Jefferies analyst defends Flutter
Despite slashing his price target on Flutter Entertainment, one analyst stood by the embattled stock. James Wheatcroft of Jefferies Equity Research cut his per-share target on Flutter from US$380 to US$210. The stock was trading at US$112.68 at the time of Wheatcroft’s 6 March report.
Wheatcroft kept a “Buy” rating on Flutter, saying he was staying positive and saw “an appealing set-up.” However, he priced no US growth into his valuation of the stock.
“We view handle declines as transitory,” Wheatcroft wrote, “with state data reports and material prediction market entry likely to catalyze investor re-engagement and a positive re-rating.” He added that “a conflation of handle decline and estimate downgrades fomented the notion of prediction markets as a structural threat to” online sports betting.”
But Wheatcroft found that neither the data nor management commentary supported the view that prediction markets were a menace to Flutter subsidiary FanDuel. Downgrades, he argued, were the product of NFL-related underperformance and not enough promotions – two things that Flutter could correct.
Calling downward handle trends momentary, Wheatcroft echoed Flutter’s sentiments that they were the product of “customer recycling, the sports calendar and inefficient generosity.” Prediction-market cannibalization was placed in the low single digits.
“Flutter’s successful launch in Missouri (a prediction market-only state until December) reinforces this view, with customer acquisition ‘well ahead’ of expectations,” Wheatcroft wrote. Flutter said on its fourth-quarter earnings call that it had reached 5% of Missouri’s population within the first month of operation in the Show Me State.
Weak handle, however, had continued into the first two months of 2026. Trends were improving on a week-to-week basis, Wheatcroft noted, especially when NFL games were factored out of the equation.
Despite a US$300 million investment into FanDuel Predicts, Flutter was projecting no revenue from event contracts. Wheatcroft observed that management was guiding to high-double-digit growth in igaming and 10% or greater growth in OSB.
Those numbers, the analyst said, implied “broadly flat underlying handle growth (excluding a [low-single-digit] benefit from new states), conservative in the context of Flutter’s handle narrative.” Should handle growth return, Wheatcroft would see an upside to management’s guidance.
Data from New York State was said to be encouraging, with Flutter “having just recorded two consecutive weeks of broadly flat handle growth after seven consecutive weeks of … declines.” Wheatcroft said that he was hewing to management’s conservative guidance for the United States.
As a consequence, Wheatcroft modeled Flutter to have more than US$3.2 billion in cash flow by 2030. This was a cutback from his previous estimate of US$4.1 billion.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
Verticals:
Sectors:
Topics:
Dig Deeper
Related stories
The Backstory
Setting the stage
Jefferies’ defense of Flutter Entertainment lands after months of market anxiety over slowing U.S. sports-betting handle, rising state tax burdens and the emergence of prediction markets. The firm’s latest stance keeps a buy recommendation but strips out U.S. upside in the model, a notable tactical retreat that still argues sentiment is overshooting fundamentals. The backdrop shows how investor focus has swung from top-line betting volume to mix, margins and regulatory friction — and why that pivot matters for FanDuel’s parent.
Handle growth cooled through late 2024 and into 2025 as promotions normalized and the sports calendar turned less favorable. At the same time, investors questioned whether prediction markets posed a structural threat. Jefferies has been addressing those concerns in a series of notes that trace a path from bullish long-term theses to a shorter-term reset on expectations, while pointing to catalysts that could revive the trade.
From peak optimism to recalibration
In July, Jefferies’ James Wheatcroft laid out a high-conviction case for Flutter, highlighting U.S. penetration and the runway from future state legalizations. That view carried a Street-high target and framed handle deceleration as a rational byproduct of industry maturation — fewer giveaways and a tougher year-over-year sports slate — rather than demand erosion. See Wheatcroft’s July note setting a Wall Street-high target on Flutter for the full argument.
The data then supported a step down in growth, not a cliff. Industry handle rose about 30% through the first three quarters of 2024, then cooled to the mid-teens into early 2025. Flutter’s outperformance faded more sharply, a function of the mix-shift away from heavy promos and fewer new-state launches. Jefferies stressed that while lower-stake, higher-margin products like parlays can suppress handle optics, they can also support revenue and cash flow. That line of reasoning underpins the firm’s willingness to model slower volume without abandoning the earnings path.
Disentangling handle softness from structural risk
By February, Jefferies moved to counter the “cannibalization” narrative, contending FanDuel’s weaker handle was explained by calendar quirks and pullbacks in promotions rather than prediction markets siphoning demand. The firm expected Flutter to reiterate that message on its earnings call and to show how growth targets remained reachable with only modest handle gains. For that perspective, see Jefferies’ February analysis arguing FanDuel softness was not cannibalization.
Customer behavior trends support that view. A June consumer survey by Jefferies pointed to a deeper shift toward in-play and proposition bets, which can elevate margins even if they reduce total dollars wagered per slip. That dynamic favors operators with strong in-play tech and parlay depth. Read more in Jefferies’ survey pointing to in-play and parlay growth among bettors.
In that context, Jefferies’ latest defense of Flutter leans on a mix-versus-volume story. If handle declines are transitory and product mix tilts to higher-yield wagers, revenue and cash flow can still track guidance. Wheatcroft also flags state data, such as New York, where sequential stabilization in recent weeks suggests the slump may be bottoming when NFL distortions are stripped out.
Regulatory heat and operator responses
Even as product mix supports margins, operators face a tougher tax map. Illinois’ progressive handle tax forced FanDuel to add a 50-cent user fee starting Sept. 1, a direct response to a cost spike that disproportionately hits the largest books. Jefferies analyst David Katz said DraftKings could follow, while smaller operators might consider similar moves. See Jefferies’ take on FanDuel’s Illinois transaction fee and competitive ripple effects.
Katz argued the surcharge would likely cushion cash flow with limited share loss, though it could impede handle growth in that state. The analysis underscores a broader shift: when taxes rise, scale leaders adapt pricing and trim promotional spend to preserve unit economics, even if reported handle suffers. That trade-off is central to Jefferies’ thesis that headline volume is a noisy signal for value creation.
Tax pressure is not isolated to Illinois. Katz warned that higher levies in several states, plus costs tied to entering prediction markets, would clip DraftKings’ late-2025 and 2026 earnings. Still, he kept a constructive sector view, citing resilient igaming and the potential for in-play to drive engagement regardless of legalization cadence. For details, see Jefferies’ analysis of higher state taxes crimping DraftKings but not Rush Street.
Prediction markets: worry or wedge?
Prediction markets have complicated the narrative. Their high-profile March Madness action drew attention and stoked fears of traffic diversion. Jefferies has treated the phenomenon as a manageable headwind so far. Wheatcroft’s work separated out temporary drags — NFL outcomes, fewer promotions, a thinner sports slate — from structural share loss. He also pointed to management commentary that event-contract revenue is not yet in Flutter’s near-term model, even after investment in FanDuel Predicts. That suggests upside optionality if regulation and product-market fit improve.
The firm also notes that operators can capture higher-value behavior even with smaller stakes. In-play and micro-betting deepen session time and drive repeat visits, which can offset a slowdown in blunt handle growth. The June survey’s finding that 90% of engaged bettors check odds in-game or consider cash-out opportunities aligns with that strategy. It also backs Jefferies’ argument that the largest platforms, with better tech and broader markets, are positioned to monetize the shift.
Why it all matters for Flutter
Jefferies’ latest defense narrows the distance between bullish long-term math and near-term caution. The firm’s modeling now assumes little from U.S. expansion or event contracts, yet it still sees a path to meaningful cash generation if handle stabilizes and mix tilts richer. That stance threads through its prior work: a strong top-down case from July, a February rebuttal to cannibalization fears, and June evidence that consumer behavior is migrating toward higher-margin bets. The Illinois fee episode shows how leaders can protect cash flow despite policy shocks.
The stakes are clear. If handle resumes even modest growth and state data continue to stabilize, the set-up could allow investors to refocus on earnings power rather than headline volume. Conversely, if tax escalations spread or prediction markets scale faster than expected, the path gets narrower. Jefferies is betting on the former. Its through line is that the U.S. market is maturing, not unraveling, and that operators with scale, product depth and discipline can manage the volatility long enough for fundamentals to reassert themselves.
