Flutter Entertainment has maintained confidence of achieving a more diversified global business, as the group lauds a significant year spearheaded by continued US expansion, responsible gambling enhancements and the proposed Stars Group merger.
Revenue for the firm grew 14 per cent to £2.14bn (2018: £1.87bn), driven by growth in the US online sports betting and gaming market, a strong performance in Australia and expansions across Europe spearheaded by the acquisition of Adjarabet.
Earnings fell 15 per cent to £385m (2018: £451m), reflecting incremental tax and regulatory changes of £107m and well as continued investment in the US market.
“The group’s four pillar strategy that we laid out last year remains in place and good progress has been made against each pillar during 2019. In our core markets we remain strongly positioned,” the group comments in its latest financial report.
“Internationally we have made progress in improving the Betfair proposition and have added to our podium positions with the acquisition of Adjarabet. In the US, our business goes from strength to strength.”
The Paddy Power Betfair parent company saw its PPB online segment grow by six percent to slightly above $1bn (FY2018: £950m), navigating a tough regulatory backdrop in which its assets have been supported by improved products, customer retention and high coverage marketing campaigns.
Gaming revenues grew 26 per cent, reflecting a strong performance from Adjarabet. Gaming momentum in Paddy Power also continued to be strong with increased customer acquisition following the launch of the ‘Don’t think you’re special’ campaign.
Combined gaming activities across Paddy Power and Betfair were up 14 per cent during the year, with an increased focus on responsible gambling said to be building a more sustainable revenue base.
Continuing a strong sportsbook performance in Australia via its Sportsbet entity, Flutter also commented that it holds the “#1 online sportsbook and #1 online casino” in the US, with a 44 per cent online share in states where FanDuel was live during 2019 stipulated.
Peter Jackson, chief executive of Flutter, commented: “2019 was a very significant year for Flutter, with further successful expansion in the United States, enhancement of responsible gambling initiatives within our business and the announcement in October of our proposed merger with The Stars Group.
“I am immensely proud of the group’s performance given the complex regulatory environment. The entrepreneurial culture of our business and the quality of our people are continuing to drive our global expansion while providing our teams with the opportunities they seek to develop their careers and gain new experiences.
“Responsible gambling is a critical component of our strategy. This is why we continue to raise our standards as a socially progressive operator and to help to lead the industry in a race to the top when it comes to responsible gambling practices. While these changes are reducing our growth in the short-run, we know that they are the right thing to do for our customers and for the sustainability of our business and the industry in the long-run.”
Looking at the future, the organisation also commented on regulatory challenges across the UK and Irish markets: “While executing on our strategy remains a key focus, it is important that we reflect on the future direction of our business and the sector more broadly. Our group operates in a fast-paced, highly competitive industry, that is governed by a multitude of national regulatory and tax frameworks which are continuously evolving.
“Regulatory change presents the group with great opportunities but also poses real potential challenges and risks. To be well positioned to deal with such change, we believe that global scale and diversification are key.
“In 2019 we saw examples of both. The expansion of the regulated sports betting market in the US continues apace, an opportunity that we believe is transformational for the group. In our core markets of the UK, Ireland and Australia we also incurred significant tax increases while our international operations experienced several unexpected market closures in the first half of the year.
“In addition, the introduction of a £2 staking limit on UK gaming machines changed the unit economics for UK shop operators, equating to an annualised profitability impact of £30m for our retail estate.
“As we look to the future, we believe that we have reached a pivotal time when it comes to responsible gambling. To better protect potentially vulnerable customers and to put our business on a more sustainable footing, it is clear that we must do more in this area both as an operator and as an industry.”