Online betting giant Flutter Entertainment is planning to solidify its corporate presence in the U.S., which could help put its stock on an equal footing with its sports gambling rivals, according to UBS. The Dublin-based parent company of FanDuel launched a secondary listing of its shares on the New York Stock Exchange on Jan. 29. Shareholders have since voted to making the NYSE the primary listing for the stock rather than London, and that change is slated to take effect May 31. Though Flutter is one of the biggest players in sports betting in the U.S. and abroad, its U.S.-traded shares are much more lightly traded than rivals such as DraftKings or Penn Entertainment . The shares also trade at a valuation discount compared to DraftKings, according to FactSet. UBS analyst Ben Shelley said in a May 9 note to clients that the primary listing change could help close those gaps. “We believe this comparatively thin trading liquidity has created headwinds for Flutter in terms of U.S. ownership. This is well supported by the geographical composition of Flutter’s investor register vs U.S. peers, with Flutter significantly under owned by U.S. investors in comparison, despite being the leading online gambling operator in the U.S.,” the note said. FLUT YTD mountain Shares of Flutter were officially listed on the New York Stock Exchange on Jan. 29. Flutter is not the only company in recent years to shift its primary listing to the U.S., and the track records of those companies could be a positive sign for Flutter. UBS pointed to building materials companies CRH — which transitioned its primary listing to the NYSE in September 2023 — and Ferguson — which made the switch in May 2022 — as examples. Those companies saw increased trading activity, more U.S. ownership and higher valuations after making the switch, Shelley wrote. “Following our analysis of [key performance indicators] for CRH/Ferguson, we find trading liquidity improved > 7x/ > 4x post U.S. listing; U.S. investor count increased > 4x/ > 5x (while European investor count remained stable); and they saw sizeable earnings multiple expansion, albeit we acknowledge there were other fundamental factors naturally in play here,” the note said. Flutter’s business is not a one-to-one comparison with its sports betting peers. For example, MGM Resorts International has brick-and-mortar casino and real estate assets in addition to its online sportsbook, as does Penn. Flutter is more complicated than simply owning FanDuel. The company has a large international business, including European sports gambling firm Paddy Power, and only about 38% of its revenue in 2023 came from the U.S. However, the long list of foreign businesses under Flutter’s umbrella should not scare off U.S. investors, according to UBS. “We see Flutter’s ex-U.S. business as undervalued vs peers owing to the greater assurance in its [free cash flow] generation with its market positions best placed to capitalise on the structurally growing online industry,” the note said. Shares of Flutter are up 15% year to date, compared to 23% for DraftKings. Shares of MGM International and Penn Entertainment are down 9% and 40%, respectively.
