Flutter's US Quarter May Meet Guidance as Promotions Ease

Flutter's US business may be entering its third-quarter report with less downside risk than investors expected. Jefferies estimates US net gaming revenue of $1.483 billion, almost exactly in line with management's $1.48 billion guidance and 8% above the year-earlier period. The broker raised its growth estimate by one percentage point after September promotions came in below its previous assumptions.

The change matters because the second quarter left Flutter with a low bar and a credibility test. Flutter reported that US revenue fell 6% year over year in Q2, as a 15% sportsbook decline outweighed 14% iGaming growth. US adjusted EBITDA fell to $119 million from $400 million. Management said higher generosity, unfavorable sports results and state tax increases weighed on profitability. A quarter that merely meets guidance would therefore mark stabilization, not a return to the growth and margins investors had expected earlier in the year.

Jefferies found promotional spending across observable states was 16% below the prior year in September. Michigan and Pennsylvania were each down about 30%. That surprised the broker, which had expected spending to rise after lighter comparisons in July and August. Lower promotions can lift net revenue and EBITDA if customer activity holds up, but the evidence is incomplete. Ohio, Flutter's fourth-largest state and the largest market that reports free-bet data, remains an important missing piece in the analyst's state-level read.

Online casino trends also improved without returning to second-quarter speed. Industry gross gaming revenue grew 13% in September, up from 12% in August but below 16% in Q2. New Jersey recovered to 13% growth from 4%, Michigan edged up to 16% from 15%, and Pennsylvania slowed to 10% from 13%. Flutter grew 8%, matching DraftKings and beating BetMGM's 4%, but still trailed its own 13% Q2 pace.

Prediction markets add a second uncertainty. Jefferies said Kalshi volumes reached $18.3 billion in the sixth week of the NFL season, roughly double the $9.7 billion weekly rate before the season. College football volume on Kalshi was 10% higher than NFL volume, partly because 18-to-20-year-olds can use prediction markets but cannot legally place traditional sports bets. Yet regulated sportsbook handle for NFL games was four times college football handle, which argues against assuming broad cannibalization.

Kalshi's share of prediction-market activity fell to 76% from 84% before the NFL season as rivals expanded. Polymarket held 12%, DraftKings' DKeX 4%, and the exchange used by Flutter 2%, or 5% excluding parlays. Those numbers show an active new market, but not yet a large replacement for Flutter's core sportsbook.

The cleanest near-term test is whether lower promotions extend to Ohio and allow US EBITDA to meet guidance alongside revenue. If they do, Flutter can show that Q2's margin pressure is easing. If the spending decline is concentrated in a few reporting states, the apparent improvement may prove less durable.