DraftKings and Flutter Entertainment are on track to surpass fourth-quarter earnings projections, fueled by unexpectedly robust betting margins from National Football League (NFL) games towards the end of the quarter, as reported by Macquarie analysts.
Macquarie analyst Chad Beynon highlighted that the NFL “hold” – the proportion of bets that sportsbooks retain as revenue – experienced a remarkable resurgence in November and December, a trend that current consensus forecasts have not fully accounted for.
According to company guidance, the expected hold rates for the fourth quarter were approximately 11% for Flutter and 8.5% for DraftKings. However, actual performance in the last two months of the quarter suggests higher figures, with Flutter realizing around a 14% hold and DraftKings achieving roughly 10%. This adjustment lifts the estimated hold for the entire quarter to about 12% and 9%, respectively, as stated by Beynon.
“In the final two months of 4Q, FLUT/DKNG recorded hold rates of 14%/10%, leading to a 4Q hold of 12%/9%,” the analyst noted.
The improved margins could lead to significant earnings growth. Macquarie anticipates an increase of $100 million to $200 million in fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) for Flutter, and $50 million to $100 million for DraftKings. Consequently, Flutter’s quarterly EBITDA could reach around $450 million, significantly higher than the $343 million consensus estimate, while DraftKings might generate approximately $273 million compared to consensus expectations of $237 million.
Both companies’ stock prices faced challenges earlier in 2025 following customer-friendly NFL outcomes that prompted operators to lower guidance, highlighting the critical nature of football betting margins for profitability and valuations. Macquarie observed that DraftKings shares were down nearly 40% from their August peaks at their fourth-quarter lows, even as NFL holds rebounded late in the season, resulting in only modest recoveries for online betting stocks.
Beynon also dismissed worries regarding the emergence of prediction markets as a significant competitive challenge to regulated sportsbooks. He asserted that such platforms account for approximately 5% of the legal sportsbook handle, with the majority of activity occurring in unregulated betting states, thus representing additive rather than cannibalistic revenue.
“Our stance remains unchanged from Day 1 — Predictions’ sports product is not a rival to online sports betting, and most action comes from non-legal sports betting states, creating incremental EBITDA opportunities for DKNG/FLUT,” he explained.
DraftKings is set to announce fourth-quarter results on February 12, while Flutter’s announcement is scheduled for February 26.
Macquarie expressed a preference for online casino and sportsbook equities as earnings season approaches. They view data and technology companies, Genius Sports and Sportradar, as “unfairly impacted” by recent market weaknesses, with potential growth from live betting.
In other news, Penn Entertainment may experience a slight upside from improved hold, although it is still projected to report a fourth-quarter EBITDA loss. Macquarie noted that December betting volume dropped about 2%, attributable partly to fewer NFL Sundays and a lack of high-profile matchups.