Flutter Entertainment may still float part of its US business Fanduel – CEO

Paddy Power owner Flutter Entertainment may still float part of its US business Fanduel on Wall Street, says chief executive Peter Jackson.

He was speaking after the Irish gambling giant said it lost €345 million in 2021 as it absorbed costs from the previous year's Stars Group merger.

"It's not something that we need to do, it's something that we continue to evaluate," Mr Jackson said of a partial flotation of Fanduel on the New York Stock Exchange.

He added that Dublin-based group would see how the market evolved over the rest of the year.

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It emerged last year that Flutter was considering listing some shares in Fanduel, its fast growing US online sports betting subsidiary, on the New York market.

Separately, Flutter and Fox Corporation are in arbitration over the US group's option to buy 18.6 per cent of Fanduel, a deal stemming from the Stars merger agreement struck in 2019.

Fox says it has the right to buy the stake at a price that values the Irish group’s US subsidiary at $11.2 billion (€ 10 billion), rather than at its potentially higher market worth.

Flutter said the pair were continuing talks to see if they could reach an agreement but added that the arbitration hearing was due on June 20th.

If the issue goes to a hearing, the arbitrator will make a binding decision in the third quarter of this year. “The group continues to vigorously defend its position,” said Flutter.

Merger costs

The group has businesses in Europe, Australia, the Americas and Asia. Revenues last year grew 37 per cent to £6 billion sterling (€7.2 billion) from £4.4 billion.

Flutter lost £288 million (€345 million) in 2021 after £543 million non-cash charges stemming from its merger with Canada’s The Stars’ Group in May 2020.

Earnings before interest, tax and write-offs, a measure of the cash the company generates, dipped 6 per cent to £723 million from £772 million.

On average 7.6 million players had signed up to its websites, including Paddy Power, Betfair and Fanduel, last year, against 6.1 million in 2020.

Operating profit at its Irish and British business, which includes Paddy Power and Betfair, fell 11 per cent to £490 million.

Flutter said swings in sports results favouring punters and the £93 million (€111 million) cost of safer gambling measures, contributed to the fall in profits.

A doubling of marketing costs to £663 million in the US left its operations there with a loss of £289 million last year, 40 per cent more than in 2020.

Revenues in the US, which is growing rapidly as individual states legalise on-line sports betting, doubled to £1.4 billion, 50 per cent more than its nearest rival there.

Mr Jackson said the business there remained on track to turn a profit in 2023.

Sports betting

He acknowledged that it was difficult to predict which jursidictions were likely to follow New York and Louisiana in legalising on-line sports betting this year.

Fourteen individual US states have legalised digital sports wagering since a landmark federal supreme court ruling in 2018. Mr Jackson noted that this covered around half the population.

Operating profits at its Australian business, Sportsbet, grew 43 per cent to £411 million.

Its international division, which covers territories in Europe, Asia and South America, generated £240 million in operating profits last year, 54 per cent less than in 2020.

Flutter says it is monitoring the Russia-Ukraine war carefully. The two countries between them contributed a total of £60 million revenues in 2021, which its chief executive predicted would fall to zero this year.

He said that the group’s main concern was for the small number of staff and contractors working in both countries.

Revenues rose 2 per cent in the first seven weeks of this year. Flutter expects turnover to accelerate as 2022 progresses, assuming normal sports results. Mr Jackson said Flutter was well-placed for growth.