FanDuel fourth-quarter results underscored a developing tradeoff in U.S. sports betting: higher margins, softer handle growth.
Flutter Entertainment management pointed to elevated NFL margins and their downstream impact on bettor behavior, while also acknowledging FanDuel did not reinvest its winnings into promotions aggressively enough to sustain betting activity.
FanDuel‘s sports betting revenue jumped 35% year over year in Q4, helping drive overall U.S. revenue growth of 33%, Flutter announced Thursday in its Q4 earnings report. Average monthly players still rose 5% to 4.8 million but handle increased just 3%, pointing to stable acquisition but softer spend.
Flutter shares were down in after-hours trading Thursday.
Margin expansion hits recycling
FanDuel’s net revenue margin reached 8.9% in Q4, up 2.2 percentage points year over year, as sustained NFL profitability lifted hold.
CEO Peter Jackson said the operator posted above-average margins in 10 of 11 weeks during the season, including multiple weeks above 30% hold.
That level of operator win rate has downstream effects: as bettors lost more, they were reluctant to keep betting, Jackson said. Similar commentary surfaced earlier this earnings cycle at DraftKings, which also flagged moderating volume trends, a growing concern among investors.
Jackson also flagged a soft NFL playoff schedule. Fewer marquee teams and star-driven narratives reduced casual betting interest compared to the prior season. Matchup quality may have dampened parlay penetration relative to prior years, even as overall hold remained elevated, he said.
FanDuel failed at promo execution
Flutter said internal strategy compounded the dynamic.
Promotional investment did not align with the cadence of sports results, limiting its ability to offset bettor losses during peak margin stretches and contributing to churn exiting the season.
“It’s fair to say we didn’t execute our generosity strategy like we wanted to,” Jackson said. “We should’ve pushed harder.”
Jackson characterized the pattern as cyclical rather than structural, noting Flutter has seen comparable margin-driven volume pullbacks in other markets, including U.K. soccer and Australian racing. He added that Flutter will address the promo issue going forward.
Prediction markets not a drag
Flutter also addressed a closely watched industry question: whether prediction markets are pulling sportsbook activity.
Management said it conducted a broad internal and third-party review and found no evidence of meaningful cannibalization. Estimated handle impact sits in the low single-digit percentage range at most.
Jackson pointed to Missouri as a live test case. FanDuel’s launch reached roughly 5% of the state’s population within 30 days, one of the strongest acquisition ramps in company history.
Prediction market outlook
Flutter continues to frame prediction markets as additive rather than competitive. Prediction markets investment for 2026 is now expected near the top end of the firm’s previously guided $200 million to $300 million loss range.
FanDuel Predicts launched late in Q4, offering sports contracts in 18 states and nationwide non-sports markets. Early engagement has skewed heavily toward sports, with activity in line with expectations.
Jackson said the company sees the category as a way to reach roughly 40% of the U.S. population that lacks access to regulated sportsbooks while acquiring entertainment-first customers ahead of potential legalization. He repeated that the company believes prediction markets can accelerate the path to broader state legalization of online sports betting and iGaming, calling them a “significant growth opportunity.”
Flutter is also evaluating ways to extend its sportsbook infrastructure into the space, including leveraging its pricing models and exploring market-making capabilities.
Investment continues
FanDuel remains the company’s profit engine. Flutter estimates the brand commands roughly 70% of U.S. market EBITDA.
Still, recent trends are driving reinvestment. The company is accelerating personalization tools, product differentiation and rewards mechanics, including a new sportsbook loyalty program modeled on casino retention systems.
Flutter guided 2026 group revenue to $18.4 billion and adjusted EBITDA to $2.97 billion at the midpoint.
U.S. guidance calls for $7.8 billion in revenue and $1.05 billion in adjusted EBITDA.
