FLUT: Future U.S. Liberalization Will Outweigh U.K. Gaming Tax Pressures

Analysts have nudged our fair value estimate for Flutter Entertainment slightly lower to $299.52 from $303.07, reflecting trimmed valuation multiples despite modest upgrades to long term revenue growth and margin assumptions, as they balance UK tax headwinds, softer near term U.S. sports results and prediction market noise against still supportive Buy skew and expectations for regulatory catalysts.

Analyst Commentary

Street research remains broadly constructive on Flutter Entertainment, with most firms reiterating positive ratings while trimming price targets to reflect tax, regulatory and sports margin uncertainty. Across recent notes, analysts emphasize that the long term digital gaming growth story remains intact, even as near term headwinds and valuation resets drive share price volatility.

Viewed collectively, the research highlights a tension between cyclical and regulatory pressures in the UK and U.S. and structurally attractive scale advantages in online sports betting, iGaming and prediction markets. This has led to a clustering of Buy or Overweight stances, but with more conservative valuation frameworks and a sharper focus on execution around FanDuel, promotions, and the new FanDuel Predicts venture.

Bullish Takeaways

Bullish analysts see the recent selloff as creating an attractive entry point. They argue that concerns around prediction markets and softer NFL outcomes are over-discounted in the valuation and that Flutter’s global scale and brand leadership still support premium multiples.
Several notes highlight the potential for U.S. legislative catalysts, including new state-level online sports betting and iGaming liberalization. These could unlock incremental long term growth and justify higher revenue and EBITDA trajectories than current market expectations embed.
Despite near term earnings pressure, analysts emphasize that underlying volume growth in U.S. sports and iGaming appears healthy, with minimal evidence of cannibalization from prediction markets. This supports confidence in Flutter’s ability to re-expand margins once promotional intensity normalizes.
Bullish analysts frame the FanDuel Predicts and CME joint venture as a strategic positioning move in a potentially sizable prediction total addressable market. This could enhance Flutter’s optionality in states where traditional online sports betting remains restricted.

Bearish Takeaways

Bearish analysts flag the UK Budget as a material overhang, with higher than expected blended gaming tax rates raising uncertainty around future UK profitability and potentially compressing valuation multiples until regulatory clarity improves.
Multiple firms have cut price targets following an 8% Q3 adjusted EBITDA miss and a 14% mid-point reduction to FY25 guidance. This underscores concerns that adverse sports results, elevated competitor promotions and FanDuel’s promotional response could keep near term margins below prior expectations.
There is caution that the growing divergence between sports and iGaming tax rates in the UK may distort incentives and encourage offshore activity. This could create medium term revenue headwinds and complicate forecasts for the UK segment’s cash generation.
Some research characterizes prediction market developments and legal challenges as a source of ongoing noise that could sustain share price volatility, especially if investors continue to overestimate the competitive threat or underestimate regulatory risk to event contracts.

What's in the News

U.S. District Judge Andrew Gordon reversed a prior legal win for prediction market operator Kalshi, lifting an injunction and reaffirming state authority over sports event contracts, with Flutter shares rising about 2% on the news (iGaming Business).
Cboe Global plans to launch a federally regulated prediction markets platform in the coming months, but will initially exclude sports products. This will add a new exchange backed competitor to the event contract space that overlaps with Flutter’s strategic interests (Bloomberg).
Polymarket is preparing to return to the U.S. within weeks with a sports focused offering, timed to capture peak football and basketball season volumes. This move is increasing competitive and regulatory attention on prediction style wagering models that intersect with Flutter’s FanDuel Predicts ambitions (Bloomberg).
Online prediction market Kalshi is reportedly raising over $300 million at a $5 billion valuation and rapidly scaling global access. This is intensifying investor debate on whether prediction markets represent a disruptive threat or a complementary channel to incumbent operators like Flutter (New York Times).

Valuation Changes

Fair Value Estimate edged down modestly to $299.52 from $303.07, reflecting slightly lower valuation multiples despite improved fundamental assumptions.
Discount Rate decreased marginally to 9.19% from 9.19%, implying a near unchanged risk assessment in the updated model.
Revenue Growth has risen slightly in the long-term outlook to about 16.36% from 16.10%, incorporating a somewhat stronger top line trajectory.
Net Profit Margin improved modestly to roughly 9.01% from 8.96%, indicating a small uplift in long-run profitability expectations.
Future P/E fell slightly to about 29.9x from 30.6x, signaling a minor compression in the multiple applied to Flutter’s forward earnings.

Expansion in new markets, product innovation, and platform integration are expected to drive user engagement, market share, and sustained earnings growth.
Structural cost efficiencies and deeper iGaming penetration should enhance margins, free cash flow, and shareholder returns over the long term.
Rising regulatory risks, high debt from acquisitions, integration challenges, slowing growth in mature markets, and demographic shifts threaten profitability and long-term expansion.

Catalysts

About Flutter Entertainment

Operates as a sports betting and gaming company in the United States, the United Kingdom, Ireland, Australia, Italy, and internationally.What are the underlying business or industry changes driving this perspective?

Ongoing expansion of online gambling and iGaming in newly regulated and high-growth markets (e.g., Brazil and the U.S.) is expected to accelerate Flutter's revenue and earnings, leveraging increasing global internet and smartphone penetration and regulatory liberalization.
Product innovation-particularly in live betting and personalized betting features (e.g., "Your Way Parlay," Same Game Parlay Live, and platform migrations across Snai and FanDuel)-positions Flutter to capture greater user engagement and wallet share, supporting both revenue growth and long-term margin expansion.
Integration of recent acquisitions (Snai in Italy, NSX in Brazil) and the realization of platform migrations are expected to unlock substantial cost synergies and efficiency gains, underpinning higher EBITDA margins and sustained earnings growth from improved operational leverage.
Structural cost efficiencies, evidenced by reduced sales and marketing as a percentage of revenue and successful renegotiation of market access agreements (e.g., Boyd), should drive higher net margins and enhanced free cash flow, supporting shareholder returns through buybacks.
Rising direct-to-casino iGaming penetration and exclusive content launches through FanDuel and global platforms are expected to increase market share in iGaming, with a long runway for growth as digital entertainment becomes an entrenched consumer preference, boosting both revenue and retention.

Flutter Entertainment Earnings and Revenue Growth

Flutter Entertainment Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Flutter Entertainment's revenue will grow by 16.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 2.5% today to 10.5% in 3 years time.
Analysts expect earnings to reach $2.5 billion (and earnings per share of $14.46) by about September 2028, up from $366.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $3.0 billion in earnings, and the most bearish expecting $1.7 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 30.7x on those 2028 earnings, down from 141.4x today. This future PE is greater than the current PE for the GB Hospitality industry at 24.0x.
Analysts expect the number of shares outstanding to decline by 1.09% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.97%, as per the Simply Wall St company report.

Flutter Entertainment Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Increasing regulatory scrutiny and taxation risk in major markets, as highlighted by Illinois' wager fee and ongoing tax changes in Illinois, Louisiana, and New Jersey, could reduce profitability and net margins if more states or international markets adopt similar or harsher measures.
High and rising net debt, currently at $8.5 billion (3x adjusted EBITDA including Snai), and continued acquisitions pose long-term financial risk. Increased leverage may limit flexibility, and persistent high debt levels could pressure future earnings and shareholder returns.
Integration risks and cost synergies from recent major acquisitions (notably Snai and NSX in Italy and Brazil), as well as the migration of technology platforms and brands (such as PokerStars and Sky Bet), may not materialize as planned, risking margin compression and lower than expected synergy-driven EBITDA growth.
Exposure to maturing or saturated markets: While core regions like Southern Europe and Australia are currently performing well, growth in mature markets is slowing and future expansion relies on expensive new market entries (such as Missouri) or product innovation, which could dilute returns and hinder long-term revenue growth.
Long-term secular risks include shifting demographic and consumer trends, such as potential declines in gambling interest among younger generations, and persistent social and regulatory concerns about gambling addiction, which could tighten restrictions and limit Flutter's customer base and long-term revenue trajectory.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $345.104 for Flutter Entertainment based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $393.0, and the most bearish reporting a price target of just $267.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $23.5 billion, earnings will come to $2.5 billion, and it would be trading on a PE ratio of 30.7x, assuming you use a discount rate of 9.0%.
Given the current share price of $294.43, the analyst price target of $345.1 is 14.7% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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