3rd May 2023 16:49
(Alliance News) - Flutter Entertainment PLC on Wednesday reported sharp first-quarter growth but an increasingly difficult UK regulatory environment makes the outlook there murky, in contrast to its burgeoning US offering.
The Sky Bet and Paddy Power owner reported a strong start to 2023, with revenue in the first quarter up 54% year-on-year to GBP2.41 billion. Average monthly players rose 30% to 12.3 million, with strong recreational customer growth seen across all divisions.
"We added over 1.5 million customers [in the US] in the quarter, and we remain the clear market leader. Our US sports betting handle of USD10.9 billion represented almost 60% of the group's total sportsbook stakes," said Chief Executive Peter Jackson.
The firm's US division saw 92% growth in revenue, while in the UK & Ireland arm, it grew 17%.
Edison analyst Russell Pointon commented: "The first quarter of 2023 has proved something of a full house for Flutter, with revenue growth across both sports and gaming. The 54% from Q1 2022 compares with a relatively easy comparative of only 5% revenue growth the previous year. Key to this vast increase in growth is the group’s ongoing expansion in both region and offering; indeed, since the merger of leading gambling providers Betfair and Paddy Power in 2015, the company has been on a trajectory to absorb an ever-increasing portion of the market share.
"While the past quarter has been a strong start to the year for Flutter, there remains some uncertainty on the potential impact of the recently published UK White Paper on gambling."
Flutter last week said a long-awaited gambling act review in the UK is "important and necessary" for the industry, which has come under greater regulatory scrutiny.
It said it wants to take a "leadership role in responsible betting and gaming". It said it has already made pre-emptive changes that have removed GBP150 million worth of revenue from its UK business.
Proposed measures announced in the UK government's white paper could present an incremental revenue hit between GBP50 million and GBP100 million.
Gambling companies in the UK are to be forced to step up checks on punters "to better protect even those unable to afford small losses" under plans to tackle addiction in the biggest shake-up of the industry's regulations in 15 years.
Plans also include maximum stakes for online slot machines of between GBP2 and GBP15 for all customers subject to consultation and a new statutory levy which will see gambling companies required to fund more groundbreaking research, education and treatment, UK Culture Secretary Lucy Frazer said.
Jefferies said it expects Flutter's earnings before interest, tax, depreciation, and amortisation to see a hit between GBP25 million to GBP50 million from the regulatory plan. The investment bank is still a fan of the Paddy Power owner, however.
"We view the White Paper as a clearing event, removing a multi-year investor concern. Flutter remains a top pick buy," it said.
By Eric Cunha, Alliance News news editor
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