EGR Power 50 2020: Flutter Entertainment (1)
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1. Flutter Entertainment (4)
FINANCIALS: H1 revenue rose 22% on a pro forma basis to £2.39bn, with adjusted EBITDA growth of 35% to £684m. Full-year EBITDA (excluding the US) is expected to be £1.28bn-£1.35bn
STRATEGY & IMPACT: To take “podium positions”, as CEO Peter Jackson puts it, in regulated markets, although cementing its spot at the top of the pyramid in the US is the goal
GEOGRAPHIC REACH: Already a major player in the UK, Australia and the US, the merger with TSG and PokerStars has expanded the group’s global footprint
INFLUENCE & LEADERSHIP: With a bulging portfolio of tier-one brands, Flutter is the 800-pound gorilla whereby its decisions now have a knock-on effect on the rest of the industry
It may have taken 11 years, but we finally have a different operator atop the Power 50 rankings as Flutter Entertainment dislodges bet365. Of course, the primary reason Flutter managed to leapfrog from fourth position last year to number one this year is the £10bn blockbuster merger with The Stars Group (TSG). The combination, completed in May, forged a global online heavyweight of scale with a colossal market cap today well in excess of £20bn.
Besides diversifying the London-listed operator’s geographic footprint, the addition of TSG’s flagship PokerStars and Sky Betting & Gaming (SBG) brands added further gaming revenue to the mix. Gaming and poker accounted for almost half of Flutter’s revenue in H1, partly due to the dearth of sport, and helped to drive pro forma group growth of 22% year-on-year. This momentum continued year-on-year to £1.33bn into Q3 as pro forma revenue leapt 30% due largely to standout performances in Australia (+76%) and the US (+82%).
Speaking of the US, Flutter’s enviable stable of diversified brands – FanDuel, Fox Bet, PokerStars, Betfair and TVG – now make it the clear online market frontrunner, if it wasn’t already. Supported by a stellar product, FanDuel has seamlessly become a leading online sportsbook in seven states (soon to be 10). With FanDuel targeting a slightly more serious betting cohort, Fox Bet, which previously belonged to TSG, is aimed squarely at casual and new bettors, complemented by free-to-play prediction game Super 6 attracting over three million registered players across 49 states.
Such is Flutter’s solid position in sports betting stateside, mainly due to FanDuel’s brand power and DFS customer database for user acquisition purposes, the group has secured a market-leading 46% share of online US sports betting. Its overall online share is 29%. What’s more, 450,000 customers were acquired in Q3, swelling actives to 1.8 million, while Flutter anticipates its lucrative US division will achieve GGR of over $1.1bn in 2020.
Closer to home, SBG revenue increased 32% in H1 but Paddy Power Betfair’s slid 18% and management has to figure out a way for Sky Bet and Paddy Power to co-exist and prosper when in direct competition for the same recreational customers. Much work is also needed to turn around the fortunes of the Betfair Exchange. If anyone can overcome these challenges, coupled with increased regulatory pressures and single-digit revenue growth in Europe, it’s the mighty Flutter.