Shares in Flutter — the betting conglomerate that includes Paddy Power, Betfair, its Australian and now key operations in a newly liberalised US — surged over 6% after it unveiled no nasty surprises in half-year results.
This comes despite exchequer tax increases and the costs of responding around the world to heightened concerns over gambling addiction having weighed on earnings.
It has also weathered “switch-offs” in a number of countries, including in high-margin earning Switzerland, Serbia, Slovakia, and Albania to post group-wide revenues of just over £1bn (€1.08bn), up 18% from the 2018 half-year.
But regulatory costs and increased taxes on gambling weighed on its underlying earnings, which were down 10%.
After unveiling its plans for the US to investors in March, after a key Supreme Court ruling last year effectively ended the widespread ban on sportsbook wagers in the US, chief executive Peter Jackson again hailed the prospects for US growth. He told reporters the company would “go live” in a number of other states this year, although giving little detail about what those plans would entail.
The over £1bn in revenues at the half-year included £497m from Flutter’s online division, which includes the online operations of Paddy Power, Betfair, and Adjarabet – the gaming bookie in Georgia in which Flutter took a majority stake at the start of the year to increase its presence in eastern Europe.
The company said that online “responsible gambling measures” is affecting “higher-value activity” at Betfair, in particular, which “is partially offsetting good mass-market growth” at Betfair and Paddy Power online. Betting tax increases in the UK, Ireland, Italy and Romania also pushed up online costs.
Its Australian division, Sportsbet, contributed £207m in revenues at the half-way stage, up 14%, but underlying earnings nonetheless slipped 3%, weighed by tax rises.
Its recent entry into the US was driven by the reversal of outright sports betting bans in a number of states. Flutter’s US operations, including FanDuel, TVG, and Betfair Casino in New Jersey, contributed £160m in revenues in the period.
The US posted an underlying loss in the period and is preparing to ramp up of promotions as the new American NFL season gets underway.
Analyst Michael Mitchell at Davy said that acquisitions in the US were unlikely, but that “market-access” deals were likely for it to open up new states as legislation allowed. Acquisitions in eastern Europe and Latin America were possible, however, he said.