Flutter Entertainment Plc, has seen its total group revenues jump by 9% during Q3, despite its retail division continuing to feel the effects of the changes in fixed odds betting terminals (FOBT) legislation implemented earlier this year.
Publishing its interim report for the three months ended 30 September 2019, Flutter Entertainment disclosed a 9% year-on-year decline in retail revenues, down to £75m, as the 5% sportsbook growth was ‘more than offset’ by a 37% decline in FOBT revenues.
The FOBT legislation meant that ‘gaming revenues decreased by 37% in Q3 2019 reflecting the impact of the change to FOBT staking limits since April. This compares with a decline of 44% in Q2 2019 and we have continued to observe an ongoing improvement in this trend as the year has progressed.’
The group, which now includes Paddy Power, Betfair, FanDuel (US), Sportsbet (AUS) and the recently acquired Adjarabet (CIS) and Stars Group, has expressed hope in an improvement to its UK retail revenues as ‘competitors have moved to close shops in the vicinity of our UK retail estate and we expect this trend to continue as more closures occur.’
Sports revenue for the group has grown by 10% and gaming growth of 7%, which has been supported by the addition of Adjarabet, which added 4 percentage points to Group growth in the quarter.
Commenting on the Q3 results, Flutter Entertainment Chief Executive Peter Jackson commented: “Q3 was an important quarter for the Group with revenues up 10% and the announcement of our combination with The Stars Group. We believe that this deal will accelerate delivery of all of our core strategic objectives and we are very excited about the international growth prospects for the combined group.
“Within PPB, both the Paddy Power and Betfair brands continued to make good progress in building more recreational customer bases through enhanced responsible gambling measures. While revenues in the quarter were impacted by this ongoing work, we remain confident that the changes being made will improve the sustainability of future growth and lead to a more diversified customer base for both brands.
“In our retail business, we have seen an improvement in gaming revenue trends month‐on‐month and this trend has accelerated since the start of the fourth quarter as competitors have started to close shops across the UK.”
Despite identifying a number of ‘encouraging underlying trends’, Paddy Power Betfair reported a 1% decline in revenues as a result of the combined impact of ‘responsible gambling measures and international market switch offs.’
Online sportsbook revenues marked a 5% decline in Q3, while net revenue margins for the quarter were ‘broadly in line’ with the group’s expectations of 8.2%. Flutter Entertainment put this down to ‘a combination of the ongoing benefit of country specific pricing, positive customer bet mix changes (including increased same game multi usage) and continued growth in our recreational customer base.’
But despite facing a tough regulatory landscape in the UK, the group’s Sportsbet division saw ‘revenues increase by 19% in the quarter to £119m, driven by good customer growth over the last 12 months’.
Jackson continued: “Sportsbet delivered another strong quarter in Australia with revenues increasing by 19%. Refinement of our pricing capabilities and ongoing changes in our product mix are delivering positive changes in expected margins while ongoing investment in product and value is continuing to drive customer engagement.”
Flutter said that its US operation FanDuel has now launched online sports betting in Pennsylvania, West Virginia and Indiana and Jackson has been very encouraged by progress to date. He added: “Published market share data in Pennsylvania shows that FanDuel quickly became the market leader with around 50% share while we remain the clear number one operator in New Jersey also. Notwithstanding the substantial investment we are making, our strong customer and revenue momentum means that we are raising our full‐year guidance in the US.”
PPB Online revenue down 1% impacted by combination of tough comparatives, market switch-offs and ongoing enhancement of responsible gambling measures. Sportsbook up 7% (excluding World Cup). Gaming daily actives up 9% #FlutterResults pic.twitter.com/dXW8eXhQTl
— Flutter plc (@FlutterPLC) November 7, 2019