Flutter trying to get its mojo back, J.P. Morgan analyst says
“Material underperformer” Flutter Entertainment “is still trying to get back some of its online sports betting mojo against an increasingly cloudy industry backdrop,” says J.P. Morgan analyst Daniel Politzer, giving the Fan Duel parent a “Neutral” rating in a 12 August note.
Politzer set a price target for Flutter stock of US$114 per share. The stock was trading at US$99.02 at the time.
Taking a wait-and-see attitude toward new Flutter management, Politzer said he viewed Flutter “as a show-me story at present.” He added that “in order to get more constructive, we would like to see better execution in the US, both operationally and financially.”
Overseas, Politzer was of the opinion that “fundamentals have been more stable of late, but aggregate growth prospects are relatively lower than the US, and margin expansion has been limited to cost efficiency plans being used to offset higher taxes.”
Politzer observed that FanDuel’s market share had eroded to 39% from 47%, at a time when Flutter CEO Peter Jackson and FanDuel CEO Amy Howe had made their exits. He added the FanDuel was midstream in an attempt to revamp its sportsbooks, a plan centering on greater generosity to players.
“While the ascent of prediction markets has been debated as a culprit for slowing industry handle … FanDuel Predicts has yet to gain much traction,” Politzer continued. He allowed that the latter could become a bigger contributor to the bottom line over the long haul.
While Politzer viewed international trends as more stable, he described a Flutter that was buffeted by several adversities. These numbered a steep increase in United Kingdom taxes (up to 40% from 21%), uncertainty in Brazil and the loss of the India market, when the subcontinent’s government banned igaming.
In his accompany charts, Politzer pointed out that Flutter’s stock price was down 68% from its historical high. He blamed this on the incursion of prediction markets, handle slowdown and a relative failure to perform in US online sports betting.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
FanDuel’s stumble put Flutter under a harsher lens
Flutter Entertainment’s current test is less about whether FanDuel remains a major U.S. sports betting brand than whether investors still believe it can widen the gap again. The company built much of its equity story on U.S. momentum, with FanDuel leading in online sports betting and using scale, pricing and product depth to support higher long-term margins. That narrative has weakened as market share slipped, betting handle slowed and rivals pressed harder into promotions.
The pressure has been visible in analyst commentary for months. J.P. Morgan analyst Daniel Politzer previously described Flutter as a company that had become a “show-me story,” citing the need for better execution in the U.S. both operationally and financially. He pointed to FanDuel’s market share falling to 39% from 47%, a significant reversal for a business long treated as the benchmark in U.S. sports wagering. That loss of share coincided with leadership disruption, including the departures of Flutter Chief Executive Peter Jackson and FanDuel Chief Executive Amy Howe, and a broader reset around customer generosity.
Flutter’s stock performance has amplified the scrutiny. Politzer’s earlier work noted the shares had fallen sharply from their historical high, reflecting investor unease over prediction markets, slower handle growth and U.S. underperformance. The result is a company still viewed as structurally well positioned, but no longer getting automatic credit for dominance. Its burden now is to prove that weaker sports betting trends are cyclical and fixable rather than signs of a lasting loss of edge.
Prediction markets changed the debate
The rise of prediction markets has become the central outside threat hanging over Flutter and other online sports betting operators. These products, generally framed as event contracts, sit under federal commodities oversight rather than state gaming regimes. That distinction has created the possibility of sports-related products being offered in states where online sports betting remains illegal, while avoiding the taxes, licensing costs and consumer-protection rules that apply to sportsbook operators.
Politzer has argued that the opportunity is too large for major operators to ignore. In a September note, he said prediction markets could be “too good to pass up,” particularly for FanDuel and DraftKings, because their brands, customer databases and marketing capabilities could help them capture share if they enter the category. The potential prize is especially large in states such as Texas and Georgia, where conventional online sports betting is not legal. In that context, prediction markets could become both a workaround and a customer-acquisition channel.
But the opportunity cuts both ways. As Inside Asian Gaming has reported through related analyst coverage, prediction markets have drawn scrutiny from state gaming commissions, tribes, sports leagues and responsible-gaming advocates. The core complaint is that federally regulated event contracts may circumvent state tax systems and gaming rules. Tribes have raised concerns about cannibalization and potential conflict with the Indian Gaming Regulatory Act, while leagues worry about integrity risks and weakening the value of sportsbook partnerships.
That uncertainty has kept investors from assigning clear value to the category. It could become a new profit pool for FanDuel or a disruptive competitor that pressures sportsbook margins. For Flutter, the strategic challenge is to participate without damaging the state and tribal relationships that support the long-term expansion of regulated betting and igaming.
Analysts split on whether fears are excessive
The market’s reaction to prediction markets has been volatile. When Kalshi and other platforms expanded or teased sports-related products, digital-gaming stocks sold off sharply. Politzer described the investor response as a “shoot first, ask later” approach, noting a prior 18% decline in DraftKings shares and an 11% drop in Flutter tied to fears that event contracts would erode the online sports betting addressable market.
Even so, Politzer was not convinced the threat justified the scale of the selloff. In his view that prediction-market fears were overhyped, he said investors were discounting the product superiority, household-name brands and promotional infrastructure that established sportsbooks had built over years. He also questioned whether peer-to-peer exchanges could scale parlay-like sports products without large pools of capital willing to absorb sports outcome volatility. Traditional sportsbooks already face quarterly swings from adverse NFL results; prediction platforms would have to manage comparable risk if they move closer to sportsbook-style offerings.
Jefferies analyst James Wheatcroft has been more constructive on Flutter. In a July note arguing the prediction-market threat was overrated, Wheatcroft said there had been no material cannibalization of online sports betting revenue and that market making could be incremental to Flutter. He estimated potential cash-flow benefits from Flutter using its pricing expertise on prediction-market platforms and said FanDuel Predicts could add to earnings over time. His argument was that Wall Street had treated prediction markets only as a threat, while assigning little or no value to the ways Flutter could profit from them.
That bullish interpretation depends on regulation, product execution and customer behavior. If event contracts remain broadly available and operators can use them without alienating regulators, Flutter could gain access to customers in non-betting states. If regulators clamp down or courts narrow the products, the disruption could ease but the new profit pool would shrink.
Management’s reset left questions unanswered
Flutter’s own communication has not always satisfied investors looking for detail. During a prior earnings call, company leaders emphasized a return to a customer-first approach but offered limited specifics on the pace of recovery. As covered in Flutter executives’ earnings-call discussion, management framed weakness as manageable and said underlying trends were improving, including growth in igaming players and revenue. The company also said prediction-market revenue was modest but described event contracts as an attractive incremental customer-acquisition tool in states without sports betting.
The call came amid leadership change at FanDuel and broader questions about promotional intensity. Flutter indicated that parts of the business had suffered from insufficient or inefficient generosity, a notable admission for a company whose U.S. rise was built partly on sharp pricing and product execution. A refreshed loyalty program was presented as one response. Management also spoke about market making as a way to monetize FanDuel’s pricing capabilities, though it avoided giving firm targets for what success in prediction markets would mean.
That lack of quantification contributed to the “show-me” framing now attached to the stock. Investors have heard the case that Flutter can regain momentum through improved promotions, better retention, igaming growth and pricing expertise. They have also seen guidance cuts, higher taxes in some U.S. states and launch costs tied to new products, the World Cup and new-state expansion. The gap between strategic confidence and measurable results is where the current skepticism sits.
Taxes and overseas headwinds narrowed the margin for error
Flutter’s U.S. problems are unfolding while international markets offer less room to offset disappointment. Politzer has said overseas fundamentals were more stable, but growth prospects were lower than in the U.S. and margin expansion was limited by cost-efficiency measures needed to absorb higher taxes. He cited a steep increase in United Kingdom taxes, uncertainty in Brazil and the loss of India after the government banned igaming as pressures on the broader group.
Those headwinds matter because Flutter’s valuation has depended heavily on the U.S. being the higher-growth engine. If FanDuel’s share loss proves temporary, international stability can support the group while U.S. margins recover. If the U.S. slows structurally, the company has fewer obvious levers elsewhere. Higher taxes in states such as Illinois and New Jersey also complicate the equation by reducing sportsbook profitability even where the legal market is mature.
Wheatcroft has continued to defend Flutter despite cutting his price target earlier this year. In his defense of the stock, he argued that handle declines were transitory and that concerns about prediction-market cannibalization were not supported by data or management commentary. He attributed downgrades more to NFL-related underperformance and insufficient promotions than to a structural threat from event contracts. That distinction is crucial: execution problems can be fixed, but structural disintermediation would require a different valuation.
The stakes are therefore straightforward. Flutter must show FanDuel can stabilize handle, regain or defend share and turn prediction-market exposure into an advantage rather than a drag. Until the data confirm that recovery, analysts are likely to keep treating the stock as a test of execution under a more complicated regulatory and competitive backdrop.
