Flutter Entertainment is strategically increasing its investment in prediction markets and focusing on growth in Brazil, despite experiencing a significant decline in first-quarter profits and adjusting its yearly earnings predictions due to rising costs in the United States.
The parent company of FanDuel, Paddy Power, and Betfair reported a first-quarter net income of $209 million, down 38% from the previous year; increased marketing, technology, and new initiative expenses overshadowed the robust revenue growth.
Group revenue increased by 17%, reaching $4.30 billion for the three months ending March 31, aided by acquisitions in Italy and Brazil alongside ongoing iGaming expansion.
Adjusted EBITDA saw a 2% rise, totaling $631 million, while operational profit plummeted by 66% to $76 million.
Flutter has revised its full-year guidance for 2026, now expecting revenue of $18.305 billion and adjusted EBITDA of $2.865 billion, a step back from its previous forecasts of $18.4 billion and $2.97 billion, respectively.
The company attributed the decline to poor sports outcomes in Q1, launch costs in Arkansas, and accounting adjustments relating to PokerStars North America.
“Flutter’s performance in Q1 was promising, with a 17% year-on-year revenue increase,” said Chief Executive Officer Peter Jackson. “Although we’ve made strides during this period, further efforts are necessary to maintain the favorable trends in our US sportsbook.”
Flutter’s U.S. operations reported revenues of $1.763 billion, reflecting a 6% increase compared to the prior year, even as sportsbook growth has decelerated in a maturing market, and FanDuel continues to grapple with customer turnover and diminished betting activity stemming from late 2025.
Sportsbook revenue climbed by 1%, while iGaming revenue surged by 19%. The company noted improvements in sportsbook customer metrics during the quarter, with average monthly player decline of 5% in January shifting to a 1% growth by March.
Flutter is also amplifying its investments in prediction markets, viewed as a long-term growth area in U.S. states where sports betting remains unregulated.
Predicted losses related to the prediction markets are anticipated to stay close to the upper range of its guidance of $250 million to $300 million adjusted EBITDA for 2026.
FanDuel Predicts expanded nationally during the quarter for financial, economic, and commodities contracts, with sports prediction contracts now available in 18 states without sportsbooks, including California, Texas, and Florida.
Flutter also launched its “One App” FanDuel platform in April, enabling customers in regulated sportsbook states and prediction-market users in non-sportsbook states to access products via a single app.
Jackson noted the company views prediction markets as “an appealing, incremental opportunity.” “Our in-house expertise and resources position us favorably to harness this potential in the long run,” he elaborated.
International operations continued to be a crucial growth component for the group, with revenue leaping 27% to $2.541 billion.
Revenue from Southern Europe and Africa skyrocketed 110% to $940 million, driven by the acquisition of Italian operator Snai, while revenue in Brazil skyrocketed 722% following the integration of Betnacional.
Jackson confirmed Flutter’s intention to enhance its Brazilian offerings ahead of the FIFA World Cup.
“We are committed to investing in Brazil,” Jackson remarked. “We believe this market presents an opportunity to forge a local leader over time. Soon, we will integrate our proprietary pricing capabilities, unlocking a top-tier parlay product and promotional enhancements ahead of the World Cup.”
Flutter also disclosed organizational changes designed to sharpen its focus on the U.S. market.
Dan Taylor, the current CEO of Flutter International, will assume the role of President of Flutter Entertainment and will take charge of FanDuel, while Christian Genetski will lead the U.S. operations following Amy Howe’s departure.
Citizens analysts highlighted that the results indicate emerging strain within Flutter’s U.S. business despite solid international growth.
“The business is beginning to show signs of weakness, but we believe these issues are not structural,” the analysts shared. “The World Cup and investments in prediction markets now present a challenging environment for the U.S. division.”
Citizens estimates that approximately 72% of Flutter’s U.S. EBITDA for 2026 will need to be generated in the final quarter, although the brokerage maintains a “Market Outperform” rating on the stock, deeming Flutter “significantly undervalued.”