Flutter: competitive US situation easing off

Flutter Q3 trading statement

The top line

Revenue up 9% YoY (12% up in constant currency); sports revenue up 13% and gaming up 1%.
US revenue up 85% YoY, Australia up 20% but UK & Ireland down 5% and international down 3% (but up 6% ex-Germany).
The company blamed sporting results and a £10m hit from the Netherlands exit for revised FY21 EBITDA guidance of £1.24-1.28bn, down from £1.27bn-1.37bn.
US guidance unchanged at $1.8-2bn and loss guidance window narrowed to $250m-275m.

Every Sunday is a Superbowl: FanDuel maintained a 42% OSB market share in Q321 with the company saying that staking levels on Sundays are matching its 2021 Superbowl performance. Gaming market share was 18%. Revenue grew to £280m ($386m) with sports-betting up 97% to £184m ($254m) and gaming up 65% to £95m ($132m). FanDuel accounted for 94% of total revenue while TVG and DFS revenues declined by an unspecified amount due to “tough comparatives”.

Pressure cooker: CEO Peter Jackson said the competitive situation in the US was “the most severe we have experienced so far”. “There was a lot of free money flowing around,” he added. During the period, Flutter went live in Arizona and Connecticut and Jackson noted that Arizona had “matured much quicker” than any other new markets. On current competitive trends, he suggested a tailing off was taking place:

“I think a lot of people really sort of used their promotional firepower at the start of the football season and are starting to run out of dry powder to some extent. They’re running out of steam and we are continuing to push hard and exploit our leadership position,” Jackson said.

Even for the big casino groups “there is only so much funding… before they actually run out of it,” he added. Jackson was also keen to suggest Flutter has a product advantage.

“We believe we can maintain our leadership from a customer experience perspective,” Jackson said. “It’s easy to acquire third-party products to catch up,but they give away all the upside. Just sticking a single game parlay on the side of the app does not make it a seamless experience, we have many in-house engineers working on our own product.”

Storm warning: In the UK & Ireland, the picture was far less positive with the company blaming a reduction in staking levels on a tough sports activity comparative, greater leisure options with the easing of lockdowns and more proactive responsible gambling measures. The government’s Gambling Act review is now likely a 2022 event, but Jackson warned that next year was still likely to be negative for the UK sector overall. “It’s hard to imagine the market in the UK will experience any real growth next year,” he said.

Junglee is massive: International suffered from the tightening of the German regulations. Ex-Germany, casino was up 21% and sports up 25% but poker was down 16% as the Covid-related mini-poker boom faded. Flutter gave mention to Junglee Games, the majority-owned Indian-facing business which it said added five percentage points of growth YoY. Flutter snapped up a 50%-plus stake in Junglee, which operates a popular rummy game, in April this year for £48m.

Flutter Q3 trading statement

The top line

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