Post-Ides of March Outcomes for DraftKings and Flutter's Q1 Figures Might Fall Short
title: First-quarter Woes for Sportsbook Giants: An In-depth AnalysisAuthor: Todd Shriber, @etfgodfathercategories: [Finance, Gaming, Business, Mergers and Acquisitions]date: April 22, 2025, 7:24h
Sportsbook giants DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT) may deliver less-than-stellar results for the first quarter of 2025, following a string of disappointing outcomes, according to Stifel analyst Jeffrey Stantial.
The NCAA Tournaments, the men's and women's event, saw favorites dominating the games, leaving sportsbook operators and some competitors on the losing end. This could lead to subpar earnings for the three months of 2025, as reflected in Stantial's revised price target of $53 for DraftKings and $315 for Flutter Entertainment.
The unfavorable March Madness results compounded the woes of sportsbook companies and their investors, following the Super Bowl, which was another low-hold event for these operators because the Philadelphia Eagles, as favorites, won, covered, and the total went over - a challenging trifecta for sportsbook operators.
The fourth quarter of 2024 also saw broadly "customer-friendly" NFL outcomes that contributed to tepid earnings. In anticipation of DraftKings and FanDuel's earnings reports, Stantial estimates that the punishing March Madness hold could shrink DraftKings' earnings before interest, taxes, depreciation, and amortization (EBITDA) by up to $80 million. Meanwhile, Flutter Entertainment could experience an EBITDA trim of around $130 million.
Historically, the stock market tends to underperform after stretches of unfavorable sportsbook results. However, analysts suggest that investors may be overestimating the hold rate downside, as both companies enter their earnings reporting period with relatively promising setups.
On the iGaming side, DraftKings' first-quarter results could take a hit due to a recent customer striking it rich with a $10 million jackpot. Nonetheless, the outlook remains solid for the near term, with state-reported data tracking within DraftKings and Flutter Entertainment's FY25 guidance and potential upside from structural hold expansion, coupled with possible promo discipline[1].
Stay tuned for more updates on the sportsbook industry as the EBITDA impacts became clear in the Q1 2025 earnings releases[2][3][4].
[1] Overall: Enrichment Data- The expected first-quarter EBITDA impacts for DraftKings and Flutter Entertainment due to unfavorable sportsbook results in March 2025 are significant. DraftKings is forecasted to see its first-quarter EBITDA reduced by as much as $130 million, while Flutter Entertainment could face an EBITDA hit of around $80 million. These negative impacts reflect the seventh consecutive quarter of unfavorable sportsbook outcomes affecting their earnings.[2] Source 1: MarketWatch[3] Source 2: CNBC[4] Source 4: The Street
- The first-quarter financial results for sportsbook giants DraftKings and Flutter Entertainment could be negatively impacted by a series of unfavorable sports events, as suggested by Stifel analyst Jeffrey Stantial.
- The March Madness outcomes, along with the Super Bowl and certain NFL results in the fourth quarter of 2024, have sapped earnings for sportsbook operators, potentially reducing DraftKings' EBITDA by up to $80 million and Flutter Entertainment's by around $130 million.
- Despite these challenges, analysts suggest that investors may be overestimating the downside, as both DraftKings and Flutter Entertainment approach their earnings reporting period with relatively promising setups in the finance, business, and technology sectors.
- On the iGaming side, DraftKings' first-quarter results could be affected by a recent large jackpot win, but the outlook remains solid for the near term, with state-reported data tracking within their FY25 guidance and potential upside from structural hold expansion and possible promo discipline.
- In the realm of mergers and acquisitions, the sportsbook industry will stay in focus as the impacts of lower first-quarter EBITDA due to unfavorable sports outcomes become clear in the Q1 2025 earnings releases.
