BetMGM, DraftKings Gaining Ground on FanDuel, Says Research Firm
FanDuel leads the US iGaming and online sports betting market, but it may be losing momentum to rivals DraftKings (NASDAQ: DKNG) and BetMGM.
According to a report released on Friday by Eilers & Krejcik Gaming (EKG), FanDuel's online sports betting net gaming revenue (NGR) increased by 11% in the second quarter, which is good but significantly less than the growth rates of 56% and 45% reported by BetMGM and DraftKings.
"FanDuel and DraftKings added $430 million in new NGR between them in the quarter, and DraftKings accounted for around three-quarters of that ,” observes EKG. “Given the overlap in customer base, that’s NGR going to DraftKings and not FanDuel.”
Flutter Entertainment (NYSE: FLUT), the world's largest publicly traded gaming firm by market capitalization, owns FanDuel, suggesting it has the financial means to fend off competitors and keep expanding.
FanDuel is still going strong
One of the most valuable gaming companies in the world, FanDuel, may be losing some NGR territory to competitors, but that doesn't mean the Flutter division is failing. Not at all.
It's possible that FanDuel is both a victim of its own success and more difficult comparisons, as EKG notes. In reference to the latter idea, there comes a time when the law of large numbers takes effect and it becomes challenging for revenue to continuously increase at high levels. Smaller rivals, on the other hand, have lower top-line bases, which makes it simpler for them to surpass FanDuel in terms of NGR growth. Additionally, FanDuel is outperforming DraftKings and BetMGM in other ways.
“FanDuel is indeed lapping a 2Q24 net revenue margin of 10.0% compared to 6.4% margin for DraftKings and 5.9% for BetMGM, as well as a much higher revenue base,” adds EKG.
Additionally, the research agency notes that the national net hold for online sportsbook operators was 8.13% in the second quarter. While FanDuel was closer to 10% and BetMGM and Caesars Sportsbook were both below the national average, DraftKings was in line with that percentage.
DraftKings Have Greater Potential
DraftKings, already the other half of a US sports betting duopoly with FanDuel, is probably the biggest danger to FanDuel's dominance.
“DraftKings also has potentially more upside to come given its 2Q25 net revenue margin of 8.7% vs. 10.4% for FanDuel, and no. 1 ranking in our OSB product testing,” says EKG. “That’s not to say FanDuel isn’t still the clear market leader. It is, but the gap to the chasing pack looks closer than ever, in our view.”
