Flutter chief executive warns coronavirus could disrupt more sports fixtures
Gambling giant’s pre-tax profits fall 38% to €164.3m as new taxes hit
Flutter Entertainment chief executive Peter Jackson: said public health took primacy over other concerns. Photograph: Nick Bradshaw
Coronavirus could claim more sports fixtures following the postponement of Ireland’s Six Nations Rugby clash with Italy, Peter Jackson, chief executive of Paddy Power owner Flutter Entertainment, believes.
Flutter said on Thursday that pre-tax profits fell 38 per cent last year to £136 million (€164.3 million) from £219 million in 2018 as it continued spending on US expansion and felt the impact of new taxes.
Speaking after the Irish gambling giant published its results, Mr Jackson agreed that it was possible that sporting events could be cancelled as countries attempted to get to grips with the coronavirus outbreak.
“There is clearly going to be some sporting disruption, some of these events are important to us, some are less so,” he said.
He noted that next month’s Cheltenham racing festival , a key event for the industry where punters will wager more €500 million, so far looked likely to go ahead.
Mr Jackson also numbered this year’s European Football Championships, scheduled for June and July, amongst the events that were important to Flutter’s business, while he described the Tokyo Olympics as less so.
He pointed out that the group’s companies had weathered other such storms in the past and added that public health took primacy over other concerns.
Flutter shares were down 6.2 per cent at €98.72 at lunchtime on Thursday following news that profits fell last year.
Jonathan Hill, chief financial officer, said that additional taxes and regulations added £107 million to costs.
That included a doubling of betting tax in the Republic to 2 per cent and restrictions on wagering in gaming machines in British bookie shops.
Mr Hill calculated that UK proposals to ban consumers from using credit cards to for online betting this year could cost between £10 million and £13 million.
Earnings per share dropped 24 per cent to 183.2 pence from 241.7p over the same period. The group intends keeping its dividend unchanged at 200p per share.
Flutter spent £145 million on marketing in the US, where it is expanding its business as sport betting is liberalised, from £75 million the previous year.
The group said that it now has a database of 8.5 million US users while it has 44 per cent of the market.
Since a federal court paved the way for legalised sports betting in May 2018, 14 states have passed laws allowing people to wager on baseball, basketball, football and other events.
Flutter plans to merge with Canada’s Stars Group, owner of Poker Stars and Sky Bet. Competition regulators in several jurisdictions continue to scrutinise the deal.
Mr Jackson noted that 2020 was off to a strong start. “We are very excited about the group’s prospects and in particular our proposed combination with the Stars Group, which will help us build a more diversified global business,” he said.
Profits at the group’s 623 Paddy Power bookie shops fell 38 per cent to £32 million as the extra taxes and regulatory costs kicked in. Revenue fell 6 per cent to £312 million.
Paddy Power Betfair, the online business whose markets include the Republic and UK, saw profits fall 4 per cent to £263 million. Revenue grew 6 per cent to £1 billion.
In Australia, profits from Sportsbet fell 13 per cent to £103 million, while revenues rose 14 per cent to £446 million.
The US business, where subsidiary Fanduel expanded online betting to three new states in 2019, lost £60 million last year from £25 million in 2018. Revenues almost doubled to £376 million.
Early last year, Flutter bought 51 per cent of Adjarabet, the leading online bookmaker in Georgia in eastern Europe for £102 million. Mr Jackson said that the group had also been building its business in Armenia.