TSG revenues up 24.6% despite cost impact from Fox Bet launch
Increased marketing and operational costs in Q4 offset sportsbook gains by Sky Bet in the UK and Australia’s BetEasy
The Stars Group (TSG) has posted a 24.6% year-on-year (YoY) rise in its full-year 2019 revenues, with total revenues hitting $2.5bn (£1.9bn).
The Toronto-listed operator attributed this rise to revenue growth within its UK and Australian business segments, predominantly due to strong underlying trends in customer activity and revenues.
However, Fox Bet’s launch in September hit betting revenues in Q4, resulting in a drop of 26% ($5.7m).
Total international revenues fell by 8.8% YoY during the fourth quarter, decreasing to $324.4m (£251.9m).
UK analysts Regulus Partners attributed the drop partly to bonusing in the US, although Fox Bet is still “a very small business with nowhere near the ‘easy’ cross-sell of casino, even with a massive international customer base.”
The operator reported an 18% increase in Q4 operational expenses to $178.4m on legal fees relating to its deal with Fox Sports, although these were offset by a decrease in acquisition costs on the previous year.
Marketing expenses for the quarter also rose 9.3% YoY to $8.9m as TSG increased its investment in Fox Bet in the months following its launch.
TSG CEO Rafi Ashkenazi said the otherwise strong results were due to the group’s strategy of delivering long-term sustainable growth.
“We’ve not only begun to see the full-year benefits of our transformative 2018 acquisitions but executed on delivering a landmark media partnership in the US, with the launch of Fox Bet, strengthening our position in this emerging market,” Ashkenazi added.
Earlier today, Flutter Entertainment CEO Peter Jackson confirmed that the company expects to complete its multi-million-dollar merger with TSG by the end of Q3 2020.
Regulus Partners said the merger between the two heavyweights would create a group with “very strong positioning” across core markets, complementary products and operations management and a manageable portfolio of regulatory risk.
A Regulus note said: “[The] US remains in ‘development phase’; other than a very strong brand proposition and attractive access deals, there is not yet much to polish (although the Super6 offer seems to be working, which could be significant as a non-CPA driven counter to early DFS dominance).”
Ashkenazi also confirmed the group would look to launch the PokerStars Sports brand in the UK and debut television advertising for PokerStars Casino during 2020.