Flutter Entertainment plc, formerly branded Paddy Power Betfair, has posted its interim financials for the six-month period ended June 30, 2019. A drop in pre-tax profits of 24% to $98m took some of the shine off an otherwise healthy 18% increase in overall revenue to $1.24bn.
There was better news elsewhere as the firm’s US interest FanDuel took a lead in the New Jersey sports betting market, pushing stateside returns up by 148%. On a more cautionary level, however, the firm revealed that growing the US business will not come cheap, with investment in customer acquisition likely lead to an expected EBITDA loss of circa $67m in 2019.
Peter Jackson, Chief Executive, commented: “We have had another productive six months at Flutter Entertainment plc. All divisions are performing strongly on an underlying basis and have responded well to the challenges faced. We are pleased with the progress we are making to build a more diversified and sustainable business.
“In the US, our FanDuel brand and product proposition enabled us to take 50% of the sports-betting market in New Jersey in H1. We are delighted with this performance and have been encouraged by the regulatory momentum that has seen 10 states regulate online sports betting since the repeal of PASPA.
“Cross-sell is an important contributor to our success, with around half our customers in New Jersey coming from our existing daily fantasy business, while strong cross-sales have delivered 15% market share in online casino. We have recently gone live in Pennsylvania, where we are one of the first operators to launch online, and we hope to replicate our success there too.”
As part of a wider business review, Flutter also used its H1 update to offer investors greater insight into its US sports betting aspirations. It listed, among its key assets, an established sports‐focused brand with high national awareness; an extensive and growing national customer base with over 8.5 million registered customers; unique cross‐sell opportunities across four distinct product verticals; and substantial scale, resources and operational expertise already established in the US.
Said the firm: “In New Jersey, FanDuel continues to lead the market, accounting for 50% market share in sports-betting in H1. Our New Jersey casino business is also growing significantly following the launch of sports betting with sportsbook cross-sell elevating our market share in H1 2019 to 15% from 10%-11% in previous years.
“We are looking forward to the start of the upcoming NFL season and towards the end of July, we successfully launched our mobile app in Pennsylvania, the first app to be live in the Apple app store. We have seen early success in acquiring new customers there and cross-selling to our circa 400,000 customers in the state.
“In March, we outlined a credible path to how the overall US sports betting market can evolve to circa 10 times the size of the New Jersey market, equating to approximately $6bn of gross revenues.”
The US update concluded: “Since PASPA was repealed, legislative momentum has been encouraging with a total of 10 states having now passed legislation enabling online sports betting. These 10 states represent circa 19% of the US population (circa 6.7 times New Jersey). We see positive signs of momentum in further states and look forward to more progress in 2020.”