70,000 Bets a Minute: How FanDuel’s Parent Is Winning at Sports Gambling

0:00Tim, I think this week's episode is one of the most interesting we've done yet. And tons of new listeners are going to tune in for the first time ever. Oh yeah? Want to bet? Funny you should mention. This week's guest is the CEO of the company behind FanDuel, the biggest U.S. company in sports betting by revenue. Even if you don't care about sports, his industry is transforming the U.S. Right. It was estimated that Americans would wager roughly$1.4 billion on the Super Bowl this year. And he told us FanDuel customers made about 70 ,000 bets a minute during the big game. The sports betting industry is big, and it's growing like crazy.

0:40And so are the consequences of getting millions of Americans hooked on gambling anytime, anywhere. That's next.

0:52For a lot of the companies we cover, first quarter is a bit of a lull. But if you're a gambler, there's no better time of the year. And if you're a sports betting company, it's also one of the busiest times of the year. The American Gaming Association estimated that Americans would wager about$1.4 billion on the Super Bowl this year. And then there was March Madness, which was twice that,$3.1 billion. There are a lot of different things to bet on these days. And making sure the house always wins is a huge technological problem for online sports betting giant Flutter and its CEO, Peter Jackson.

1:27You think about the Super Bowl with all those different players and all the different stats available, we have to be constantly assessing what we think the probabilities are of events happening. And then we turn those probabilities into prices, have them available on our site, and at peak, 70 ,000 bets a minute coming through the platform with, you know, you can imagine millions of customers looking and assessing prices in between that as well. The stock market has been all over the place since January. But in recent years, FanDuel's parent company, Flutter, has performed more like a tech company.

2:03There's some irony in the fact that the best way to make money on FanDuel might be to skip the app and buy the stock. I've been absolutely delighted with the way that the team have built the business in the U.S. with FanDuel. And if you look at the projections, we actually are talking about a$70 billion total addressable market in the medium term across the U.S. and Canada. The story of Flutter is the story of a whole new multi-billion dollar vice coming out of the bookies notebook and into a place where it can be taxed and regulated. And no one has a better understanding of the odds of what's coming next than Jackson.

2:42From The Wall Street Journal, I'm Tim Higgins. And I'm Christopher Mims. This is Bold Names, where you'll hear from the leaders of the bold-named companies featured in the pages of the Wall Street Journal. Today we ask, how is Flutter capitalizing on the rapid rise of legalized online gambling in the U.S.? Is the sports betting boom sustainable? And is it really all just good, clean fun? Or are states opening the gates to potential harms?

3:15Peter, welcome to the show. Good to have you here. I'm sure our listeners have at least a passing familiarity with your best known brand in the US, FanDuel, and its competitor, of course, DraftKings. But for those of you who aren't already wagering on sports in the US, let's start with introducing your company and what you do. Yes, I run a business called Flutter, which if you're English, you immediately know what that is because it means having a bet. And if you're American, you've got no idea what we're talking You bet. But we're the world's largest sports betting and gaming business. Flutter Entertainment, we're listed on the New York Stock Exchange.

3:52You're right, Chris, we own Fangio. So it's an important part of our portfolio. It's about half of our revenues. The other half of our revenues come from our businesses outside of Fangio. And, you know, you're kind of on a tear, like you've been posting really strong results. And you're also growing. You've got 44 % of the take for sportsbook revenue in the U.S. Goldman Sachs estimates Americans will spend$45 billion a year on sports betting once the market is mature. It's already a$10 billion a year market right now. So let's start with that. Do you really think that you're on pace to grow 350 % in the next, I don't know, 10, 20 years?

4:39when we acquired fangil you know we were anticipating that we'd be one of the market leading businesses and we'd be you know expecting that the market would be would be enormous um i've been absolutely delighted with the way that the team have built the business in the u.s with fangil and if you look at the projections we actually are talking about a 70 billion dollar total addressable market or TAM as people would say in the medium term across the US and Canada so we think the business will be bigger that covers both sports betting and iGaming look it's you know all of us who spend time you know in America you know you cannot help but realize how passionate people are about sports everybody watches it everyone knows the score They all know what happened to the players.

5:33You had a good game, a bad game. A whole piece around fandom is so important. And we deliver a brilliant experience for customers. We own the parlay concept, this idea that people can pull together a series of events that are related in a game. And they can place a bet on it. So what would be an example of that? It's the Super Bowl. Patrick Mahomes is going to do a touchdown and then he's going to have a dance afterwards and people can bet on that. Or how does that work? Well, I'm sure that will be available somewhere on our platform. But, you know, it's about picking that Patrick Mahomes will score a touchdown.

6:13There's going to be a field kick from both teams in both halves. That Saquon Barkley is also going to score a touchdown. and that the Eagles are going to win by 10 points. Right. I think that's a big thing. You could combine all that together. The technology has allowed for all sorts of bets, right? It's no longer just which team is going to win or are they going to cover the spread. You can get very granular in the whole game. I mean, this is incredibly deep. But I think it also kind of rises with analytics in sports and this kind of bigger conversation about the future of television, right? You have the FanDuel Sports Network, which I think costs something like 20 bucks a month.

6:57And here in the US, you can get MLB, NHL, and NBA games, which seems like a really great deal. Is that part of the future of your business, television streaming? We've always been in the sports broadcasting business in America. So our first investment there, we bought a business called TVG. So some people wouldn't think about it as sports, but you know horse racing is very popular of course we made the leap to streaming it as well so we started with two horse racing channels and we built it out from there now of course there's a huge amount of technology that we have to have behind the scenes to price all of these events and markets and selections now you know what do we mean by pricing it you know i mean can you can you think about like the the super bowl with all those different players and all the different stats available, we have to be constantly assessing what we think the probabilities are of events happening.

7:55And then we turn those probabilities into prices, have them available on our site, and at peak, you know, 70 ,000 bets a minute coming through the platform with, you know, you can imagine millions of customers looking and assessing prices in between that as well. So it's an incredibly technology-rich environment, very complex operating environment. we take a huge amount of risk. Customers place$100 bet with us. The most that they can lose is$100, but they could win$10 ,000 for me. To price that, you've got an internal risk and trading desk. I mean, it feels like a picture, a pit full of commodities traders in Chicago shouting at each other.

8:38I mean, is that how you are able to price so many events every day? Well, obviously it's a much cooler job than working in a commodity pit because it's talking about sports, right? So we're paying these people to watch live sport, right? So, I mean, there isn't a better job on the planet than that for most people. So, yeah, but you're right, you know, we have hundreds of traders, you know, around the world. So we used to have a follow the sum model. So, you know, actually supporting the Super Bowl, we had traders in Dublin, we had them in Melbourne, we had them in New Jersey. And yeah, they are running our models.

9:14They're looking at our bet stream of data, right? So we get more bets than anyone else. It gives us more insights. I could be watching Tim's bets come through and we'll be really confident taking all of his money apart from maybe when he's betting on Texas in the college game. And we know that he's really sharp on that. And when he does, we'll take his money, but we'll check the odds, right? And we have that sort of ability real time to assess all the bet stream data that's coming through and help make sure that we're offering as accurate a set of odds to our customers as we can. In a lot of ways, you're a tech company.

9:51You do a lot of innovation. The other day, I noticed this new feature that it's basically a slider where you can adjust the amount of risk a person wants to tolerate for a complicated chain of bets that we just talked about parlays. You got all kinds of deals, alerts, stuff clearly borrowed from social media apps, casual games. How do you do all this? I mean, do you have a lab of people just dreaming up new ways to keep people engaged? Or are you taking ideas from social media? How does this work? How does the innovation occur? You're absolutely right, Tim. We are a technology business. We're delivering a brilliant user experience to our customers.

10:32But if you think about the amount of things we sell on our platform, we've almost got a limitless assortment. right so you know trying to work out how you merchandise all of those different um you know products to customers and make them available because ultimately you know people want to watch the game but they want to get their bet on quickly uh and you know and that's not to get in the way right but you maybe they want to do a bit of research along the way so yeah we those those types of products where people can spend time looking at what other people are betting on or looking into the history of what's happened in the matchup between two players.

11:09That's an important component. Actually, even simple things like making sure that if people have got a bet on, they could actually track the performance of their bet in the game without having to keep going onto their phone. So making sure that we're taking advantage of the latest features on the Apple iOS, for example. But that slider component, it's simple and elegant. So a customer can select the number of yards they want to pick for a player. You think about it, every yard you increase or decrease, we have to go back and we have to determine what we think the probability is of that event happening.

11:47And it's happening real time, right? Real time. Whilst the game is happening, we're constantly assessing all of those probabilities. But we also spend a lot of time talking to our customers and finding out what they want and thinking about how we can bring that to life for them. And the scale that we have, the data, the insights allows us to do that. We just heard how Flutter uses tech to create new experiences for its customers. But how much of that tech is also used to keep them clicking, scrolling and betting, just like social media keeps us glued to our phones? In the end, this is about entertainment.

12:24This is not about making a living for them. But you get much better value from the money you're spending with us than you do going to the cinema. Stay with us.

12:45Clearly, like you just said, the data matters. Of course, you are a business, right? I mean, according to our own reporting, I think people lose on average seven and a half cents on every dollar they bet with you. Right. The house always wins. But how do you keep people coming back when on average, you know, you have the problem that every gaming business has, which is that clearly you're making money overall and they're losing it to you. We're in the entertainment business. I mean, the business is called Flutter Entertainment. And, you know, I'll tell the story. I mean, I get in a cab, right?

13:22And the guy says to me, what do I do? And I tell them I work for FanDuel. And he's like, oh my God, you can't believe what happened at the weekend. I had my parlay bet on and, you know, six legs clicked and the seventh leg didn't. He said, I had$10 down. And if only that player had gone five more yards, I would have won a hundred bucks. He said, I've been telling everyone about it, right? They'd had so much entertainment from it, right? And that's what it's about. Now, sometimes they win, sometimes they lose those parlor bets. But in the end, this is about entertainment. This is not about making a living for them.

13:54But you get much better value from the money you're spending with us than you do going to the cinema, right? Where it's a sort of been and gone experience, right? You know, you get to tell your friends about it. You can share it on social media. People love showing their wins. They love showing the ones that they almost won. So that's what we bring. We bring excitement to life for people. So sports betting is definitely better than going to a movie. Well, if you're asking me, of course it is. So let's talk about young people. So I was a young man once. A long time ago. A long time ago. You know, loved risk.

14:31Loved making impulsive bets on things. But we're in a different kind of era than we were even a couple years ago. Lots of states are sort of tightening the screws on social media companies, especially in terms of age verification. Utah just passed an age verification by App Store law. Do you think that that might impact you as well, that age verification regime that's going to happen here for all kinds of apps? We operate in a very, very strict regulatory environment. When we first launched our business, because we operate on a state-by-state basis. So that's how it's a state's rights issue. So this is not a gift of the federal government.

15:13so the states can determine whether sports betting or iGaming is legal at their states. Right. And sports betting is legal in 39 states now already. Yeah. The first state we went live in was in Jersey. And actually, you could cross the bridge between New Jersey and Manhattan. And as soon as you were a meter past the halfway point, your phone would stop working on our app. So we had to have absolutely pinpoint, precise precision to know exactly where you were so that we were very careful to ring fence people from a geographical perspective. Likewise, we do very, very careful and precise customer onboarding and verification to make sure that you are who you say you are and you therefore are old enough to be able to gamble with us depending on what the state's rules and regulations are.

16:04So this is, We're not as a platform where you can just tick a button and say, I'm over 21, let me on. We need to see all your verification details and documents before we'll let you onboard onto our platform. That said, plenty of teens have said it's easy to circumvent those age verification controls. I mean, it wasn't hard to find op-eds in university newspapers that are talking about teens with problem gambling issues, especially on college campuses. for example, Purdue University has tried to ban everybody on campus from doing this kind of gambling. It does kind of feel like your business though, to get people on as soon as you can.

16:45And that does feel like the playbook of some other businesses in the past I could name. So how important to your growth is getting people as soon as they're able to get on your app? We take this stuff incredibly seriously, Chris. So, you know, if there are examples where, you know, people think they can get through our systems, we will shut that stuff down. Now, There are a lot of illegal operators in the US, people who are spending a lot of money with unregulated sites. So I agree, around the world, no underage, people should be allowed anywhere near our platforms or any of our regulated competitors.

17:24And actually, we should all be doing as much as we can from the regulators, the banks, the Internet companies who allow the advertising. right you know they shouldn't be on these illegal sites to advertise there's there's lots that can can be done the regulators are much more interventionalist in the uk in a number of different fields and so in the gambling space they have determined that they want to try and ensure that customers don't spend more money than they can afford and that's quite interesting sort of moral question right which is what is more than people can afford right you know so where do you draw the line on that for people you know there's a tool that we you know have a make have available in the states at the moment you know spending tools to make sure the people are aware of how much money they're spending on our site because look you know it is entertainment they are spending money with us and we need to make sure you know it's clear to them how much we're spending the other thing that we've developed in australia actually is a real-time intervention tool so you know because if i can see that traditionally you're spending you know a hundred bucks you know a week with us but when the super bowl comes around you spend four hundred dollars we think well that's your normal pattern right and then if the following year we suddenly see you spending two hundred dollars in one day and trying to spend three hundred dollars the next day we'll intervene and we'll say you know are you sure you want to do this because this seems outside of what you would normally do with this your normal pattern of behavior so we're developing some real-time intervention tools to help ensure that you know we can just turn the mirror and point to our customer and just say, just have a think about whether you want to do what you're about to do.

18:59I guess I'd be curious in hearing more about that, because one of the criticisms about online gaming is that it's taking too many cues from social media and so-called dark patterns, that idea that kind of keeps people engaged. I read something from a researcher that talked about how these features keep the product exciting, engaging, and make them almost addictive. So on one hand, you've got a product that is almost tweaked in a way to keep people going back for it. And the other hand, you've got some tools, presumably, that can try to mitigate some of that. So where are you in that kind of debate or kind of that challenge?

19:43The whole field of safer gaming is really important to us. So research, education, internally in our business on it. And we spend a lot of time with our customers, with these types of tools that I was describing, making sure that we push this really hard. So there are many customers who we block from our systems because we're not comfortable that they're gaming responsibly. It's then important that you actually have a tool available in the country so that if the customer wants to self-exclude, they can do it from all operators. So, you know, there's plenty of revenues that we don't take, right?

20:22There's customers that we switch off or we restrict the amount of money that they're spending with us to make sure that they stay at a level which they are comfortable with hindsight to ensure that they're engaging with us safely and responsibly. It's absolutely crucial. It's part of our societal license. So you're spending$134 million on this year, but there's also data that shows there have been surges in people searching online for help with gambling addiction, especially since we've seen the return of sports gambling here in the States, largely thanks to these apps normalizing this behavior.

20:59I think of a recent paper that talked about that four years after a state legalizes online sports betting, the likelihood of a person filing for bankruptcy increases by 25 to 30 percent. So there are other effects out there, reduced access to credit, debt set to collections, abuse of debt consolidation loans, all these things that there's a cost to society. And I'm curious kind of how you reconcile that reality with kind of the entertainment part of it. Like people want to have fun, but there also is a larger cost to society dealing with this kind of fun. We're very focused on the super casual user.

21:38So we want people who are spending a small amount of money. They're putting their$10 on a parlay. Maybe they're spending$100 at the weekend. So this is not extraordinary amounts of money for people to be spending. It is in that sort of entertainment bucket. That's what we're focused on. We've got the biggest mass recreational customer base in America. We're not, you know, we're not trying to sort of get the whales that, you know, you often hear people talking about in our type of industry. Now, that isn't to say that there aren't consumers who get themselves into trouble. I think it is important that the industries pull together and have these tools that customers can self-exclude so they can opt out of it.

22:21And then it's important that those things get extended as well. I mean, there's nothing worse than if you've decided to opt out of gambling than if you're still surrounded by the advertising. So we need to make sure that on the digital platforms allow people to opt out as well. I guess I'm curious what your statistics show of the people actually opting in to use some of these safety features, because the research suggests that people rarely opt into it. So there's these very sophisticated tools that are there to help people, but people rarely want to take that help. Is that what your data would show?

22:59look if you look at our business in in italy a hundred percent of our customers there have a deposit limit in place but you know that you know we've we've introduced that as a uh as a tool so you know chris you could choose a deposit limit that suits you tim you could have a different one right depending on how much money you want to spend and of course these things require cooling off period to change them right um so you know that's that's a good example of of a of a tool that we have now of course people in the u.s can avail of that we haven't insisted that every everybody puts in place a deposit limit but we are introducing in the u.s this real-time intervention tool so when you're in the process of making that deposit to make you sort of you actually there'll be a threshold at which point will make you stop and actually reconfirm you do want to make the deposit and there'll be a threshold at which point we actually will want one of our agents to speak to you on the telephone you can make the deposit on the telephone right to make sure that you are actually definitely want to go ahead with it.

24:00And there may also be levels at which when we speak to you, even if you tell us you want to do it, we'll say, do you know what, we think you've had enough. Jackson just outlined for us how his company spends big on reducing the harms of problem gambling. You might be surprised what he told us when we asked if the same standards that apply to gambling should be applied to social media. There's a lot of good practices that we have, which actually sometimes it's frustrating for us that some of the operating partners we have are not able to fulfill. That's next.

24:47A lot of what I'm hearing kind of as the subtext of what you're saying is you are the the the cleanest shirt in the laundry you talked about being you know part of the entertainment business um one of the things about the evolution of the entertainment business of course is that is that you know it's so much of it's being delivered right through these i'm holding up my phone for those of you can't see it which is all everyone right now um in some ways it's a more potent delivery device right that's the flip side of it being accessible and so you know there's this kind of growing literature on how we have to be careful because it's with us all the time right so psychiatrist Anna Lemke she has this great book called dopamine nation she calls so much of what gets delivered through our phone a digital drug and um so many of the kind of safeguards that you talk about putting in place I mean they do remind me of like responsible drinking campaigns or, you know, the regulations that were put on companies like Juul, for example, about not advertising to young people.

26:02I mean, is it fair to say that in the same sense that social media is a digital drug, that this is a digital drug and we should acknowledge that and sort of regulate it accordingly? We are regulated. I think unlike the social media businesses, we're very heavily regulated on a state by state basis in the US and country by country basis elsewhere. And there are a lot of customs and practices we have to adhere to to make sure that our customers are well protected in that operating environment. And I think there are some therefore important distinctions between what we do and what some of the social media and other digital businesses are doing.

26:47We take our responsibilities very seriously. And I think there's a lot of good practices that we have, which actually sometimes it's frustrating for us that some of the operating partners we have are not able to fulfill. but nonetheless we'll still make sure that we operate and provide a very safe form of entertainment to our customers. You operate in a world that everything's almost been gamified. I'm curious where you see there's more potential for expanding. You get into predictive markets, you get into the stock market, which a lot of people think has become a lot like gambling. Can we bet on election outcomes?

27:28like when do i get to bet on the things that i can bet on polymarket with you well if you're in the uk because you can right so you know you can there's all sorts of novelty bets right you know you can bet on uh the outcome of the you know the elections you can bet on the outcome of uh whatever the the big you know celebrity-led you know program is on tv tonight you know there's all sorts of things uh that you can bet on these sort of um so fun fun markets outside of outside of sports we're not there yet in in in the u.s um you know i i'm not the person to sort of sit here and opine on you know whether you know the stock market is gambling or not there are other people who will have views on you know on that but of course you know uh there has been gamification of that there's some well-known businesses who have democratized it i think is how people would describe it um yeah but what we what we focus on doing with with our business is offering people sort of you know great value entertainment and yeah if if we were allowed to let our customers bet on you know on the election or um some of those other things um yeah we found them to be you know we call them novelty markets we found them to be sort of yeah a bit of fun in other countries, and I'm sure American consumers would enjoy it as well if they could.