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The U.S. sports betting market opened in 2018, and almost every major operator lost. DraftKings, Caesars, and BetMGM burned through more than $6 billion combined in three years. FanDuel made $922 million in EBITDA in 2025.
📊 Snackable Stats: $1.4B
approximate EBITDA swing in Flutter's U.S. division between 2021 (over $500 million in losses) and 2025.
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Here’s what you’ll learn:
How promotional spending can build market share and destroy a business at the same time.
What happens to market structure when the economics only work for one or two players.
Why your most durable customers might be the ones you inherit.
A $150 Billion Market Where Nobody Made Money
On May 14, 2018, the U.S. Supreme Court struck down the federal law banning sports betting in most states, and the land rush started immediately. Delaware took the first legal wager within three weeks. By early 2026, 39 states plus Washington D.C. had legalized the activity, with total U.S. handle climbing from $13 billion in 2019 to $149.9 billion in 2024 and producing $13.7 billion in gross gaming revenue. More than 95% of it happened on phones.
The numbers looked great from the outside. From the inside, they were brutal. DraftKings spent $981.5 million on sales and marketing in 2021 and lost $1.52 billion that year. Caesars offered a $3,300 deposit bonus at the New York launch, the largest market in the country, which its CEO later admitted was coming "a little too hot." Caesars Digital lost $666 million in adjusted EBITDA in 2022. BetMGM projected EBITDA losses of $420 to $440 million in 2021 alone. Each of these operators was making the same bet: spend now, own the customer later.
The underlying math never worked. The industry kept just 8.1% of every dollar wagered in 2022, and then states took their cut. Tax rates ranged from 6.75% in Iowa to 51% in New York, the largest market. At New York's rate, a 9% hold left operators with roughly $4.41 per $100 wagered, before technology, payroll, or a dollar of marketing. DraftKings CEO Jason Robins testified before state legislators that the effective tax burden exceeded 70%. Operators had been building audiences in a market where the economics made sustained profitability almost impossible.
They made it worse by training bettors to chase bonuses instead of building loyalty. In Michigan's 2021 launch, promotional spending hit 82% of gross gaming revenue in the first four months, according to Deutsche Bank analysis. Operators weren't building brands. They were renting attention.
The shakeout was quick. WynnBET exited eight states. PointsBet sold its U.S. assets. FOX Bet, Fubo Sportsbook, and others closed entirely. Colorado went from 26 active online sportsbooks to roughly a dozen. Today, FanDuel and DraftKings control approximately 74% of U.S. sports betting revenue. Everyone else is fighting for scraps, or gone.
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The Fantasy Sports Trojan Horse
In May 2018, weeks after the PASPA ruling, Paddy Power Betfair acquired a 61% stake in FanDuel for $158 million in cash plus existing U.S. assets. What Flutter got was more than a brand. FanDuel had 7 million registered daily fantasy sports users across 40 states, 1.3 million of them active. Every one had already deposited money, verified their identity, and shown a willingness to wager on sports. Pre-qualified sportsbook customers, waiting for legalization. FanDuel opened its first sportsbook at the Meadowlands Racetrack in New Jersey within days of the deal closing.
That customer base let FanDuel reach scale faster and cheaper than anyone else. DraftKings disclosed an average customer acquisition cost of $371 in 2020. FanDuel was converting its own DFS users for a fraction of that. Flutter would eventually spend $6.1 billion to reach full ownership, but the original deal, timed perfectly to PASPA, was the one that mattered most.
The second strategic weapon was a product that changed the economics of sports betting. In November 2019, FanDuel launched same-game parlays, multiple outcomes from a single game combined into one wager. The technology came from Sky Bet's UK "Request a Bet" feature, which Flutter already operated. Parlays hold far more margin than straight bets; Illinois regulatory data puts sportsbook hold at 18% on parlays versus 5% on straight wagers. FanDuel had a roughly two-year head start before DraftKings launched its own version ahead of the 2021 NFL season.
Behind the product sat a pricing advantage no American competitor could match. Flutter owns the Betfair Exchange, the world's largest peer-to-peer betting marketplace, producing real-time, market-derived odds across every major sport. Flutter deployed Betfair traders directly into FanDuel's operations, giving it sharper pricing than competitors relying on third-party data feeds. FanDuel's structural sportsbook revenue margin reached 14.5% in Q4 2024, well above the rest of the market.
The final piece was promotional discipline. Caesars' spending spree temporarily hit 12% market share in early 2022, then collapsed to 6.2% by Q4 when the spending stopped. The money had bought rented customers, not real ones. By Q4 2024, FanDuel's promotional spend had fallen to 4.0% of handle. Its market share had grown to 43%.
When Being Right Starts Paying Off
FanDuel posted its first profitable quarter in Q2 2022, $22 million in adjusted EBITDA, while every major competitor was still losing hundreds of millions per year. The gap widened fast. In 2023, U.S. operations produced $4.48 billion in revenue and $65 million in full-year EBITDA, the first annual profit. In 2024, EBITDA reached $507 million on $5.8 billion in revenue. In 2025, $922 million.
At the group level, Flutter posted $14.05 billion in total revenue for 2024 and its first positive net income of $162 million. Free cash flow hit $941 million. Leverage dropped to 2.2x. The company authorized a $5 billion stock buyback. In iGaming, FanDuel climbed from third place and roughly 21% market share in 2022 to the top U.S. online casino brand by early 2024, a segment that generates higher and more stable margins than sports betting.
The stock has told a different story. Since the January 2024 NYSE listing, shares ran from around $205 to an all-time high of $313.69 in August 2025, then fell roughly 65% to around $109 by early March 2026. Adverse NFL results hit late-2025 margins. Illinois raised its tax rate to a graduated 20-40% and added a per-wager fee. Flutter committed $200–$300 million to FanDuel Predicts, its prediction markets product, which spooked investors focused on near-term earnings. Tax escalation is the long-term threat. New York sits at 51%. New Jersey has proposed 25%. For 2026, Flutter guides to $18.4 billion in revenue and $2.97 billion in adjusted EBITDA.
Key takeaways to consider…
Existing Customers Are the Cheapest Customers to Acquire. FanDuel's 7 million DFS users gave it a built-in customer base that had already deposited money and verified their identities. That head start let FanDuel reach scale at a fraction of competitors' $371 CAC.
Spending to win customers is not the same as winning customers. Caesars spent $1 billion on acquisition, briefly hit 12% market share, then watched it collapse to 6% when the spending stopped. Rented customers leave when the subsidy does. The metric that matters is retention after the promotion ends, not share during it.
Unit economics determine whether scale is an asset or a liability. More volume at bad margins just means bigger losses. FanDuel improved its structural revenue margin from roughly 21% iGaming share to the top position by building a product customers returned to on their own, not by discounting. Scale only compounds if the underlying unit economics work.
Treat Regulation In Your Industry As Part Of The Cost Of Goods. In regulated industries, model the worst-case tax scenario as your base case. Flutter built its financial model around state-by-state tax rates before entering each market. New York's 51% rate and Illinois's graduated 20–40% are not anomalies, they're what happens when a vice industry generates enough revenue to become a political target. Any business entering a licensed market should assume the tax environment gets worse, not better.
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🍫 Power Numbers
4B+ - Bets processed annually by Flutter
$16.96B - Total sportsbetting handle in 2025
$922 million - FanDuel's U.S. adjusted EBITDA in 2025
74% - Combined FanDuel and DraftKings share of U.S. sports betting revenue, leaving 26% for everyone else.
43% - FanDuel's share of U.S. sportsbook gross gaming revenue.
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