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Affordability checks hit operators' UK revenues as white paper wait goes on

Flutter Entertainment and 888 announced their interim results on Friday
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Two major gambling operators told the City on Friday that measures such as affordability checks, introduced in anticipation of the government's long-delayed gambling review white paper, were already hitting revenues.

Peter Jackson, chief executive of Flutter Entertainment which owns Paddy Power, Betfair and Sky Bet, said the continuing delays to the publication of the government's proposals for gambling reform were "disappointing".

British racing's leadership has voiced grave concerns about possible unintended consequences of the government's gambling review, especially the prospect of intrusive affordability checks into punters' personal financial information.

Latest figures from the operators will add to worries about the potential for more action in that sphere from both the government and Gambling Commission.

Flutter, and rival operator 888, who completed the acquisition of William Hill in July, unveiled their results for the first six months of 2022 on Friday.

In Flutter's case, overall revenue grew by nine per cent to £3.4 billion during the first half of the year.

However, in the UK and Ireland revenue fell by four per cent, partly due to the easing of Covid restrictions compared with the same period in 2021, but also due to measures such as affordability checks.

Flutter said the "significant action" it had taken in 2021 to improve the sustainability of the business ahead of the government’s gambling review of the Gambling Act had an annualised impact on revenues of £48 million.

Jackson said the white paper delay was disappointing, adding: "We are confident that the safer gambling changes we have already made to date position us well for the future."

Peter Jackson: "we hope for clarity as soon as possible"

He added: "We've consistently supported the review and we hope for clarity as soon as possible. Uncertainty is unhelpful for everybody involved and we have now had more than 18 months of it.

"There is a lot of work that DCMS [Department for Digital, Culture, Media and Sport] has done on the paper and we hope that it will be out in the fourth quarter."

888 said group revenue for the first six months of 2022, not including William Hill, had fallen 13 per cent to £332.1m but that its revenues in the UK had fallen 25 per cent to £120.8m. 

That reflected the implementation of more stringent safer gambling policies, it said.

The company added that during the last year the group had implemented a range of additional safer gambling measures, including lower affordability thresholds and reduced slot-stakes limits.

Chief executive Itai Pazner said: "The group's financial performance in the period primarily reflects market conditions in the UK. 

"However, we believe the proactive actions we have taken to increase player protections, and drive higher standards of player safety, have put the group in an even stronger position for the future."

Flutter revealed that despite the rising cost of living there had been no discernible signs of a consumer slow down.

Jackson said: "We aren't seeing any impact at the moment. The one thing that we have seen was a return this year to the typical levels of engagement with our products on a weekly basis.

"It had gone up in Covid and it has reverted to where it was since lockdowns were eased."

The markets reacted very differently to the results announced by Flutter and 888.

Flutter's share price rose 11.9 per cent to 10,500p by the close of trading on Friday afternoon as the company revealed its American arm Fanduel had taken a 51 per cent share of the US sports betting market.

Quarterly revenue in the US exceeded $750m (approx £619m/€730m) for the first time in the second quarter, while the division also moved into profitability.

However, 888's share price fell by 10.8 per cent to 142.7p by the close of trading, with adjusted profit before tax falling by 66 per cent to £14.4m during the period, while adjusted ebitda (earnings before interest, taxation, depreciation and amortisation) was down 29 per cent to £50m.


Read this next:

Ladbrokes Coral owner Entain: business is resilient but not immune to a downturn

Flutter revenue down in UK and Ireland as government white paper delay continues

 


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Uncertainty is unhelpful for everybody involved and we have now had more than 18 months of it
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