As Paddy Power prepares to move its primary listing to New York, the Paddy Power owner wants to convert its rapidly growing US customer base to shareholders.
In January, the company, which has the largest market share of FanDuel in the US as well, listed their ordinary shares at the New York Stock Exchange in a secondary listing. The company will ask its shareholders to vote on whether they approve the plan to move its primary listing to New York by the end that month.
Peter Jackson, the chief executive of FanDuel said, “We want to ensure that our customers can buy shares in the company which owns their favorite entertainment provider.” He added that retail investors were “important components” of the US market.
He said that many US investors, such as institutional shareholders, “only invest on their home market”.
Jackson hopes that the change to the primary listing will encourage US retail investors to buy Flutter shares, as the group has started reporting under GAAP rules which they are familiar.
Once they have seen some US GAAP reporting, they will understand these codes and language. “We hope that this will encourage new investors to invest in Flutter,” said he.
He added that switching the primary listing from the UK to the US could also help the company meet the criteria for inclusion in the S&P 500 index.
The US sports betting industry is booming following a US Supreme Court decision in 2018 that overturned a federal prohibition. According to the American Gaming Association the industry generated $10.9bn in revenue last year. This comes as European regulators tighten their controls.
Flutter of Ireland, which purchased a majority share in FanDuel and increased its stake to 95% after two years, has now established a dominant position on the market despite fierce competition.
It reported a 53% share of sports gaming net revenue in the United States last year. This is up from 50% a year earlier, and it overtook rivals like DraftKings. The US division of Flutter also made its first profit in the past year.
Flutter’s share price has risen by almost 20 per cent in the last six months due to investor excitement about FanDuel’s growth projections and proposed US primary listing.
Peel Hunt analyst Ivor I. Jones stated that the popularity of the brand would not necessarily mean more retail investors.
“You’ll see the brand name [FanDuel] everywhere. It’s advertised at the Super Bowl and it’s a clear local hero. . . Retail investors behave a lot like institutional investors. They invest in good companies that they believe will grow. “They’re not influenced by the fact that it is a company they personally know,” he said.
Flutter anticipates that US profits will triple this year, to $635mn to $785mn. The company recorded a $1.2bn net loss for 2023. This was largely due to an impairment charge relating to its online casino brand PokerStars.
Flutter will maintain a secondary listing on the London Stock Exchange, after cancelling its Irish listing. Jackson said that current shareholders, including those from the UK, are “supportive of the move to New York”.
Jackson stated that “higher levels of trading are seen for the same capitalization [on the New York Market] than on the London Market.”