US growth boosts revenues at Paddy Power owner Flutter

Paddy Power Flutter Entertainment believes California could legalise sports betting next year, opening a €3.4 billion market to the Irish gambling giant.

Flutter reported on Wednesday that rapid growth in the United States boosted revenues by 6 per cent to £1.57 billion (€1.9 billion) in the first three months of the year.

Investors plunged for the stock on the back of the news. Its shares had surged by almost 7 per cent to €105.30 by early afternoon in Dublin.

The company published the results hours after California confirmed that a petition, backed by Flutter and others, asking the state to ballot voters on legalising sports betting had amassed more than the 1.1 million signatures needed.

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Jonathan Hill, Flutter's chief financial officer, suggested that if the ballot passed "we could see California going live for the National Football League in 2023".

US media calculate that the California sports betting market could be worth between $3.5 billion and $3.6 billion (€3.4bn). The state, home to the global entertainment and tech industries, generates wealth of about $3.4 trillion a year, more than either France or Britain.

The Irish gambling giant said on Wednesday that revenues from its US division surged 45 per cent in the first quarter of the year to £429 million from £288 million during the same period in 2021.

Mr Hill said that Fanduel, its US online betting business, had gone live in New York and Louisiana, two states that recently legalised digital gambling on sports. Fanduel is the leading online sports betting player in the US, with a 37 per cent share of the market that has so far legalised.

The company recruited 1.3 million new customers there in the first quarter of the year, bringing its total to 2.4 million.

Paddy Power

However, Mr Hill confirmed that its Irish Paddy Power bookie shops were slow to recover from Government Covid curbs. Business in the Irish shops trailed 2019’s first quarter by 24 per cent, while their British counterparts are close to pre-pandemic levels. Mr Hill suggested that the slower rate at which Irish workers are returning to offices was partly to blame.

“We ultimately believe that the Irish shops will recover,” he said, ruling out closures or relocations.

A £30 million bill for new safer gambling measures in Britain and a reduction in the amount and frequency of customers’ bets left revenues from the UK and Republic 8 per cent behind last year’s first quarter at £519 million.

Mr Hill noted that Covid lockdowns increased Irish and British clients’ betting during last year’s first quarter, boosting this division which includes Paddy Power, Betfair and Sky Bet.

A run of favourable results for bookies also benefitted Flutter’s revenues in the opening months of 2021.

Mr Hill said that Irish and British customers were betting more in line with levels last seen in 2019. There were few signs that inflation had prompted them to cut back, according to Mr Hill, but he said the group was watching for this with “eagle eyes”.

Australian turnover expanded 8 per cent to £291 million, while its international business fell 5 per cent to £327 million.

Overall, Flutter’s betting websites lured more than 8.85 million regular players in the first quarter, 15 per cent more than the 7.67 million it recruited during the same period last year.

Peter Jackson, the group's chief executive, described the performance as positive. He noted that the US, led by Fanduel, accounted for more than half of all bets staked with Flutter in the first quarter.

“With our enlarged recreational customer base, winning position in the US and an ongoing focus on sustainable growth, our business is well placed for the future,” Mr Jackson added.