Flutter boosted by US and Australia but tax and regulation hits profits
Revenues at Flutter Entertainment passed the £2 billion mark in 2019 thanks to the group's American and Australian arms but profits have been hit by higher taxes and stricter regulation.
The owner of Paddy Power Betfair recorded revenues of £2.1 billion last year, a rise of 14 per cent, but profit before tax fell 38 per cent to £136 million, while underlying ebitda (earnings before interest, tax, depreciation and amortisation) was down nine per cent to £426m.
Chief executive Peter Jackson said ongoing investment in the US and additional tax and regulatory changes had cost the group approximately £107m year-on-year but insisted that responsible gambling practices would "play an ever bigger role in our business".
He added: "Putting responsible gambling and customer affordability front and centre is the right thing to do for our customers and our business."
Flutter hope to complete a merger with Sky Bet's parent company The Stars Group later this year to create gambling goliath with a market value of more than £10 billion.
Jackson said: "2019 was a very significant and busy year for the group. We've continued our successful expansion in the US, played a key role in driving the race to the top in responsible gambling and announced our proposed combination with the Stars Group."
In the US Flutter's FanDuel brand ended 2019 as the largest online sportsbook and casino, with a market share of 44 per cent in the states where they operate.
"We remain as confident as ever in the size of the US prize and in our strategic approach, which we believe positions us well for further success," Jackson said.
In Australia, Flutter's Sportsbet brand grew revenues by 11 per cent.
However, regulation closer to home continues to bite, with the introduction of a £2 staking limit on FOBTs hitting profits by £30m and the forthcoming ban on betting with credit cards estimated to hit ebitda by £14m-£17m a year.
Gambling advertising on television is another area which could result in further regulation, despite the industry's voluntary introduction of a whistle-to-whistle ban on ads during pre-watershed live sport, although there is an exemption for horseracing.
"We were a big proponent of the introduction of the changes," Jackson said. "Whilst it is early days as to how those have gone down, we were pleased to see a reduction in the level of advertising.
"I think it is important that there was the carve-out that we put in place for racing because of the incredibly important relationship between our business and racing. So I think we have got to make sure we get the balance right with these things.
"We've also got to make sure we protect vulnerable people and children."
Stocks took another battering on Thursday due to concerns over the coronavirus outbreak, and Flutter shares ended the day down 6.8 per cent at 8,226p.
Meanwhile, The Stars Group also revealed their full-year results on Thursday with the owner of Sky Bet reporting revenue up 24.6 per cent to $2.53 billion and adjusted ebitda rising by 17.9 per cent to $781m.
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