With the sports betting industry booming, are you in the mood for Flutter?

If you want to support a rapidly growing sector with untapped potential, the global growth in sports betting cannot be ignored. The race is on for a larger share of the purchasing power of younger consumers who enjoy watching sporting events while also placing bets – or multiple bets.

In the US, the main players in this battle are Draft Kings and Fan Duel, owned by Flutter Entertainment, the Dublin-based owner of Betfair and Paddy Power.

Flutter is number one in the league, thanks in part to its particular competence in the so-called “parlay”, where several bets are combined into one bet.

Flutter and Draft Kings may be the dominant names, but other publicly traded US players include Caesars Entertainment, PENN Entertainment and Bet MGM, a joint venture between MGM Resorts and Entain, which owns Coral and Ladbrokes.

However, such opportunities seem to be opening up that even Walt Disney overcame his previous, steadfastly held moral objections to gambling in any form to make his debut in this controversial field with the ESPN Bet app.

The UK sports betting market is worth £3.5 billion and growing at 4.5 per cent a year, but the main target is the US. Because, as Barclays analyst Brandt Montour notes, sports betting appears to have an “enduring power” in the lives of American sports viewers.

Indeed, some observers even consider sports betting to be one of the fastest-growing industries in America.

This assessment, which will delight some investors and dismay others, is based on surprising data.

In America, about half of the people who watch a baseball or American football game can already use an app to bet on the score or almost any other aspect of the action, such as the margin of victory.

However, this percentage is expected to increase to approximately four-fifths of viewers, resulting in a 60 percent increase in U.S. gambling revenues to $18 billion by 2027.

By around 2030, Flutter predicts, online sports betting and casino could be worth $63 billion, or 50 percent more than 2022 estimates. This growth will be driven by sports betting, including betting on “fantasy” sports, in which players create imaginary teams.

As much as $1.3 billion was spent on this year's Super Bowl, the culmination of the American football season. That's an increase of 20 percent in a year. About 1.8 million fans downloaded sports betting apps in the weeks before the event.

America's status as the country with the most sports betting was highlighted by Flutter's decision in January this year to move its primary stock exchange listing from London to New York, although the company retains a secondary listing here.

Subsequently, shares of Flutter – formed from the merger of Betfair, Paddy Power and The Stars Group – soared 33 percent to $236 on optimism about its prospects. The stock is currently up 147%. higher than five years ago.

Draft Kings stock also benefited from the competitor switch, rising 11 percent since January.

Last month, Flutter forecast the company's profits would grow to $5 billion (£3.7 billion) by 2027. Analysts expect it to reach $2.51 billion in 2024. The amount in 2027 could likely be higher if more Americans are able to benefit from sports betting.

It was legalized in the country in 2018 – the year Flutter acquired Fan Duel – although individual states can still ban the practice.

California and Texas are not giving up, but other states have been won over – mainly by their ability to collect taxes, but also by their desire to curb crime. Wealth manager Oppenheimer and other analysts who follow Flutter and Draft Kings point out that before the advent of licensed operators, many billions were wagered through illegal gambling rings, often based abroad.

Oppenheimer estimates that as much as $150 billion is invested annually through this black market route, full of corruption and violence. This is a point to remember for investors who may find gambling companies distasteful, although it is reasonable to wonder why there is no general regulatory body in the US similar to the UK Gaming Commission.

So far, the size of the illegal gambling market and the taxes incurred have not been enough of a reason for California – the most populous state with nearly 40 million people – to change its mind on sports betting.

But Amy Howe, Fan Duel's chief executive, said last month that she was “optimistic that it will happen at some point.” Texas may prove more stubborn, despite the efforts of Texas billionaire, TV personality and businessman Mark Cuban, who last year sold a majority stake in his Dallas Mavericks basketball team to the Adelson casino dynasty.

Florida may have legalized sports betting, but with restrictions. Flutter is not allowed to operate there. But Flutter CEO Peter Jackson is looking beyond the U.S. to countries where sports betting is growing rapidly. Last month it bought Brazilian group NSX, whose main brand is BetNacional. Brazilians mainly bet on football, but they are turning to other sports.

Football is also Italians' favorite sport to bet on, which is why Flutter paid £1.9 billion to Snaitech, Playtech's Italian subsidiary, last month. Jackson described the deal as “strategically and financially compelling.”

Snaitech, usually called Snai, ranks second in the Italian sports betting industry and has 2,000 retail outlets where Italians like to place their bets.

Online games are less popular. Only 21% choose this option. Italians. However, one can suspect that Flutter will want to change this.

Last month – a busy time for Flutter – Jackson pledged that the company would undertake $5 billion in share repurchases over the next three to four years. These programs, which could begin next month, should provide long-term growth for the stock.

Montour predicts the stock will rise to $275. Oppenheimer is even more enthusiastic, setting a price target of $300. The high price target is $355, and ten of the 18 analyst teams that follow Flutter have rated the stock a “buy,” even though it is trading at a very expensive 40 times higher.

A buy rating for Draft Kings, although analysts are less confident about the share price growth.

The average price target is $49, up from $37 currently, although one analyst expects a jump to $89.

Entain is considered another purchase. The average price target is 935p from the current 770p, following recent results showing the company's “accelerating momentum”.

While all of this may sound tempting, there are significant risks for anyone considering switching to Flutter or any other sports betting company. There are growing concerns in the United States about the sport's “gambling” and the lack of a regulator to push for more frequent reviews of customers, including monitoring affordability.

All gambling is addictive, but it is argued that sports betting can be especially addictive because it can combine betting with undying loyalty to a favorite team that will endure through thick and thin.

These issues will strengthen the resolve of anyone who avoids stakes in gambling or tobacco companies for ethical reasons. But they should give everyone else pause, if only because states may try to raise more taxes on the industry. Illinois has already imposed a fee on operators.

But if you're willing to bet on this emerging industry, Flutter may be worth the risk.

If you are already an investor, stay on board and experience the thrill.

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