...By Henry George for TDPel Media.
Flutter Entertainment, the owner of Sky Bet and Paddy Power, reported a 17% growth in revenue in the UK for the final quarter of 2022.
The success was attributed to customers who joined during the World Cup remaining loyal.
However, the introduction of new “financial risk checks” that the UK government proposed to protect gamblers and could cost the company £100m annually has raised concerns about the future of the business.
Peter Jackson, the company’s CEO, stated that implementing the reforms without changes to technology or data rules would be challenging.
The Department for Culture Media and Sport issued a consultation on the reforms, and Jackson expressed his uncertainty about how the government would deliver on its promise to protect those at risk and make the checks “frictionless” at the same time.
Flutter’s UK revenue accounts for only a small percentage of the company’s total revenue as its US betting brand FanDuel continues to expand.
FanDuel brought in £908m in Q1, £300m more than the UK and Ireland.
Flutter recently announced its plans to pursue a secondary listing in the US, which could eventually lead to a primary listing there.
Despite the FCA’s recent reforms to make London a more attractive place to list, Jackson remains confident that Flutter will continue to pursue its long-term goal of primarily listing in the US.
The US market’s buzz and the strong retail investor market are some of the pull factors for the company.
Flutter’s shares dipped when Peel Hunt changed its rating from “buy” to “hold” due to the company’s rise in share price towards the analysts’ target.
Analysis and commentary:
Flutter Entertainment’s growth in revenue is impressive, particularly in the UK market, where gambling regulations are increasingly stringent.
The success is attributed to the company’s efforts in retaining customers who joined during the World Cup.
However, the introduction of new “financial risk checks” could have a significant impact on the business.
Flutter’s concerns about implementing the reforms reflect a broader issue in the gambling industry, where regulatory changes are sometimes difficult to implement without making significant technological or data rule changes.
Flutter’s expansion in the US market has been a significant factor in its success, and the company’s decision to pursue a secondary listing there is a positive move.
However, it remains to be seen whether the company’s long-term goal of primarily listing in the US will be successful.
While the US market is undoubtedly attractive, Flutter will need to navigate a different regulatory landscape and address concerns about problem gambling in the US.
Finally, Flutter’s share price is a key factor in its success.
The recent dip in share price following Peel Hunt’s rating change highlights the importance of analysts’ opinions in the market.
Flutter’s ability to maintain its current momentum and meet investors’ expectations will be crucial to its continued success.