Sportsbooks' Financial Struggles due to Unpredictable March Madness Outcomes
Unions in States Experience Setbacks in Book Sector; Florida and Alberta Provide Recent Updates
This week, top sportsbook operators have been under the hot seat with regard to a series of unfavorable sports outcomes. First-quarter earnings calls have been dominated by questions relating to the unpredictable trends in March Madness. These questions surfaced after the operators cited these negative trends as the reason for lower earnings for the second consecutive quarter.
executive leaders from Flutter Entertainment, DraftKings, and PENN Entertainment faced numerous queries related to the unusual sports results, particularly in the final quarter of 2024 and March Madness 2025.
In the first three months of 2025, the sportsbook operators have taken a hit due to a new trend in March Madness, with underdogs falling short in advancing.
DraftKings reported on Friday that the adverse sports outcomes have resulted in a negative impact of $170 million on their revenue and $111 million on their adjusted EBITDA. Flutter, the parent company of FanDuel, incurred larger damage, with the unfavorable results costing them a $230 million hit to their US revenues. As a result, Flutter reduced their fiscal year US revenue guidance from $7.7 billion to $7.4 billion.
Penn Entertainment, operator of ESPN BET, indicated a negative impact of $15 million to its revenue, as well as a $10 million impact on EBITDA in the first quarter.
Despite adjustments in risk management strategies, DraftKings CEO Jason Robins believes that the outcomes do not represent a recurring trend. Reiterating, "Our analyses provide us strong confidence that the recent volatility we've experienced is random in nature."
Florida Pulls Digital Sports Betting Bill
In Florida, two key gambling bills have been withdrawn this week, providing a slight victory for opponents of the Seminole Tribe of Florida. Despite extending the current legislative session into June, the legislature sheepishly withdrew SB 1404 and CS/HB 1467.
SB 1404 aimed to criminalize mobile sports betting platforms that weren't covered under the state's gaming compact with the tribe. By withdrawing the bill, legal options for non-tribe sports betting in Florida remain unchanged, albeit for a temporary period.
The withdrawal of SB 1404 was well-received by the Social and Promotional Games Association, an association that represents the sweepstakes industry. The association had objected to the bill's broad definition of online gambling, which encapsulated categories like video poker, digital slots, and online table games.
CS/HB 1467 addressed the criminalization of illicit sports betting platforms across the state. Despite the bill's withdrawal, it can still be revived during future legislative sessions.
Alberta Advances Sports Betting Expansion Bill
Alberta took strides to expand legalized sports betting this week by passing the Alberta iGaming Act. Despite requiring Royal Assent for passage, the bill has received a third reading and is on the verge of becoming law.
Currently, sports betting is legal in Alberta but on a limited basis. Operated by the Alberta Gaming, Liquor and Cannabis Commission, Play Alberta is the only legal online gaming and sports betting platform in the province. The launch of a commercial sports betting market in Alberta has the potential to generate annual gross gaming revenue of $700 million, according to JMP Securities.
In terms of population, Alberta ranks fourth in Canada, with 4.3 million residents. The upcoming market is expected to mirror the Ontario market, which was launched at the beginning of the year and contains more than three dozen operators.
Seventh Son of Ex-New York City Mayor to Lead World Cup Task Force
As the one-year countdown to the 2026 FIFA World Cup approaches, the son of former New York City Mayor Rudolph Giuliani has taken on a high-profile position. President Donald Trump appointed Andrew Giuliani as head of the World Cup task force. During Trump's first term, Giuliani held roles as associate director to the Office of Public Liaison and assistant to the president. Since then, he has unsuccessfully sought the governorship of New York.
The World Cup will be held in the US, Mexico, and Canada, with five of the 11 sites located in states that are expected to offer mobile sports betting by the time the event begins. The availability of in-game betting inside venues may enhance handle in these states.
Partnership Between Defy The Odds and EDGE Markets
Defy The Odds, a startup co-founded by several prominent female gambling executives, has partnered with EDGE Markets. EDGE Markets is the company responsible for EDGE Boost, a debit card product designed for responsible gaming. By forming this strategic partnership, Defy The Odds and EDGE Markets aim to introduce a suite of responsible gaming services and financial tools, with the goal of creating a safer and more manageable betting experience for users.
Other Highlights
- DraftKings: Despite the negative impact of external factors, DraftKings managed to post record profits and improved sportsbook net revenue margins of 6.4% during Q1 2025[5].
- Flutter: In spite of the impactful quarter, Flutter maintained a 43% market share in gross gaming revenue and increased their average monthly players by 8% year-over-year[4].
- CFTC: The Commodity Futures Trading Commission has decided to dismiss its appeal against the decision that allows Kalshi to operate election betting markets[6].
- Penn Entertainment: Despite an ongoing proxy battle, Penn Entertainment remains optimistic about ESPN BET and its future potential[7].
- Wynn: Wynn experienced a nearly 9% revenue dip during Q1 2025, delaying projects and downplaying the impact of tariff concerns[8].
- Genius Sports: Genius Sports reported a 24% reduction in net loss and a slight increase in revenue during Q1 2025, positioning them for long-term growth[9].
- The unpredictable outcomes in March Madness have led to financial struggles for top sportsbook operators like Flutter Entertainment, DraftKings, and PENN Entertainment.
- Executive leaders from these companies, including Flutter Entertainment's CEO, faced numerous questions about the unusual sports results, particularly in the final quarter of 2024 and March Madness 2025.
- In the first three months of 2025, sportsbook operators like DraftKings and Flutter Entertainment have been negatively affected by a new trend in March Madness, with underdogs falling short in advancing.
- DraftKings reported a $170 million negative impact on their revenue and a $111 million negative impact on their adjusted EBITDA due to these adverse sports outcomes. Flutter Entertainment incurred larger damage, with unfavorable results costing them a $230 million hit to their US revenues.
- The Alberta iGaming Act, which aims to expand legalized sports betting, has passed its third reading and is poised to become law, potentially generating annual gross gaming revenue of $700 million.
- President Donald Trump has appointed Andrew Giuliani, the son of former New York City Mayor Rudolph Giuliani, to head the World Cup task force for the 2026 FIFA World Cup, which will be held in the US, Mexico, and Canada.
