The FTSE 100 has just made a comeback to 7,000 levels, but the recent crash has left me with some incredible bargains. And I’m looking to capitalise on this drop before the market rebounds fully.
The global business environment has changed considerably since 2020. While some previously prominent industries are looking at a decade of laboured recovery, several new and exciting areas have emerged.
I’m looking for a firm operating in a growing sector with a global footprint, stable business model and steady growth. And only one share from my FTSE 100 watchlist looks like a solid option to me.
A big FTSE 100 bet?
Flutter Entertainment (LSE: FLTR) is a sports betting and online gambling company that operates famous brands like Sky Betting & Gaming, PokerStars and Sportsbet. The firm was formed by merging two British giants — Paddy Power and Betfair.
After recently released first-quarter results, its share price has jumped over 42%. Here’s why I’m still considering an investment at its higher price.
During the pandemic, there was a boom in online betting activity. In the US, the monthly average sports betting amount across the country was $310m. Across 2021, the value was estimated at over $7bn a month. This 20x increase was because several states in the US legalised sports betting after 2018.
Another big factor has been the rise of mobile payments. In fact, mobile sports betting account for 84% of all transactions in the region.
Flutter Entertainment benefited as a result. In 2021, group revenue grew 37% to £6.03bn. Across its brands, average monthly players exceeded 7m for the first time. The FTSE 100 firm also acquired several smaller betting brands across the globe.
The UK and Ireland remain Flutter’s biggest markets, accounting for 33% of total revenue. While mobile phone betting figures are lower here, offline stores still receive a lot of foot traffic. And Flutter Entertainment remains the biggest betting firm in the region.
My concerns
There’s no doubt that online sports betting and gambling are fast-growing industries. But this also raises a few ethical concerns, especially online. The age checks are fragile on some newer websites, leading to higher instances of minors gambling. This has led to calls for tighter regulations worldwide, including an upcoming Gambling Act Review White Paper from the UK government. This could cut revenue through taxation overnight, which poses a risk.
In fact, Flutter Entertainment’s online revenue for Q1 2022 dropped 20% year on year as the company launched changes to make gambling safer. While this was offset by a 45% jump in overall revenue from the US, it’s a sign that even big FTSE 100 companies in this highly regulated sector can suffer from new regulations.
However, I’m still bullish on this company given the popularity and global appeal of its brands. It’s already an established powerhouse in the growing US market. Its primary strategy now is to grow its player base in the region while also focusing on high-volume markets like India, Brazil and Australia.
The industry is expected to be valued at $140bn by 2028. And I expect Flutter Entertainment to play a vital role in this growth. This is why I’m considering an investment in it if the upcoming full-year results are favourable.
