Flutter Entertainment, the parent company of FanDuel, has announced a significant reduction in its US revenue forecast for 2024, cutting it by $370 million to approximately $5.78 billion. This adjustment comes in the wake of what has been described as the most bettor-friendly NFL season in nearly two decades, with an unusually high rate of favorites winning their games. The company highlighted that this trend particularly affected their NFL Parlay and Same Game Parlay bets, leading to a substantial financial impact.

The unfavorable sports results in the fourth quarter of 2024 resulted in a $438 million reduction in gross gaming revenue (GGR), a $390 million decrease in revenue, and a $260 million reduction in Adjusted EBITDA for the period from November 12 to December 31. The revised US Adjusted EBITDA for 2024 is now estimated at $505 million, down from the previous guidance of $670 million to $750 million.

Flutter's Q4 2024 trading update revealed a significant hit to financial performance, primarily driven by these unfavorable betting outcomes. The company's Q4 sportsbook net revenue margin dropped to 6.6%, reflecting the impact of these results. However, the structural revenue margin improved by 100 basis points year-over-year to 14.5%, indicating underlying business strength despite the short-term volatility.

Despite the challenges in the US market, Flutter reported positive momentum in its UK and Ireland operations, particularly with favorable sports results in the English Premier League. This led to an estimated increase in Group Ex-US revenue and Adjusted EBITDA by approximately 1% and 2%, respectively, compared to previous guidance.

Flutter emphasized that these customer-friendly results are temporary and do not impact the long-term outlook communicated at their Investor Day in September. The company remains confident in its growth drivers and long-term trajectory. Additionally, Flutter implemented cost mitigation strategies, including a reduction in promotional spend by 20 basis points year-over-year to 4.0%, to offset the adverse sports outcomes.

The company's shares experienced a decline following the announcement, with Flutter's stock dropping by 2.5% to 3%. This phenomenon has also affected other sportsbook operators, as the high rate of favorite wins in the NFL has been a widespread challenge across the industry.