Flutter Entertainment – the parent company of US gambling giant FanDuel and one of the world’s biggest online gambling operators – recently released its Q4 2025 earnings. Despite showing significant growth, it was still below levels expected by investors and analysts, and the market has reacted quickly. During the day following the February 26 earnings report Flutter’s share price fell from 123.3 USD to 106.14 – a drop of 12.7%. Shares have since stabilized at around 5% lower than close on the day of announcement. Yet, they remain down 47% year-on-year. So what has investors continuing to be pessimistic on Flutter despite solid revenue growth?
This article will take a deeper look at the earnings report, analyzing not only the specific figures but also the market conditions that led to the recent sell-off, and the US gambling sector trends that make it part of a potential bigger picture realignment.
Earnings Release Strong but Below Expectations
Flutter’s 2025 Q4 reports showed a revenue increase of 25% year-on-year, hitting $4.74 billion. Adjusted earnings per share were $1.74. Both benchmarks were below Wall Street analysts targets. Analysts had estimated $4.93 billion in revenue and $1.85 in earnings per share.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) was up considerably at $832 million. Although this too was below the $893 million analysts had expected.
One telling figure was that net income for the quarter was down to $10 million from $156 million the year prior. A fall of 94%. The company said this was primarily due to higher costs and tax expenses across US markets. Net cash also declined from $428 million last year to $224 million, which it said was mostly due to ongoing expansion.
This all led to a downgrade in guidance, which was also below Wall Street’s expectations. The company now expects to make $18.4 billion in revenue in 2026, down against analysts’ consensus predictions of $19.34 billion for the year.
The report also highlighted an interesting divergence which is not common in the US sports betting market. Revenue grew but the total amount players wagered for the quarter (the “handle”) slowed considerably.
Flutter briefly touched on some investor concerns in its report.
“US current trading largely reflects the impact on our customer base of the very high gross revenue margins achieved in the second half of Q4, driving lower levels of customer engagement into 2026,” the earnings report said.
In practical terms, FanDuel had too high a margin against bettors in a short time and that reduced customer retention. The huge NFL market continues to drive US sportsbook engagement, and the results in the playoffs this year did not favor the most popular teams. Which meant more bettors than usual were losing.
The company also appears to have increased promotional spending during the playoffs, when many fans were losing, and then mistimed its promos afterwards leading to high customer churn.
Stock Prices Slide, Reflecting Forward Guidance
In the wake of the report, released after the market closed on February 26, Flutter share prices fell some 12% in a single day. That briefly saw the stock hit its lowest price since October 2022.
Although it has since stabilized, several major financial firms have cut price targets in the days following. For example, these companies all downgraded Flutter’s price target or rating during this week, with some cutting price targets by $100 or more.
- Barclays
- Benchmark
- Truist Financial
CBRE Group also downgraded its rating from Buy to a Hold. Although overall revenue growth remained relatively strong, Flutter’s narrative that it won too much from bettors, resulting in less retention, hardly points to a sustainable long-term strategy in the US.
The US gambling business has seen rapid expansion for the past six or so years now and Flutter had been trading at a premium due to its dominant position alongside DraftKings when it comes to market share. Neither company made any profit for the first few years of their operation, yet investment continued to pour in based on massive revenue growth and the potential for that to continue into the future.
However, given that the US division of Flutter’s international business was the main focus of shortfalls that led towards downgraded guidance, investors seem to have viewed the figures as significant.
Is the Honeymoon Period of US Sports Betting Over?
However, despite the gravity of last week’s share price fall, they cannot be analyzed completely without considering the wider picture. This recent decline comes off the back of a 47% drop in value over the pats year.
Although Flutter’s total number of player accounts continued to grow, the rate of growth slowed considerably from an 8.5% increase in Q4 2024 to 3% in the same period 2025.
That is reflective of what many investors are feeling about the US online sportsbook market – it may be entering a mature phase, and profitability concerns are still not off the table. The following have all contributed to the share prices of major US online gambling operators falling in the last year:
- Rising promotional costs
- Slower handle growth
- Regulatory uncertainty
- Emerging competition from prediction markets
In a related aside, online casinos (of which FanDuel is one) are booming in states that have them – but they are limited by political appetite for expansion.
The market is posting record revenues in New Jersey and offshore casinos serving US players are still going strong by most estimates. However, regulated casinos’ growth is slowing overall as currently, few new states are looking to open up legal markets. FanDuel rival DraftKings recently included a substantial bump in earnings in its projections for 2026 based on joining the upcoming online casino market launch in the Canadian province of Alberta, on which very little information has yet been revealed other than it will happen this year.
With the online casino sector a competitive one across offshore and state-licensed markets, a comparison platform helps you discover the best online casinos in the US – whether you’re looking as a player or from a market analyst’s perspective. Gambling reviewers consolidate player considerations like bonuses, payment methods and user experiences across casinos into one place. However, this information can also help inform investment decisions. It is increasingly clear that specifics like bonuses can have significant market effects in what can be a tight margin sector.
Flutter Barely Mentioned It, But Prediction Markets are New Competition
If there’s one recent development that has really unsettled investors in the US sports betting giants, it’s the rise of prediction markets.
The astonishing rise of firms like Kalshi and Polymarket in the past two years really blindsided many online sportsbooks. In a similar way that DraftKings and FanDuel did so to the existing US gambling giants in 2018 and 2019, when they took over regulated sports betting via the huge brand awareness and customer base they had gained from their previous fantasy sports (definitely not sports betting) operations.
Prediction markets went from niche political polling to mainstream awareness to multibillion dollar business in just a few short years. The concept is that they are akin to financial markets but on any kind of yes/no question as a contract. Users buy in their prediction at a certain price point, and they are paid out based on the price point when the question is deemed settled.
While they originally were used purely for political markets, crypto predictions and even policy research, when the model began to take off platforms soon moved into offering contracts on sports. This now accounts for some 80% of their revenues.
While sportsbooks like FanDuel reported strong but slowing revenue growth in 2025, Kalshi reported a massive 1,200% revenue increase over the year. It went from $24 million in 2024 to around $260 million in 2025.
Flutter has somewhat belatedly jumped into the prediction market arena with the launch of its FanDuel Predicts app. However, according to CNBC Flutter CEO Peter Jackson told investors the company had found no evidence that prediction markets are cannibalizing the regulated sportsbook business. It did however, say the rollout of its own platform across all 50 states would cost it around $300 million over the year.
Some states have been pushing back against the prediction markets however, which has also caused investor concern. Regulatory costs are already pressing on sportsbook operators, so launching one could expose Flutter to further costs if the models are widely challenged in the future.
Can Flutter Maintain its Global Market Leading Position?
While FanDuel may be under threat in the US, as recognized by investors and analysts over the past 12 months, Flutter’s global business is still very strong. The company operates multiple global brands including:
- Betfair
- PokerStars
- Paddy Power
- Sky Betting and Gaming
Although FanDuel remains it’s biggest brand, as the US is the largest global sports betting market by some distance, PokerStars is a global leader in its niche and Betfair and Paddy Power are long-term operations in the large and stable UK gambling market.
The investment case for the future may hinge on Flutter’s global scale enabling it to weather the storm of increasing taxes, regulation and competition in an evolving US market. If the concerns about cannibalization from prediction markets prove overstated, or FanDuel’s predict it is a massive success, buying at the current dip could have strong future earnings potential.
Being the market leader across multiple geographies and verticals makes Flutter more resilient than some other competitors in the US market. It’s mature businesses in the UK, Italy and Australia may stabilize margins during volatile market conditions elsewhere.
For investors, the global aspect to Flutter’s portfolio may justify maintaining a valuation premium relative to US rivals like DraftKings that lack comparable international scale or brand depth. In that sense, Flutter could be a reasonable hedge on the US sports betting market, offering exposure to continued growth while retaining stability from it’s diversified gambling operations.
