Brazil write-off causes third-quarter earnings miss for Flutter
Third-quarter revenue was up 2% for FanDuel parent Flutter Entertainment, but the effects of Brazil’s ban on iGaming and online sports betting drove massive losses and lower cash flow.
Flutter realized revenue of nearly US$3.9 billion but lost US$1.1 billion, mainly because of an US$873 million write down related to the forced closure of Betfair Brazil. Cash flow shrank 25% to US$360 million. The company’s leverage ratio stood at 4.6 times cash flow.
Despite a 12% gain in US players, Flutter saw its bettor base decline 3% year over year. The discontinuation of operations in India was blamed for the reversal. The overall revenue improvement was dampened, Flutter stated, by adverse sporting outcomes.
In the US and Canada, FanDuel saw 4% more OSB win and 8% higher iGaming revenue. Prediction-market activity and the debut of online gambling in Alberta were credited with the hikes.
Economies in the United Kingdom and Brazil helped Flutter contain flatness in international performance. A UK tax increase cut into cash flow by 14%. Cash flow was US$435 million. Overseas revenues were US$2.4 billion.
Reflective of the recent challenges, Flutter’s 2026 guidance was revised downwards. Revenue was expected to be US$300 million lower, reaching US$17.6 billion for the full year. Cash flow was trimmed by US$160 million, to US$2.5 billion.
Making his debut as Flutter CEO, Dan Taylor issued a statement saying that the third-quarter outlook “gives me confidence that we are moving in the right direction. In the US, our sports book improvement plan is delivering early but tangible progress in customer engagement and performance. Our International business continues to benefit from strong underlying momentum and the impact of our cost transformation programs.”
In closing, Taylor described his priorities as being to “build on our US leadership, capture the prediction markets opportunity, unlock more value from our international portfolio and simplify the way we operate. Delivering against those priorities will require faster execution, tough decisions and disciplined investment. I am confident our actions will make Flutter a stronger business in the long-term.”
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
Leadership handoff met a tougher operating backdrop
Flutter Entertainment’s third-quarter miss landed just after one of the most consequential management changes in the company’s recent history. Peter Jackson, who led the transformation of the former Paddy Power Betfair into a global online betting group anchored by FanDuel, stepped down as CEO on Oct. 1. Dan Taylor, previously president of Flutter International, took over as the company was absorbing market exits, tax pressure, higher investment requirements and a sharper investor focus on cash generation.
The succession had been announced alongside second-quarter results, when the company said Jackson would leave Flutter after nearly nine years as CEO. That report also showed the business was already under strain. Revenue rose 3% to US$4.3 billion, but Flutter swung to a US$296 million loss from a US$37 million profit a year earlier. Cash flow fell 45% to US$508 million and monthly active users dropped 11%, largely tied to the closure of operations in India.
Those figures made clear that Flutter’s top-line growth was not translating cleanly into earnings. By the time Taylor delivered his first quarterly update as CEO, the company had suffered a much larger reported loss tied to Brazil and lowered 2026 guidance. The timing matters: Taylor inherited a company still leading key markets, especially through FanDuel in the United States, but facing more pressure to prove those positions can support durable cash flow.
Earlier optimism gave way to write-downs and guidance cuts
Flutter entered 2025 with momentum. In March, the FanDuel parent reported that it had swung to a fourth-quarter profit, reversing a US$902 million loss in the prior-year period into a US$156 million profit. Revenue rose 14% to US$3.7 billion and cash flow reached US$655 million. Management pointed to FanDuel’s US strength, international share gains and record Super Bowl engagement as evidence that the platform was scaling.
That confidence was not without caveats. Flutter said bettor-friendly NFL results had hurt sports betting margins and that new territory launches in Missouri and Alberta would create near-term costs. Still, the company framed 2025 as an expansion year, with FanDuel’s sports-betting leadership and growing iGaming base expected to offset investment and volatility.
By midyear, however, the earnings story became more complicated. Flutter was growing in the US and internationally, but the company’s profitability was increasingly exposed to one-time market changes, adverse sports results and rising tax burdens. The forced closure of Betfair Brazil later produced the US$873 million write-down that dominated the third quarter. That impairment changed the narrative from investment-led volatility to a more serious question about how much regulatory risk sits inside Flutter’s international portfolio.
The Brazil charge was especially notable because management had earlier expressed strong conviction in the market’s long-term potential. A large write-off tied to a ban on iGaming and online sports betting underscored how fast emerging-market opportunity can turn into balance-sheet damage when rules change.
FanDuel remained the engine, but not immune
FanDuel has been the central reason Flutter’s valuation story has been tied to the US. The brand has held leading positions in online sports betting and iGaming, supported by product depth, same-game parlays, rewards, cross-sell and a large customer base. Earlier reporting on Flutter’s second-quarter earnings call showed management emphasizing a 17% US revenue increase, FanDuel’s strongest gross-revenue margin and a 32% rise in players.
The US business also benefited from product development. FanDuel expanded same-game parlays, added new casino titles and leaned into FanDuel Rewards. Those initiatives helped iGaming continue to grow even as sports results hurt betting margins. In the second quarter, US iGaming revenue rose 14%, while sports betting faced a 15-point drag from unfavorable outcomes.
But FanDuel’s strength did not fully insulate Flutter from earnings pressure. US cash flow plunged 70% in the second quarter to US$119 million, reflecting investment in prediction markets and new-state launches. In the third quarter, Flutter again cited adverse sporting outcomes as a dampener, even as FanDuel recorded higher online sports-betting win and iGaming revenue.
The company’s challenge is that the US business is both its growth engine and a capital-intensive battleground. New launches, marketing cycles tied to the NFL and World Cup, tax changes and product investment can all suppress cash flow. That dynamic has made leverage a central concern. Flutter’s debt-to-cash-flow ratio was 4.3 times at the end of the second quarter and 4.6 times in the third, well above management’s longer-term target of two times to 2.5 times.
Prediction markets shifted from threat to possible hedge
Prediction markets have become one of the biggest strategic debates around Flutter. Early in the year, management avoided specifics. During a May earnings call, executives stuck largely to broad themes and said FanDuel’s prediction-market revenue was modest, while calling event contracts an incremental customer-acquisition activity in states without legal sports betting. They also declined to quantify what success would look like.
Investors have been less patient. The rise of prediction markets raised concerns that event contracts could siphon handle from regulated sports books, weaken margins or create a new promotional fight. Flutter’s answer has been twofold: it can use FanDuel’s pricing expertise to participate in the category, and it can offer its own products where permitted. The company has forecast revenue from FanDuel Predicts and described market making as a potential use of its existing trading capabilities.
That view gained outside support in July, when Jefferies analyst James Wheatcroft argued the prediction-market threat to Flutter was overstated. He said there had been no material cannibalization of online sports betting revenue and that market making could become incrementally profitable. His analysis treated prediction markets not as an existential threat, but as a way for Flutter to reach customers in states where online sports betting remains unavailable.
The third-quarter release suggests Flutter is now trying to convert that thesis into operating results. Management credited prediction-market activity with contributing to FanDuel’s regional gains. Still, the opportunity remains uncertain because regulation, customer adoption and competitive behavior are unsettled.
Tax and regulation became the through line
Across Flutter’s recent results, the common thread has been regulation. Brazil produced the largest single hit, India reduced active users, UK tax increases cut into cash flow and US state-level taxes are changing the economics of sports betting. Illinois’ handle tax prompted FanDuel to prepare a bet surcharge, a move Jackson described earlier as a response to an outlier policy.
These pressures explain Flutter’s emphasis on cost savings and portfolio simplification. The company has announced major cost-cutting plans, including a US$500 million initiative to offset taxes and inflation, after earlier targeting hundreds of millions in savings by 2027. It has also exited or closed smaller or underperforming assets, including FanDuel Picks and FanDuel TV’s racing network, as management reviews whether each brand and product justifies continued investment.
The stakes for Taylor are therefore broader than one bad quarter. Flutter remains one of the few operators with scale across the US, the UK, Europe, Australia and selected emerging markets. But scale now brings exposure to more tax regimes, political decisions and market-specific shocks. Investors are likely to judge the new CEO on whether he can preserve FanDuel’s lead, reduce leverage, make prediction markets pay and avoid further international write-downs while restoring confidence in cash-flow guidance.
