Flutter lauds Sportsbet “step change” as Australian pro forma revenue rockets 27%

Flutter Entertainment CEO Peter Jackson has hailed the “phenomenal” performance of Australian brand Sportsbet during the Covid-19 pandemic, having experienced a “step change” in terms of scale.

Flutter reported a pro forma 27% year-on-year increase (in constant currency) in Sportsbet revenue during the first half of 2021 to £585m, resulting in a 56% YoY spike in adjusted EBITDA.

Jackson said the continuation of Australian horseracing throughout the pandemic was a major reason for the strong performance, as were retail closures affecting rival Tabcorp, which propelled retail customers towards Sportsbet’s online offering.

“We were fortunate that in the Covid-19 situation in Australia last year racing was allowed to continue, even when most mainstream sports stopped and that gave a real fillip to the business,” Jackson explained.

“A retail monopoly operates in Australia, and we managed to encourage a lot of those customers who were not able to go and use the terminals and shops, pubs and clubs, that are part of that retail monopoly.

“They came and tried the sportsbook business, they loved it and we’ve managed to be very good at retaining those customers,” he added.

Sportsbet’s H1 revenue growth was aided by a 52% rise in average monthly players to 906,000, as well as a 27% jump in sportsbook stakes to £5bn.

A “more normalised” sports calendar during Q2 was also cited as a driving force behind the revenue uptick.

However, the firm’s sportsbook net revenue margin remained in line with 2020’s margin of 11.7%, with additional customer retention strategies offset by favourable sports results and what Flutter called “improvements” in expected margin, which had added 140 basis points to actual margin.

Australia was one of the first countries to relax Covid-19 restrictions.

However, the Flutter CEO has denied suggestions that migrated Sportsbet customers could return to retail betting.

Jackson said: “We have been paying them a lot in terms of generosity to keep on the platform, and they’ve been enjoying the quality of the product and the generosity we give them, which far exceeds what they would have received from the retail monopoly.

“We’ve been very pleased with the way we’ve kept those customers into this year, it has really delivered a step change in the business, with more than 50% growth in the number of customers on the platform,” he added.

Jackson said the Australian business had “consistently surprised people” despite a challenging regulatory environment.

“If you consider the introduction of the point of consumption tax, people thought that would impact the business,” Jackson said.

“Despite this we managed to grow our business in advance of that and then the operating leverage allowed us to effectively grow through that big step change in tax.

“If you look at the profitability of the business in the first half this year, it’s nearly three times what it was in 2019, so we’re really getting that operating leverage into the business and the team are doing a great job,” the Flutter CEO concluded.