This article is a reprint from legalsportsreport.com. Reach and comment on the original.

FanDuel and Fox Bet‘s parent companies both reported positive momentum for the US sportsbooks, with FanDuel’s outlook still stronger than most.

FanDuel’s parent company, Flutter, upgraded its guidance for expected losses in the US this year off of the sportsbook’s third-quarter momentum.

It’s likely no coincidence that Flutter and Fox Bet’s parent, The Stars Group, reported third-quarter earnings on the same day. The two are working toward a $6 billion merger that should close in the second or third quarter of next year. Flutter will be the majority shareholder at 54.64%.

Both of the sports betting brands will operate business as usual for the next few years, said Fox Home Team Sports VP Jim Mattson, when asked about the Flutter-Stars Group merger.

FanDuel rolling in Pennsylvania and beyond

Flutter is encouraged by the progress of FanDuel Sportsbook following launches in PennsylvaniaWest Virginia and Indiana, CEO Peter Jackson said. Active US customer growth is currently running ahead of expectations.

FanDuel’s Pennsylvania sports betting app quickly took the top spot for market share. It’s the clearest demonstration of its potential to replicate the success seen in New Jersey, Flutter said in its third-quarter report.

Performance for the FanDuel Sportsbook app in Indiana, which launched Oct. 22, has been encouraging, so far, the company added.

The app launched in the Hoosier State through a market-access agreement with Boyd Gaming. Boyd CEO Keith Smith said he was “quite optimistic” for the Indiana online sports betting launch based on the performance in PA and NJ.

FanDuel now has more than 250,000 online sportsbook customers. That’s up from around 200,000 from the beginning of October when the merger with The Stars Group was announced.

Third-quarter online casino revenue grew 174% compared to last year as cross-selling of the iGaming product from the sportsbook remained strong. FanDuel remained the market leader in New Jersey at 18% share in the quarter, Flutter said.

The existing daily fantasy sports business and Flutter’s TVG online horse racing betting business grew revenue 5%.

Fox Bet PA, NJ performance in-line

Fox Bet‘s real-money sports betting operations have performed in line with expectations after launching in PA and NJ before football season, according to Stars Group’s report.

Week-to-week customer activity levels have been encouraging, the company added without specific detail.

Fox Sports Super 6, the free-to-play sports predictions app, has more than 820,000 downloads and 7.5 million contest entries in its eight weeks of operations.

Startup costs mounting for Flutter, Stars

Both companies are taking their lumps now to build out their sports betting infrastructures.

The two expect to lose almost $100 million combined this year for their US operations.

FanDuel Sportsbook’s momentum in the third quarter led to an upgrade of those losses from Flutter. The company now expects to lose $51 million to $58 million in the US this year. That’s up from an expected loss of $71 million previously.

The Stars Group maintained its outlook of $40 million in US losses for 2019.

State expansion helping FanDuel

Sportsbook margins are notoriously low and can be dictated by whether bettors win or lose.

That’s typically felt even more when sportsbooks don’t have geographic diversification. Locals tend to support their favorite teams, which can trounce margins when those favorites win.

So it’s no surprise as FanDuel Sportsbook expands into more states the margin is improving.

The net revenue margin is up a percentage point. Lower proportionate costs for customer acquisition bonuses also helped the margin along with the geographic diversification.