The news of Flutter Entertainment moving its listing from the London Stock Exchange (LSE) to New York (NYSE) jolted the online gambling industry a few months back. Now that the transition has been completed, speculations are rife about its impact on the UK’s gambling industry.
One of the reasons for this move is believed to be the growth of some of its brands, like FanDuel, in the US. With almost 40% of Flutter Entertainment’s revenues being projected to come from the US this year, the decision doesn’t come as a surprise for the industry insiders. With over 98% of investors voting in favour of the move, the decision was as unanimous as it could be.
But what is the impact of such a giant leaving the London Stock Exchange on the overall gambling industry in the UK? Well, let’s dig a bit deeper to clarify the issue in this blog.
Background on Flutter Entertainment
Flutter Entertainment, one of the world’s leading online gambling and sports betting companies, has recently reported a whopping 24.6% rise in its global revenue. According to the annual report released by the company, the number of average monthly players surged by 20.3% to 12.3 million.
One of the strongest driving forces behind Flutter’s move to the NYSE is to tap into the significantly larger capital markets. The move will enable Flutter to attract a broad range of investors, increasing share liquidity. With all that cash at hand, you might even hear the company make some significant acquisitions in the near future.
In the short run, the move will influence the stock market capitalisation and investors’ perception of the LSE. Flutter is one of the leading market players in the gambling industry, and the company’s exit has led to the loss of the overall market value of the LSE. It could further lead to a reduction in investor confidence, not just in the gambling sector but also in many other industries.
Unfortunately, Flutter is not the only major company making such a move to NYSE. The drug company Indivior and the travel company Tui made similar moves last year.
Online gambling has been one of Flutter Entertainment’s key focuses and a massive driver of the changes in its official status as it transitioned to the NYSE. In the recent past, the market for online gambling has grown exponentially, majorly due to technological development, a massive increase in internet users and shifting customer preferences.
As for Flutter, the company has to capitalise on this growth, primarily with the help of its highly effective subsidiary, FanDuel, which currently controls the US market for online sports betting.
Impact on the gambling industry
Flutter is one of the largest companies on the LSE and is engaged in the gambling business on an international level. Its exit can be considered a major loss to the industry as a whole. It might make investors doubt the opportunity of the LSE as the platform for high-growth international companies, especially in the gambling industry.
Another critical factor that could be considered is the effect on other gambling stocks listed in London. Some of the businesses that may be affected include William Hill, 888 Holdings, and GVC Holdings. Investors in these businesses may begin to question their intentions to pull off a similar feat for better valuations and more liquid exchanges. It may result in a tendency for gambling firms to go for dual listings or move their main listings to markets such as the US, where conditions are more conducive for development and funding.
Furthermore, Flutter’s action is expected to create noticeable changes in investment and competition patterns in the context of the UK gambling industry. Investors may shift the funds to companies in exchanges with higher valuations and growth prospects, such as the NYSE. The shift in investment portfolios might mean that there will be less funding available for UK-listed gambling firms.
Such a funding dry spell might mean less innovation and fewer opportunities in the sector. The general investment climate in the gambling industry in London may be dampened, with firms struggling to woo investors.
However, the UK gambling industry is not struggling currently. We’ve seen consistent growth within the sector YoY, and even with Flutter moving to the NYSE, it shows no sign of slowing imminently. In-person and online gambling have become significant economic factors for the UK over the past twenty years. Along with this, we’ve also seen the growth of affiliate sites to help review this expanding market. Sites like Casino.org and others have sprung up to review slots, casinos, and other forms of gambling across the UK. These adjacent industries only go to show the growth of gambling within the region, regardless of Flutter’s move.
However, if the move does hold the weight some experts are suggesting, one thing that might happen is companies considering consolidation strategies. Larger companies might start acquiring smaller ones, leading to market monopolisation, which is not a good sign for the gambling industry.
To counteract this trend, LSE might need to implement measures to attract gambling companies. Some possible measures include providing better listing requirements, less regulation, better services for the listed firms, and other attractive conditions for innovation and development. Also, developing a more robust environment for fintech and digital gambling may contribute to the preservation of London’s position as a global financial hub.
In summary, while Flutter’s move to the NYSE signals a potential shift in market dynamics, London can still retain its prominence by adapting its strategies to better meet the needs of the gambling industry. It will involve a combination of regulatory flexibility, enhanced support mechanisms, and targeted incentives to foster innovation and growth within the sector.
