Paddy Power owner Flutter has raised its forecast for full-year profit growth after a six-month-long winning streak for US gamblers swung sharply back in the favour of bookmakers during a better-than-expected second quarter.
Bookmakers tend to suffer when favourites win and Flutter, the world’s largest online betting company, cut its US core profit guidance by $180 million (€154 million) in May following a series of unlikely customer-friendly sports results.
Less favourable outcomes for punters in the second quarter allowed it to claw $100 million of that back and increase its group-wide profit forecast to $3.3 billion from $3.18 billion in May, which would represent 40 per cent year-on-year growth.
Flutter’s second-quarter adjusted earnings before interest, tax, depreciation and amortisation of $919 million, up 25 per cent year-on-year, were above the $816 million expected by an average of eight analysts with LSEG SmartEstimate.
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Core profit at FanDuel, which had market-leading 41 per cent and 27 per cent shares of the US sports betting and iGaming markets, jumped 54 per cent to $400 million during the quarter.
Flutter’s international division, which includes the Paddy Power, Betfair and Sisal brands, grew its profits by 13 per cent to $591 million, with more than two-thirds of revenue growth attributed to recently completed acquisitions in Italy and Brazil.
Flutter said it is closely monitoring US regulatory developments in the event contracts market and assessing the potential participation strategies this may present.
Event contracts, which allow traders to bet on specific outcomes and profit from predictions on everything from sports and entertainment to politics and the economy, have exploded in popularity in the US since last year’s presidential election.
“There are often times when it’s good to be early, but I think there’s often times when you’ve got to make sure you see how regulatory considerations pan out before you leap in and potentially cause yourself challenges with stakeholders,” Flutter chief executive Peter Jackson said.
Flutter operates a similar business in Betfair, the world’s largest betting exchange. The head of US rival DraftKings said on Thursday that it was in “monitor mode” while it actively explores event contract opportunities. – Reuters
