Company News

Earnings dip at Paddy Power parent Flutter in line with guidance

DUBLIN, Feb 26 (Reuters) - Full-year earnings at Paddy Power Betfair parent Flutter Entertainment fell in line with the gambling group’s guidance as it prepares to close its acquisition of Poker Stars operator Stars Group Inc (TSG) .

Flutter agreed in October to buy Toronto-listed TSG in a $6 billion share deal that is set to create the world’s largest online betting and gambling company by revenue upon its expected completion in the second or third quarter of 2020.

Earnings before interest, tax, depreciation and amortisation (EBITDA) at the Dublin-based group fell 9% to 426 million pounds, at the lower end of its guided range of 420-440 million pounds excluding its heavy investment into the United States.

That was down on 465 million pounds in 2018, also excluding the U.S. unit where Flutter made a 40 million pound loss, a better outturn that the 55 million expected earlier last year.

It added on Thursday that 2020 has begun strongly, with good customer and revenue momentum across all divisions.

Earnings across betting firms have been squeezed by the imposition of betting tax increases across developed markets such as Britain, Ireland and Australia, where Flutter made most of its 2.1 billion pounds in revenue last year.

The UK government also last month introduced a ban on the use of credit cards to place bets, prompting rival William Hill to warn on Wednesday of a likely impact on its results.

Flutter said enhanced responsible gambling initiatives it introduced last year limited revenue growth in its main online division to 6%, and that the annualised earnings impact of the credit card restriction would be 14 to 17 million pounds.

Bookmakers have responded to the stiffer taxes with a push into the U.S. market where sports betting rules have been relaxed and a flurry of consolidation, including the 2016 merger of betting exchange Betfair and Paddy Power, which runs high street betting shops as well as an online business.

Flutter, which also merged its U.S. unit with fantasy sports company FanDuel in 2018, said it had amassed a 44% share of the online betting market in U.S. states where FanDuel was live during 2019.

Flutter said it currently expected an earnings outcome in 2020 in the U.S similar to 2019 as it continues to invest and plans to launch in at least three additional states.

“We remain as confident as ever in the U.S. prize,” Chief Executive Peter Jackson told reporters on a conference call. (Reporting by Padraic Halpin; editing by David Evans)