that is not my strong suit. kind of top line number, though, 162 million in

profit, they're growing, they're at a deposit. To me, hear flutter in my brain just immediately translates it to fan duel. I'm curious for you, Ted, that was not the case a few years ago. How much when you were just looking down and seeing the balance sheet and the narratives, how much has things changed since you were first starting in the business? It's very interesting and I think very telling.

to look at Flutter's results and you really see how much the international industry has kind of transformed, I think, and how much of a massive role the United States now plays as such a dominant market with, I mean, how many states are active now? Is it 36 or 38? It's 37 plus DC, I believe. Oh, and Hawaii's house passports burning yesterday. I don't know if it's going through the Senate, but if we can get Hawaii on board, I think that's a big domino to fall, but we never expected.

So with the addition of Hawaii then, it'd be close to 40. And the US is obviously the world's largest economy. It's got a population of 300 million people, in excess of 300 million people, sorry. There are four major sports leagues plus the MLS are five of the most valuable leagues in the world. They're in the top 10. There's huge sports consumption. So of course, the market has emerged as being probably the most valuable in the world.

And we're seeing that very clearly in Flutter Entertainment's results. I think it's very interesting. As you said, Flutter now, especially in America, you'll immediately make that association with Fangil and looking at the results, can see why. But for a lot of the UK and European industry, the thing that you would historically associate Flutter with would be Paddy Power and Betfair. Obviously the company has, I guess really has Irish origins because it's...

Andrew McCarron (04:37.942)
The first company, the oldest one we've got here is Paddy Power and Flutter's origins are really when Paddy Power merged with the British company Betfair and then you had obviously the acquisition of the Stars Group, didn't you? And it's gradually just snowballed into now owning Fangiol, the legacy daily fantasy sports platform, which made that leap into betting. And that is now by far its biggest earner.

Even though, of course, Pally Power and Betfair and all these other brands are still incredibly strong brands and bring about a lot of money. mean, if we look to the results, what was it? Was it three, I think revenue of 300 million from UK and Irish activity, which is a significant amount, but it's very rare. It's very interesting to see that the 300 million, which is already a vast sum, is one of the more insignificant numbers here in comparison to

billions for Fanjul in terms of revenue. So it's very interesting to see how this company has morphed from being an Irish, Irish-British company, already a very dominant player, to now being incredibly US focused. And obviously that's also seen in its listing as well, isn't it? It quite very famously left the London Stock Exchange for the New York Stock Exchange in

What I think was actually quite a big blow for the British stock market and the public listings in this country, especially at a time when the government were trying to keep as much investment here as possible. So yeah, think the results are very indicative of Flutter's journey and quite significant transformation over the recent years and also indicative of how significant the US betting market now is.

for these international companies? Yeah. mean, reading through the transcript this morning, I was struck that they were saying like, you know, we have the US stuff and then we're going to like make basically reorg into this international division. That's the rest of the world, basically, you know. It's not like they're very clear that the US is their home base. What was also interesting in this transcript was

Andrew McCarron (06:56.43)
So they did their projections for 2025 and the analysts on the Q &A, they're never gonna be like, I don't think you're right. But they pretty much got as close to I don't think you're right as I've seen where they were pointing out like handle growth is slowing down in the US, we'll get Missouri. They.

This is go to Canadian gaming business eventually and Tom Nightingale will have kind of all of the Canadian highlights from these earnings calls. They said they don't think they're getting Alberta until Q1 26 when the original thought was Q3 25. And they're like, you know, handle slowing. How can you possibly like sustain this growth if the industry as a whole isn't necessarily growing? And the Fandle executives did kind of push back. They did point out

And this is true. A lot of promotional spend because it's tax deductible in certain states, operators will go big on it. And that artificially inflates handle because you get to write off promo cred. So you're essentially just creating dollars that never really existed in terms of growth. They also were kind of like, I don't know. I don't think handles that big a deal. And I was just like.

For being a sports book operator, as Fandl is, handles a bit of a deal, especially when the entire success of Fandl has been high hold products, which is making sure that you generate a lot of handle and then hold onto a lot of it, which is why it is kind of interesting. They are continuing to roll out high hold products. did, I know you don't follow the NFL.

Ted, but did you hear about kind of the third and fourth quarter of last year were just disastrous for sports books when it came to football betting? Yeah, I did see, I saw that coming through and some of the results I saw and I think it was, was mentioned in a lot of the affiliate reports as well, I think, wasn't it, impact in that space quite significantly. Although yeah, you might need, you might need to give me bit of an idea of how exactly this occurred.

Andrew McCarron (09:09.968)
I mean, I believe the words unprecedented and catastrophic were thrown around in these updates. was a very volatile swing in the favor of, well, I mean, it was great for betters. Everybody's raking it in. Volatile swing for operators. And I think some people, including myself, are just kind of like, well, if you're going to live and die by high-hold same-game parlays,

and all of the favorites come in and you parlay them together. Like, is this necessarily a strategy you want to continue pursuing because you kind of create the potential for this to happen? In the earnings call, they said, you know, this is just the nature of the business. We still believe in high hold products. And they talk quite a bit about the Your Way product on FanDuel where I haven't seen it myself and they kind of soft rolled it out. So there's not a ton of information about it.

But essentially it allows you to build same game parlays and have like, you know, manipulatable, manipulatable, God, that's a hard word to say. I've never had to say that before. Lines where you can, you know, customize it even further to keep people in these high hold bets and continue to keep those margins. Talking with Martin Elliott,

You know, he said that the super sub product, it, Patty Power has been one that has really been great for customer acquisition and retention. Have you used it at all? you familiar with it? I'll admit I've not used it, but I am familiar with it. I mean, the, it, it makes a lot of sense. And I think Patty Power has always been one of the big leaders in the, in the UK. guess we'll call them, call them bet builders or same game hackers.

They've always been one of the big leaders in that space, been pushing that product quite strongly, have acquired a lot of customers and I think as a result of that obviously made a lot of money from that product. And we now obviously see a similar kind of product in the US with, as you call them, game parlays. It's obviously the same product, different terminology really. And these bang products are always going to prove popular with people because

Andrew McCarron (11:31.384)
of just the sheer amount of options there are, the entertainment value of being able to have different options in different markets in one game to make viewing a fixture more exciting, to diversify your ways of getting a win. And then this sub-product has given people a way to get around one of the biggest frustration points I think customers will have with one of these products, which is if your player gets injured or gets sent off or

doesn't play if you've put it on before the lineups are announced that you can get a replacement, a shoe in for it and keep your bet rolling and stay engaged. So I think it makes a lot of sense that they'll be interested in taking this out to the US market and introducing it to more customers there, especially given how popular same-game parlays have proven with the US better in the same way they have with the UK and Irish and wider European better.

Yeah, to clarify, like Super Sub is soccer only, but I think the idea that they carried over is how can we entice people who maybe are nervous to play accumulators or parlays into playing more. And that's kind of where your way is coming from. Yeah, by like in a way, sort of adding another layer of insurance to the bet, I guess. Exactly. All right.

Like I said, if you want the full financial report, go to SBC News for that one. We're going to take a quick break and come back to make Ted talk about crypto because I don't want to do it by myself. All right. Welcome back to iGamingDaily. Last week, there was news that DraftKings settled one of its many, many lawsuits that I have been tracking. This one, the rather substantial class action lawsuit against them for

their now closed NFT marketplace and their DFS product with NFTs called Rainmakers. For people unfamiliar with the case, the motion to dismiss the case was denied. For those who don't watch a lot of Law & Order or follow courts like I do, that's usually a sign that the...

Andrew McCarron (13:44.046)
defense or the plaintiff has a pretty strong case. It was going to be moving forward. also tricks discovery, which means that you can petition all of these different things from a company. So DraftKings had a lot of reasons why they wanted to settle this and just get it out of the way. They settled for $10 million. It sounds like a lot of money, Ted. How big is $10 million really, though, when you have potentially 175,000 people?

who are going to get a piece of it. Yeah, I mean, when you put it like that, probably not really that significant. And I think as well, if you consider wider consequences potentially of this lawsuit, that the allegations that the NFT marketplace was violating regulatory standards in the US with how digital assets are governed and classified, that could have gone a lot further than just a $10 million settlement.

worst case scenario this could have led to some quite significant enforcement action really. So when you consider those two things in general it's I guess yeah it's really the conclusion I've come to is DraftKings have kind of put this issue to bed at fair enough what 10 million is a lot but yeah it's put away but yeah. It's a drop in the bucket comparatively I mean you're talking like I feel that I have a friend

who I play poker with that is he will qualify for this class action lawsuit. When I told him, was like, I don't know how they're divvying it up, but there's a chance that if they just give everybody the same, you get $57. It's not a lot of money and like you said, this had a lot of regulatory scrutiny around it. Again, they were selling NFTs of athletes and there was a separate lawsuit that they ended up.

coming to an agreement with the NFL Players Association related to the licensing of these things because they just shut it down and were we're not paying you anymore. So I think they probably paid a lot of money for that to go away too. Yeah. And I mean, I'd argued, sorry to interrupt you, yes, was probably the most significant one as well, The player's lawsuit, the athlete's lawsuit, would that not have been? I mean, in terms of final judgments, maybe. I think

Andrew McCarron (16:09.276)
Really, big thing is, again, so discovery, being able to get inside the inner workings of DraftKings and this product and petition. We're talking tens of thousands of pieces of evidence, emails, documents, implementation, that sort of thing. And you are also a business that runs like

highly, highly regulated and licensed sports books and casinos across the country and potentially the world as they get to expand, you do not want someone poking around in the unregulated thing that you were doing. And you will, I mean, again, blanket, I am not a lawyer, but I think for me, what sticks out is you just, don't want that.

that evidence getting out there and becoming part of the public domain and having people like me troll the court sites and find it. I guess the only thing to consider might as well be DraftKings is what is the second biggest sports book in the US by market share and revenue. So 10 million to settle this, put this issue behind them and as you say, prevent any further potentially quite disastrous investigations and enforcement actions.

not exactly a bad thing for them, is it? Yeah, I don't think so. It kind of raises the question too, the most interesting thing about the whole Rainmaker thing was just seeing someone that regulated get into the crypto space in some respect. I wonder, on the DraftKings earnings call, Jason Robbins mentioned event contracts, the prediction markets, election betting as people have called it.

are something that they're potentially looking into. We've seen Crypto.com get into event contracts with Crypto and CFTC hasn't intervened. Have they intervened? Sorry. There was a period where I read like 50 of these. Do you remember they didn't, right? Yeah. I think they did. Crypto.com launched that product shortly before Christmas, I think. And not long after that, the CFTC

Andrew McCarron (18:33.282)
requested that they take it down. I don't know whether they have done though. Yeah, I don't think they did. Yeah, think and I think it's just sort of yeah, nothing's really come about from it. I do know that Robin Hood launched was it? Yeah, it was Robin Hood, wasn't it? They launched their own sports events contract. get taken down though. Yeah, which was more to do with politics, I think than sport. And yeah, they were told to remove that within a day of it being launched, I think, which they said they were quite disappointed with because they

claim that they've been engaged in a lot of discussions with the CFTC ahead of this. So it's still a very regulatory contentious topic, I think, this whole notion of political event contracts. I mean, it's interesting, think coming from, might be going on a bit of a tangent here, but coming from the UK, I know we've had this conversation before, but political betting in the UK, could just go on, say we were talking about Flutter earlier, I could just go on the Poudy Power website.

and put a bet on who's going to be the next prime minister of the UK or the next president of the US or, you know, some might have like chances of Donald Trump to be impeached within the next four years, something like that. You can have a find to all sorts of political markets in Britain. But as we said, in America, it's very close. It's not allowed, is it? The way that you do it is through these event contracts, which isn't really classified as a form of betting.

Well, and the event contracts, I mean, the market for elections used to be very restricted. Like the CFTC basically just said, these two small organizations, one of which was a school, like for educational and research purposes could do it. And then CalG just kind of ran with it. It didn't used to be a big thing. Yeah, it's we don't do a lot of what you guys do. Most states.

We were talking before we recorded betting on the Oscars is something I enjoy doing, but I have to drive, you know, like 20 minutes to Indiana to do it because you can't do it in Kentucky and you can't do it in Ohio, which I live just across the river from. So yeah, it's something that we can't do, but I think Flutter said something about they're looking kind of R and D into event contracts, DraftKings as well.

Andrew McCarron (20:41.806)
I think with Donald Trump and the new CFTC and this upcoming round table on event contracts, they're looking and seeing if this maybe opens the door for a lot more alternative markets that they could potentially offer. Like Fintel in Canada offers all sorts of crazy stuff. Like will it rain? mean, just stuff like that. And so I think they would love to be able to expand that here, whether it be through event contracts. So we shall see.

All right, we are entirely out of time, which is surprising because I did not think I had this much to say about crypto and earnings calls, but you brought out the best in me, Ted. Thanks for joining me. Thank you guys for joining us and we'll see you next time on iGaming Daily. Thanks very much, Jess.