Flutter Loses Millions on Mandatory Safety Measures in the UK
Flutter Entertainment increased its group revenue by 6% in the first quarter of the year. However, the figure could have been better had it not implemented new safety measures in the UK and Ireland.
Inside Flutter Entertainment’s offices in Dublin. The global gaming group continues to see strong revenue, but also missed a couple of opportunities. (Image: Flutter Entertainment)
Flutter Entertainment, overall, had a successful first quarter. The global gaming operator’s latest financial health report shows a 6% increase in revenue across the board. The £1.6 billion (US$2 billion) figure comes, in part, due to continued expansion in the US. There, it has improved by 45%.
The US segment’s £429 million (US$537.2 million) was the result of an increase in consumer participation across Flutter’s online verticals. FanDuel, with revenue of $574 million, accounted for 37% of the US online sports betting market. Part of that revenue was offset by the $1 billion FanDuel spent promoting its services to gain a larger market share.
However, as much as the US helped, the company’s bottom line could have been better. Flutter lost £30 million (US$$37.59 million) during the period. This was a direct result of safety measures it implemented in the UK and Ireland, as gambling reform comes to the region.
One Step Forward, Two Steps Back
Flutter has continued to expand its global enterprise, adding new operations in Greece, the US, and other countries. It has also targeted several high-profile acquisitions, including the $2.2-billion deal for Italian lottery operator Sisal.
Despite its growth, the company slipped in the first quarter. Online revenue in the UK and Ireland dropped by 20% from its mark a year ago. In contrast, land-based sports betting operations in the region improved, with the segment almost reaching its pre-COVID-19 level.
Compared to 2019, prior to the pandemic, Flutter’s UK betting shops delivered revenue just 6% lower. In Ireland, the figure is off by 24%. It could remain the same or drop, as consumers tighten their belts over cost-of-living increases.
A battle for position in Australia is coming, but Flutter CFO Jonathan Hill isn’t concerned. The company’s Sportsbet arm controls almost 50% of the sports betting market, giving it solid control.
The impending launch of sports betting operations by a consortium that includes News Corp Australia may threaten that position. However, Hill is confident the company will hold on to its lead.
All Eyes on the UK
What’s more concerning to Flutter and the gaming industry than the increased competition in the US and Aussie markets is the situation in the UK. Everyone is waiting to see what the government has to say in its long-awaited gambling reform white paper.
The publication and the associated new gambling laws are already overdue, and it still isn’t clear when a response may come. Flutter proactively implemented responsible gambling measures. It based its decision on what most insiders expect the government to lay out in the reform, even though these measures hurt its bottom line.
Flutter CEO Peter Jackson believes the move was the right one, given what the industry knows about the UK’s approach to gambling. He is confident the upcoming white paper will “level the playing field.” It should also lead to other operators implementing measures similar to those put in place by the company he leads.
Not everyone is optimistic that the changes are for the best. The Betting and Gaming Council has cautioned that “naïve changes” will cause the UK’s gaming market to decline.
It reiterated this week the results of a recent study that shows that the UK problem gambling rate is just 0.2% – half of what it was a year ago – as the market becomes more restrictive.
However, the use of black market sites because of the restrictions has doubled. That should force UK officials to consider how they view gambling reforms, but probably won’t be enough for them to consider a common-sense approach.