Flutter Entertainment claims to have retained its US online sportsbook and gaming leadership position this week in its interim results for the six months ended June 30 2020, although it did incur an adjusted EBITDA loss of $25.1m stateside during the half.
The firm, which posted overall H1 revenue of $2bn versus $1.5bn year-on-year, cited a combined US market share of 31%5 in H1. FanDuel online sportsbook now has over half a million customers, it noted, and is operating across six states, following launches in Colorado in May and Iowa in August.
In the report, the company told investors: “This combination of volume-led gaming growth, stronger horse racing revenues in Australia and the US and the successful return of sports has resulted in group revenue growth of 20% during the disrupted period.”
The US, added Flutter, remains a key focus of investment for the group. “At our full year results in February, we outlined how we expected to offer FanDuel’s online sportsbook to 21% of the US population in 2021 (across nine legislated states). Since then legislation has also been passed in Virginia (c. 2.5% of US population), with planned referenda in Maryland and Louisiana in H2 to potentially approve sports betting there also.
“Our planned investment in Michigan and Illinois may now occur earlier than we previously anticipated. Michigan could possibly ‘go live’ in Q4 2020, subject to regulatory approvals. In Illinois, the requirement for in property mobile account registration has been temporarily removed in response to the Covid-19 outbreak. It remains uncertain as to how long the easing of this restriction will remain in place.”
The firm added that along with new state launches, investment in technology has been a priority and was pleased to now have its own proprietary account and wallet live across all states. “We expect to begin migration of FanDuel’s existing third-party online betting platform to in-house technology before the end of 2020,” it confirmed.
Expanding on H1 US trading, the company said: “During Q2, when most US sports were postponed or cancelled, the combination of strong performance in our TVG horse racing business, coupled with better-than-anticipated sportsbook staking, meant that Q2 sports revenues still grew 4%.
“This was despite the decline in daily fantasy revenue which was particularly pronounced given its high correlation with the number of sporting events that take place. Gaming revenue grew 380%, with continued strong growth in New Jersey boosted by the launch in Pennsylvania of the FanDuel Casino in January and PokerStars in November 2019.
“Q2 benefitted from substitution of customer activity to gaming, with revenues increasing more than fourfold. Cross-sell exceeded our expectations and direct gaming revenues more than doubled quarter on quarter, partly benefiting from redirection of marketing investment away from sports to gaming.”
Flutter added, however, that cost of sales as a percentage of revenue has increased materially year-on-year to 42%. “Approximately half of the increase reflected changing product mix with daily fantasy sports revenues significantly reduced due to the cancellation of sports,” it advised. “Other operating costs increased 19% in H1 as we continued to invest in our team and technology, with both the FanDuel and FoxBet online sportsbooks launching in Colorado in May.”
Chief Executive Peter Jackson updated investors: “While maintaining strong trading momentum, we have also made good progress since May on the integration with The Stars Group. All four regional CEOs have been appointed and most key leadership roles have now been filled.
“The second half has started well, with good sports betting performance following the return of major sport events, whilst gaming performance has remained resilient. Looking ahead, we have identified promising opportunities to increase investment across the group and, while the outlook with respect to Covid-19 remains highly uncertain, the diversification of our group means we approach the future with confidence.”