Detroit Lions Take Bite Out Of Sportsbooks: Analyst Advises Patience After Flutter Cuts Guidance

Summary of Key Points Core Viewpoint - The 2024 NFL season has seen an unusually high number of betting favorites winning, which negatively impacts sportsbooks like Flutter Entertainment and its subsidiary FanDuel. Flutter has lowered its full-year guidance due to these customer-friendly results in U.S. sports betting [1][4]. Financial Impact - Flutter reported a revenue reduction of $390 million and an adjusted EBITDA decrease of$260 million for the period from November 12 to December 31, contributing to an overall adverse impact of $550 million in U.S. sports revenue for the fourth quarter [3][4]. - The company's revised U.S. revenue estimate for the full year is now$5.78 billion, down from a previous range of $6.05 billion to$6.25 billion. Adjusted EBITDA is now forecasted at $505 million, compared to prior guidance of$670 million to $750 million [4]. Betting Trends - The 2024 NFL season has been described as the "most customer-friendly" since the launch of online sports betting, with the highest rate of favorites winning in nearly 20 years [2][10]. - Parlays, which are typically beneficial for sportsbooks, have been unfavorable for Flutter, indicating a potential area of concern for investors [5]. Specific Game Analysis - A significant adverse result for Flutter occurred on December 30 during a game between the Detroit Lions and San Francisco 49ers, where the Lions, as 3.5-point favorites, won 40-34. This game had a high betting volume, with 91% of tickets and 94% of money at FanDuel on the Lions [6][7]. Future Outlook - The Detroit Lions are currently favorites to win Super Bowl LIX at odds of +320, a significant change from earlier odds of +1,200 in February. This could lead to further unfavorable outcomes for FanDuel depending on the number of futures bets placed on the team [8]. - Flutter is expected to report its fourth-quarter financial results on March 4 and provide guidance for 2025, following the NFL Playoffs and Super Bowl [8]. Analyst Insights - Analyst Bernie McTernan from Needham has a Buy rating on Flutter and notes that historically, lower guidance revisions from sportsbooks have presented buying opportunities. However, he advises caution due to potential fiscal budget proposals that could impact online sports betting taxes [9][10][11].