Top Online Sportsbooks: Why DraftKings and Flutter are Leading the Betting Market This Football Season

Investors eyeing the lucrative 2025 football season don’t need to search far. The spotlight is on two heavyweights: DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT), operators of the largest online sportsbooks in the U.S.

Analyst Update

In a recent report, Macquarie analyst Chad Beynon identified DraftKings and the Flutter-owned FanDuel as the top online wagering stocks to consider for the upcoming football season. Despite an impressive rise in shares this year, both stocks have fallen short against competitors like Rush Street Interactive (NYSE: RSI) and firms focused on sports betting data solutions.

Key Insights

• Positive Q4 Outlook: Beynon highlighted that both companies could face less challenging year-on-year comparisons in Q4 following a customer-friendly resolution from last year.
• Improved Growth Rates: Coupled with solid hold and growth rates in Q3, this trend positions them favourably for the upcoming season.
• Outperform Ratings: Both DraftKings and Flutter received ‘outperform’ ratings, with Beynon projecting mid-to-high teens upside from current levels.

Shifting Betting Strategies

One of the compelling reasons DraftKings and Flutter could succeed this football season is their reduced reliance on pregame wagers (e.g., sides and totals). Instead, they are expanding their offerings in player propositions, in-game betting, and same-game parlays.

“With both operators becoming less dependent on traditional game outcomes for revenue, we see an attractive upside risk, especially for DKNG, which offers a significant free cash flow yield discount,” commented Beynon.

Competitive Edge in Live Betting

Leadership in the live betting and same-game parlay space is critical for DraftKings and Flutter, especially as new prediction markets encroach on their market share. While they offer innovative in-game betting and same-game parlay options, competing derivatives firms do not share this capability.

Projected Growth Despite Challenges

Beynon noted that despite anticipated losses from the December launch of sports betting in Missouri, the EBITDA margins are expected to expand significantly in 2025.

“If DraftKings and Flutter can achieve a hold of over 10%, we expect their U.S. EBITDA margins to reach the 20%+ range this year,” Beynon stated. This scenario not only indicates robust operating leverage but also reassures investors regarding a long-term target margin of 30%.

Sports Betting Tidbits

In related sports betting news, Caesars Sportsbook has introduced a per-bet fee in Illinois following a recent increase in state sports wagering taxes. Starting September 1, they will charge a fee of 25 cents per wager.

This fee will be displayed during the bet placement process and can be verified in transaction history,” said Caesars spokesperson. This policy aligns them with DraftKings, Fanatics, and FanDuel, all of whom have initiated similar per-bet fees in the state.

As the competition intensifies, understanding these shifts and adapting strategies can be crucial for investors and players alike.

Overall, DraftKings and Flutter’s innovative approaches and strong market positions make them exciting stocks to watch as the football season approaches.

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