00:00All right, so I saw a story, Sam, last week, or maybe it was early this week on the show,
00:04about some layoffs with DraftKings.
00:07I know we're not going to talk about that, but it does sort of correlate with this next story here
00:11that says, at least from some of the reporting that you're doing here, that Flutterstock is down after quarter four.
00:17And so, you know, we're out of football season here, and I do understand that.
00:22But what would be the reasoning behind this?
00:24Because everything that I see still seems to indicate that more people are betting sports than ever before.
00:30Yeah, so Flutter, the company that owns FanDuel, anytime there's a lot, it's pretty much because of FanDuel.
00:37Obviously, FanDuel is one of the biggest sports books, and historically, they've been a leader in the space.
00:43But they reported their financials yesterday, their fourth quarter earnings, which, like you mentioned, Craig, the stock really took a
00:50hit because of it.
00:51It's down to its lowest price that it's ever been at since it was listed on the New York Stock
00:55Exchange two years ago.
00:57It's down 15% on the day.
00:58And the reason looks to be is because they missed some really key financial targets.
01:02You know, sports betting revenue was up about 35% in the quarter, but it was expected to be up
01:08a lot higher.
01:09And the reason that Flutter executives are saying is pretty interesting.
01:13It's because they said they did a really good job on NFL during the fourth quarter.
01:18If you remember, last year at this time, we were talking about how awful sports books did on the NFL.
01:23Pretty much customers won at historic rates, never seen before.
01:28Investors were saying, you know, is this sports betting volatility going to swing the other way?
01:32It was a similar case in March Madness.
01:34It was a really bad NFL season two years ago for the sports books.
01:38This NFL season, especially in quarter four with the playoffs and, you know, getting colder and more intense games, was
01:44actually really good for FanDuel.
01:45They held about 9%, which means out of all the money that's bet, all the dollars that come in, they
01:50kept about 9% of that and turned it into revenue.
01:53So that's normally a good thing, but the real factor that they talked about here was Handel, the amount that
01:59people bet, only was up 3% in the quarter, which if you look at any other quarter before that
02:06historically, Handel's usually up about 40% year over year, 30%, 25%, but it has slowed down a little bit.
02:13So people are still betting more dollars every year, but it's not jumping at the rates we once saw.
02:19It's been kind of a growing concern among Wall Street, among people thinking about the outlooks of who's going to
02:25win sports betting.
02:26How is this going to be a profitable business?
02:28Obviously, I have a ton of costs.
02:29So it was really interesting to hear Flutter executives talk about kind of suffering from their own success.
02:34They said that, you know, people lost so much on the NFL this year that we saw customers more hesitant
02:40to keep betting and keep spending that money with us.
02:42They also threw their hands up and admitted that they just didn't give promos out the way that they should
02:47have.
02:47But they had a couple of weeks where they held about 30% on the NFL.
02:51That's versus the average is usually about 8%, 7%.
02:54So that means customers really got hammered on a couple of weeks.
02:57And they said they should have given out, given that money back to the customers and promos to keep them
03:01betting, keep the handle up.
03:03And they just didn't, quite frankly.
03:04So going forward, they said they're going to focus on, you know, not doing that, on reacting better, on, you
03:11know, making their customers feel like they're going to get their money back more if they lose more.
03:15And they also talked about prediction markets.
03:17A lot of people have thought, you know, is FanDuel losing business to prediction markets?
03:21Is that a reason we're seeing the handle slow down?
03:23They said that's actually not the case.
03:25They provided some pretty good evidence, I would say, is that, you know, their Missouri launch, you know, happened right
03:31around prediction market time.
03:32People in Missouri had prediction markets.
03:35In December, FanDuel went online and it was one of their best state launches ever.
03:38So they're not quite seeing the fact that they're losing handle to prediction markets yet.
03:43They do have plans for their own prediction market to ramp up this year, about $300 million.
03:48They're going to invest over the course of this year.
03:50And they also talked about, you know, using the pricing technology, the great sports betting technology that makes FanDuel the
03:57leading sports betting app,
03:57and moving that over to prediction markets and figuring out how to kind of benefit from their sports betting success
04:03into a space where, you know, it's more peer-to-peer.
04:06There's market makers.
04:07It works differently.
04:07So FanDuel stock at its lowest it's been pretty much ever, or Flutter stock rather.
04:13And interesting that there's kind of saying it's because they got hit, because they did so well in the NFL.
04:18That's why they handle slowing down.
04:20But we'll have to see how they, you know, adapt the rest of this year.
04:23Obviously, we have the NBA season underway.
04:24And, you know, in just a couple weeks, I look at the calendar, you've got March Madness coming up, which
04:29is pretty much their second biggest event.
04:31So I think investors will really be keen to see, did they change their strategy?
04:34How is Handle moving?
04:35But right now, that's the story, is that Handle growth is moving in the wrong direction.
04:39We'll see if that corrects.
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