Flutter Entertainment (LSE: FLTR, NYSE: FLUT) may be approaching a turning point as analyst pressure from prediction market competition concerns begins to ease, according to Jefferies.
Jefferies analysts highlighted improving online sports betting trends and potential new sources of profitability as key reasons for growing optimism around Flutter’s outlook.
The bank noted that fears over prediction markets cannibalising online sports betting had driven a 65% decline in Flutter’s share price since last summer and a significant valuation de-rating.
That de-rating saw Flutter’s enterprise value to EBITDA multiple compress from 15 times down to just 8 times, reflecting the depth of investor concern over competitive disruption.
Jefferies argued the disruptive narrative is now unwinding, with online sports betting handle growth recovering and limited evidence of meaningful share losses in legal sports betting states.
“The powerful, but misplaced narrative that PMs will cannibalise OSB has started to unravel,” Jefferies wrote, noting prediction markets could instead create incremental opportunities for Flutter.
Those opportunities include market-making activity, the FanDuel Predicts platform, and potential regulatory leverage that could support broader online sports betting legalisation efforts.
Jefferies identified market-making as the largest single opportunity, estimating a $340 million annual EBITDA contribution if Flutter captures a 25% share of Kalshi parlays.
That figure is notable given Flutter’s $970 million fiscal 2026 US EBITDA guidance, while current consensus estimates assume no positive contribution from prediction markets whatsoever.
Consensus forecasts instead reflect approximately a $300 million investment burden, suggesting meaningful upside if Jefferies’ more optimistic scenario begins to materialise.
The analysts also flagged FanDuel Predicts as a source of additional upside, estimating the product could contribute a further $150 million in EBITDA over the coming years.
Jefferies calculated that prediction markets would need to reduce online sports betting handle by around 50% before they became a net negative for Flutter’s overall business.
Ahead of Flutter’s second quarter results, Jefferies forecast US EBITDA of $126 million, which it said would represent 21% above company guidance and 24% above consensus expectations.
That beat, if realised, would be driven by online sports betting performance and market-making activity and would mark Flutter’s first US EBITDA beat in approximately one year.
“If FLUT was de-rated for reasons that turn out to be wrong (PM cannibalisation), we would expect a commensurate re-rating as that understanding evolves,” Jefferies wrote.
The analysts added that if prediction markets ultimately expand Flutter’s total addressable market, the company could support a higher valuation multiple going forward.
Shares of Flutter traded up 3% at $109 on Tuesday afternoon, though the stock remains down almost 50% on a year-to-date basis.
