Paddy Power Betfair Revenue Down 1% as RG Measures Impact
Paddy Power Betfair’s parent company Flutter Entertainment has reported a 1% decline in year-on-year revenues. Q3 results show online revenue figures of £247m with sports betting down 6% to £163m.
A drop in the revenue for sports betting was anticipated due to the company benefitting from increased betting during the 2018 World Cup. Flutter said when these figures are factored in, sports growth was, in reality, up 5% year-on-year. With the adjustment, net revenue margins are up 7% at 8.2% which the company state is “broadly in line with expectations”.
Exchange markets and business to business revenues were also down in real terms by 9% but showed a 1% increase when adjustments for the increased World Cup revenue were removed.
The companies responsible gambling measures have impacted the bottom line with a £2m drop in gaming revenue, which Flutter attributed to restrictions brought in that affected high-value accounts. Despite this, daily activities are up 9% year-on-year and gaming revenue brought in £84m, which is an increase of 11%. While UK sport betting figures are down, group revenues for sports increased by 10%, mainly due to the group’s acquisition of Adjarabet, which added 4% to the growth rate.
Group CEO Peter Jackson said the group’s focus on casual players rather than concentrating on high-value accounts meant the PPB (Paddy Power and Betfair) was able to show growth while implementing responsible gambling measures. He said;
Within PPB, both the Paddy Power and Betfair brands continued to make good progress in building more recreational customer bases through enhanced responsible gambling measures.– Peter Jackson, Flutter Group CEO.
Jackson acknowledged that the group’s focus on RG had hit revenues, but he said he was confident that the changes being made would improve the sustainability of future growth and the brands would benefit from a more diverse customer base.
Flutter also released the group’s global figures with revenue increasing 19% in Australia to a value of £119m.
The costly US expansion of the group is performing better than expected; revenue increased 67% to 91% which enabled the company to upgrade its Earnings Before Interest, Tax, Depreciation, Amortization (EBITDA) figures from a negative value of £55m to an adjusted one of losses of £40 – £45m. The revised number is due to better-than-expected revenue figures in both the sports betting and casino markets.
Jackson paid tribute to the FanDuel brand stateside saying that the sports betting brand that was launched in Pennsylvania it quickly became the market leader and enjoys a 50% share of the market. This success has been repeated in New Jersey where FanDuel is the clear number one operator.
Flutter has been aggressive in its American ambitions; the Group recently announced a deal to buy online giant PokerStars in a deal worth $6 Billion. Interestingly the Star Group also owns the highly popular Sky Betting brand, so this deal also increases the Dublin based group’s interests in the UK market.