Where to place your chips? Barclays backs Flutter as top gaming pick

Barclays has named Flutter Entertainment (FLTRF) its top digital gaming pick through 2025, citing its leading market position, global diversification, and favorable outlook, while preferring it over DraftKings due to its higher-quality profile and resilience. The firm anticipates sequential improvements in digital gaming handle and hold, driven by strong NFL season engagement and easier comparisons, and dismisses near-term threats from prediction markets, reinforcing Flutter's strong positioning within a sector expected to see rapidly scaling profitability.

Analysis

Barclays has designated Flutter Entertainment (FLTRF) as its top pick in the digital gaming sector through 2025, prioritizing its leading market share, global diversification, and perceived higher-quality profile over its primary competitor, DraftKings (DKNG). The brokerage maintains a bullish outlook on the digital gaming sector into year-end, anticipating sequential improvements in handle growth and/or hold, supported by strong early indicators from the NFL season, including a 5% year-over-year increase in Week 1 viewership and a 14% rise in fantasy app downloads. While same-state online sports betting handle growth moderated to 12% YoY in H1 2025 from 27% in 2024, Barclays notes that cash handle stabilized as operators rationalized promotions. The competitive landscape is viewed as a duopoly, with both Flutter and DraftKings poised for material TAM expansion from iGaming and rapidly scaling profitability at what are considered reasonable valuations. However, DraftKings is seen as a more volatile asset due to its closer ties to US sports results and headlines concerning prediction markets. Barclays downplays the near-term threat from prediction markets, arguing that incumbents maintain structural advantages in high-margin products like iGaming and sports parlays, which are key drivers of profitability.

Key Decisions for Investors

• Given its perceived higher-quality profile and global diversification, investors with a bullish thesis on digital gaming may consider favoring Flutter (FLTRF) over DraftKings (DKNG) for a potentially more resilient exposure to the sector.
• Investors should monitor key performance indicators like handle and hold rates closely, as the favorable start to the NFL season and easier year-over-year comparisons suggest a potential for sequential performance improvements for operators.
• Traders and investors should acknowledge the higher volatility profile of DraftKings, whose stock performance is more directly linked to US sports outcomes and sentiment around emerging competition like prediction markets.
• For those with a long-term horizon, the analysis suggests the duopoly of Flutter and DraftKings offers a significant growth runway from iGaming expansion and scaling profitability, potentially justifying current valuations relative to the broader internet sector.