Flutter’s Peter Jackson: We mustn’t allow ourselves to become complacent
CEO underlines at Investor Day the need for the online giant to maintain and capitalise on its gold medal positions in a host of regulated markets
Flutter Entertainment CEO Peter Jackson has emphasised that the leadership teams must not let complacency stymie the future progress and ambitions of the world’s largest online gambling group.
Speaking during a Q&A session at the tail-end of the four-hour-long Investor Day in New York yesterday, 25 September, the boss admitted he worries about Flutter potentially being bogged down in bureaucracy and becoming less nimble than smaller competitors.
“It’s as true for the whole group as it is the US itself, we have to be careful we don’t let complacency get in the way,” Jackson said when responding to a question from Jed Kelly, MD of equity research at investment bank Oppenheimer.
“We are getting bigger every year […] I think it is crucial that as the business gets bigger, we maintain our speed.
“In fact, we want to get faster, because if we ever find that we start slowing down and suffering, like other big businesses do, from being bureaucratic, we won’t be delivering for our customers – and faster and more nimble competitors will beat us. That’s the thing I most worry about.”
Jackson continued: “Our decentralised [decision-making] model provides us with a strong protection against that, but we talk about it a lot as a team; making sure we are absolutely paranoid about maintaining our agility and speed.”
The Investor Day was a chance for Flutter’s global executive team to lay out, accompanied by 150 slides, how the multi-brand operator is a “global leader with unmatched scale”.
Investors and analysts heard how Flutter, which has a market cap of $41bn (£30bn), boasts 32 million active customers and anticipates full-year 2024 revenue of around $14bn and approximately $2.5bn in adjusted EBITDA.
FanDuel took centre stage at the event, with the number one US sports betting and igaming operator referenced a total of 40 times during the presentation.
The audience heard how FanDuel’s market-leading parlay product and in-house pricing meant the operator generated gross revenue margin of 12% in H1 2024, well ahead of the 8.1% achieved by the rest of the market.
This compared with 9.2% for FanDuel back in 2021, a slide in the presentation showed.
However, management are confident FanDuel can hit the giddy heights of structural gross revenue margin of 16% in the long term, resulting in net revenue margin of 12% when deducting “market-leading generosity”.
“We are confident that there is headroom for our pricing growth,” said Mike Raffensperger, president of sports at FanDuel.
“There are a number of factors that lead to our pricing advantage, but there may be none more impactful than our parlay penetration.
“Every year since the legalisation of sports betting in the United States, the percentage of parlays – both traditional and same game – has increased year after year.
“We’re currently at a level where about half of all pre-game bets are parlays, and almost a quarter of those are live bets […] so we are raising our expectations, long term, on where our structural margin will be.”
Structural gross revenue margin has been on the increase in other key markets as well, Flutter explained, thanks in part to the explosion in player props and bet builders.
The UK and Ireland, home to Paddy Power, Sky Bet and Betfair Sportsbook, went from 8.3% gross revenue margin in 2021 to 13.3% for the period January to July 2024.
This was almost double what the rest of the industry managed to generate for January to July 2024: 7.2%
And in Australia, where Flutter holds the number one position in the market with the Sportsbet brand, gross revenue margin reached 17.5% in 2023.
Meanwhile, Flutter said yesterday that it forecasts the industry’s total worldwide regulated TAM to be worth $368bn in gross gaming revenue (GGR) by 2030, with a compound annual growth rate (CAGR) of 8%.
As for North America specifically, mature TAM is projected to reach $70bn, of which the US will contribute $63bn.
On the TAM projection, Jackson said: “We believe the large, addressable market has a long runway for growth ahead through regulatory expansion boosting the TAM, as well as structural tailwinds like the continued shift from retail to online.
“This opportunity includes regulated markets like the US and our core markets of Australia and the UK and Italy. It also includes exciting high-growth markets like India and Brazil.
“And while we have podium positions in many of these jurisdictions, our market share opportunity is still relatively small, despite being the global leader in this space.”
He added: “It’s a very fragmented market. This means that a significant opportunity remains for us to grow, using our very successful M&A playbook.”
On 17 September, Flutter shelled out €2.3bn to acquire Italian omnichannel operator Snaitech from Playtech, a transaction that is expected to take the group’s market share in Italy to 30%.
The deal came just four days after Flutter paid $350m for a 56% stake in NSX Group, the parent company of Brazilian operator Betnacional.
Just prior to Investor Day, Flutter unveiled a $5bn share buyback programme, expected to launch following the Q3 earnings announcement in November.
The news sent the group’s shares in New York surging around 10% to hit an all-time high. The stock is up 3%, at the time of writing, to a new record-high of $248.