Flutter Entertainment, formerly Paddy Power Betfair, has reported a 24 per cent drop in profits before tax for the opening half of the year.
Flutter – which runs Paddy Power, Betfair, US-based FanDuel, Australia’s Sportsbet and Adjarabet in the CIS – saw 148 per cent growth in the US market and an eight per cent increase in online revenue.
But the group’s underlying EBITDA dropped by £21m to £196m in H1 2019, after a £47m hit from taxes and duties. As well as the new FOBTs staking limit in the UK, Flutter also had to contend with increased taxes in Australia, Ireland, Italy, Sweden and Romania. Profit before tax dropped to £81m from £106m and underlying earnings per share were 148.0p, down 15 per cent from 173.6p.
Peter Jackson, Flutter’s CEO, said: "We have had another productive six months at Flutter Entertainment. All divisions are performing strongly on an underlying basis and have responded well to the challenges faced. We are pleased with the progress we are making to build a more diversified and sustainable business.
“In Europe, Paddy Power's recreational focus and great marketing execution has helped deliver continued growth in customers. The build out of functionality for Betfair continues to make good progress, with sportsbook country specific pricing launched, along with additional languages and currencies. The requirement to switch off a number of international markets has illustrated how important these initiatives are. We have started to trial the second generation of our responsible gambling model and have been pleased to work with the industry in making a number of commitments to promote responsible gambling, which will improve the sustainability of our industry, even if it impacts sector earnings in the short term.
“In Australia, Sportsbet's ongoing delivery of innovative products, appealing marketing and recreational focus has led to excellent performance. Our decision to increase investment ahead of the introduction of point of consumption tax has been vindicated, with Sportsbet's earnings close to flat despite this very significant tax increase.
“In the US, our FanDuel brand and product proposition enabled us to take 50 per cent of the sports-betting market in New Jersey in H1. We are delighted with this performance and have been encouraged by the regulatory momentum that has seen 10 states regulate online sports betting since the repeal of PASPA. Cross-sell is an important contributor to our success, with around half our customers in New Jersey coming from our existing daily fantasy business, while strong cross-sales have delivered 15 per cent market share in online casino. We have recently gone live in Pennsylvania, where we are one of the first operators to launch online, and we hope to replicate our success there too.”
