After Ides of March, DraftKings, Flutter Q1 Results Could Disappoint

Posted on: April 22, 2025, 07:24h. 

Last updated on: April 23, 2025, 09:52h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • March extends rough stretch for sportsbook operators
  • First quarter could be seventh straight in which industry hold disappoints

The house doesn’t always win, and it’s likely first-quarter earnings from sportsbook giants DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT) will reflect as much.

DraftKings
A DraftKings logo. That company and rival Flutter could deliver weak Q1 results following customer-friendly outcomes in March. (Image: DraftKings Sportsbook)

After the NCAA Tournaments, both the men’s and women’s events, delivered a spate of wins by favorites, the two largest US sportsbook operators and some competitors could be poised to deliver disappointing results for the three months of 2025. That’s among the reasons why Stifel analyst Jeffrey Stantial pared his price target on DraftKings to $53 from $57 while lowering his forecast on FanDuel parent Flutter to $315 from $320.

March Madness results were unfavorable for the sportsbooks, with favorites winning 22/32 games, seven #1/2 seeds progressing to Elite 8, and strictly #1 seeds making the Final Four,” wrote the analyst in a new report.

Citing data from the various states that have reported for the March quarter, the first three months of 2025 could mark the seventh consecutive quarter “of negative impact from unfavorable results.”

DraftKings, Flutter Could Face Decent EBITDA Hits

Disappointing March Madness results came on the heels of the Super Bowl, which was another low-hold event for DraftKings, FanDuel, and their competitors because the favorite Philadelphia Eagles won, covered, and the total went over – a toxic cocktail for sportsbook operators.

Compounding the woes of sportsbook companies and their investors is the point that the sour Super Bowl and NCAA Tournament results followed a rough fourth quarter in which operators broadly pointed to “customer friendly” NFL outcomes as a major contributing factor in what were tepid earnings for the last three months of 2024.

As for what’s looming when DraftKings and FanDuel step into the earnings confessional, Stantial estimates weak March Madness hold will weigh on the former’s earnings before interest, taxes, depreciation, and amortization (EBITDA) could be sapped by up to $80 million while the FanDuel owner could see its first-quarter EBITDA trimmed by as much as $130 million.

“From a trading perspective, historically we observe stock underperformance immediately following stretches of unfavorable results, followed by recovery as earnings downside is de-risked either through Consensus revisions, initial results, or otherwise,” adds the analyst.

Hold Rate Downside May Be Overstated

Shares of DraftKings and Flutter are down 10% and 12%, respectively, year to date, indicating hold rate concerns are on investors’ minds. However, Stantial says those worries may be getting blown out of proportion and the stocks have “favorable setups” into earnings.

On the iGaming side, Stantial noted DraftKings’ first-quarter results could be adversely affected by a customer recently hitting a $10 million jackpot, but the overall near-term outlook is solid.

“Despite concerns on handle deceleration, we estimate state reported data is tracking to DKNG/FLUT FY25 guidance with potential upside from difficult-to-benchmark structural hold expansion and/or promo discipline,” concludes Stantial.