EGR Power 50 2021: 1. Flutter Entertainment
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1. Flutter Entertainment(1)
FINANCIALS: Pro forma revenue surged 30% YoY in constant currency (cc) to £3bn in H1, and this was followed by a 9% YoY rise, or 12% cc, in Q3 to £1.4bn
STRATEGY & IMPACT: To dominate all verticals, reinforced by the £402m purchase of bingo-led tombola. The opening of the cavernous £15m tech and innovation hub in Leeds underlines the group’s ambition
GEOGRAPHIC REACH: Number one in the US, while Sportsbet in Australia is a highly profitable asset. Taking a majority stake in India-facing DFS and rummy site Junglee Games looks a shrewd move
INFLUENCE & LEADERSHIP: Flutter is at the forefront of RG with its safer gambling controls, while the £500 loss limit for under-25s in the UK and Ireland was roundly applauded by industry observers
It is probably no huge surprise to find Flutter sitting pretty at the top of the Power 50 rankings for the second year running. After all, this FTSE 100 juggernaut remains the world’s largest public online gambling operator with a market cap in excess of £19bn, supported by a bulging portfolio of market-leading betting and gaming brands.
In the UK and Ireland, Flutter boasts a triumvirate of betting-centric sites in the shape of Paddy Power, Sky Betting & Gaming and Betfair, even if Paddy Power and Sky Bet target – and fight over – the same casual betting cohort. The International division is spearheaded by PokerStars, which has been dishing out juicier player rewards of late to drive retention, although casino overtook its historical raison d’être – poker – in H1 to become the largest vertical.
Yet it is the markets of the US and Australia that have turbocharged the group of late; Flutter amassed a 42% share of the US sports betting market in the third quarter with its FanDuel Sportsbook, which is live in 12 states after recent launches in Arizona and Connecticut. FanDuel (including DFS) accounted for 94% of the £280m Q3 revenue – up 85% year-on-year (YoY) – for the group stateside, while staking levels on Sundays this NFL season have consistently matched 2021 Super Bowl levels.
Down Under, Sportsbet retention was boosted in Q3 by stay-at-home Covid restrictions capturing discretionary spend as AMPs and revenue leapt 24% and 20% respectively. Closer to home, there have been headaches, though; shackling regulations in Germany caused Flutter’s International segment to slump 3% overall in Q3. Discounting Germany would have resulted in a 6% growth. What’s more, Flutter’s withdrawal from the Netherlands when the regulated market went live in October is expected to cost the business £10m in EBITDA in 2021 and around £40m next year.
This, combined with unfavourable sports results in the first 24 days of October impacting EBITDA to the tune of around £60m, partly explains why Flutter expects adjusted EBITDA (excluding the US) of £1.24bn-£1.28bn this year, down from previous guidance of £1.27bn-£1.37bn. And with the outcome of the review into the Gambling Act 2005 due early next year, along with the ratcheting up of responsible gambling measures, Flutter CEO Peter Jackson has warned that 2022 UK growth is “hard to imagine”. But if any operator can negotiate these headwinds, it’s Flutter.