Flutter keeps faith in global progress against regulatory hurdles

Flutter Entertainment leadership remains confident in the group’s Australian prospects despite a slowdown in trading from the country during Q3, as outlined by CEO Peter Jackson and CFO Paul Edgeliffe-Johnson.

The leadership duo addressed investors and analysts this morning after the group’s Q3 earnings call, which revealed an overall group-wide revenue increase of 8% to £2bn (Q3 2023: £1.9bn) whilst acknowledging hurdles in Australia.

“The way I think about the business in Australia is we actually have to be really careful that we don’t try to over monetize the business and cause problems in the longer term,” Flutter leadership informed an analyst who quizzed the duo on the long-term prospects of its Australian operations

“We have great business in Australia. There is some softness in the market, it is still significantly bigger than it was pre-COVID. I think it’s important that we continue to invest in the market to take advantage of the growth when it comes.”

Flutter, which operates in Australia via its Sportsbet brand, is not alone in encountering difficulties in the country. Following its own Q3 results last week, Entain projected that forthcoming regulatory changes in the market will affect volume.

In Fluter’s case, Australian revenue dropped 7% year-on-year from £319m to £262m, with the group citing a ‘challenging racing market’ and decline in sportsbook stakes. However, group leadership maintains that its business ‘Down Under’ is ‘still performing well from a competitive standpoint’.

Analysts were informed that the racing market ‘went up a lot with COVID’, maintaining that Flutter’s Australian operations are ‘still a very good business”. Racing may be tough, but the company is insistent that it is reverting back to a level ahead of 2019 trading.

In contrast, the UK and Ireland performed well for Flutter, with retail and online revenue both continuing to rise. However, this has not stopped the former market being a source of concern for some. 

The UK is currently going through a generational change in its gambling regulation, with consultations ongoing regarding the Gambling Act review White Paper. Against this backdrop, many operators including Flutter have increased investment in safer gambling and responsible gaming functions, 

“Pertaining the UK market from a regulatory perspective, it’s important to say that whilst we stepped forward, early to put in place a bunch of changes, we do continue to improve our measures,” callers were told.

“This wasn’t a once and done thing we did last year, we’re continuing to make changes. I think we also were very thoughtful about the guidance that we provided to the market at the time.”

Following the White Paper publication in April, Flutter released an estimate of what investing in responsible gambling would cost the company, estimating impact on gross incremental revenue of between £50m-to-£100m as a ‘best view’.

Leadership explained this morning: “That was predicated on our best view at the time on what we thought would happen as a result of the white paper and consultations, and we still stand by that today. We haven’t seen anything that would cause us to deviate away from it.”

Also on the agenda was Flutter’s US performance, with FanDuel remaining one of the standout earners – out of the huge range of brands – within its international portfolio. 

The FTSE 100 group is still pursuing a US public listing as a future goal, a move which would see it delist from the Dublin Euronext but retain its standing on the LSE.

Summing up Flutter’s US outlook to analysts, leadership explained: “We have operated in this market for many years now and it remains incredibly intensive competition. 

“We don’t anticipate the back end of this year being any different to any other; we’ve always been very focused on acquiring as much business as we possibly can.

“We’ve been very pleased to have been able to acquire the customers. We see some commercial spending changing, I believe the market is becoming more rational and that’s actually a positive thing for all participants.”