Flutter Entertainment — the company that owns FanDuel, the largest online sportsbook in America — just delivered a fourth-quarter earnings report that missed Wall Street estimates on virtually every metric that matters. Revenue came in at $4.74 billion versus the $4.97 billion analysts expected. Adjusted earnings per share hit $1.74 against a $1.95 consensus. Even EBITDA disappointed at $832 million, undershooting the $893 million target. The stock has plummeted more than 15% since the report dropped.
CEO Peter Jackson offered a surprisingly candid explanation: bettors simply lost too much money in Q4. When the house wins too big, gamblers get discouraged, bet less frequently, and eventually stop opening the app altogether. “It’s fair to say, not everything went our way in the fourth quarter,” Jackson told CNBC. Translation: when your customers lose their shirts, your engagement metrics crater.
The damage didn’t stop at the Q4 miss. Flutter’s full-year 2026 guidance landed between $17.75 billion and $19.05 billion in revenue — meaningfully below the $19.34 billion analysts had modeled. That light outlook suggests the headwinds aren’t just a one-quarter blip. Barclays slashed its price target to $225, pointing to operational issues at FanDuel including an inability to retain bettors and market share losses to competitors during the NFL season.
There’s a deeper narrative here for anyone invested in the sports betting thesis. The U.S. legalization wave was supposed to be an unstoppable tailwind — and Flutter, as the clear market leader with FanDuel, was supposed to be the primary beneficiary. But the Q4 results reveal a vulnerability that bulls have been ignoring: sports betting is fundamentally a cyclical entertainment business, not a tech platform with network effects. When bettors lose, retention drops. When retention drops, customer acquisition costs spike. It’s a hamster wheel that gets expensive fast.
One bright spot on the earnings call: Jackson told investors he sees no evidence that prediction markets are cannibalizing the sportsbook business. He also suggested that the rise of prediction markets could actually spur more states to legalize sports betting — expanding Flutter’s total addressable market. That’s a long-term bull case worth tracking, but it doesn’t solve the near-term margin problem.
For traders, Flutter at these levels becomes interesting as a contrarian play. The stock is now down roughly 30% from its highs, and the company still grew revenue 25% year-over-year in Q4. The question is whether this is a buying opportunity or a value trap — and the answer depends entirely on whether FanDuel can fix its retention problem before competitors eat its lunch.