Flutter Entertainment’s US business has grown from being its smallest unit three years ago to its second biggest today, the Irish group’s chief executive, Peter Jackson, said on Tuesday.
In the first half of this year, the US, where the largest business is online sports betting firm, Fanduel, generated £652 million sterling (€770 million) in revenues.
In dollar terms that translates as $900 million. Jackson pointed out that the group broke the $500 million-mark for revenues in the three months to June 30th.
Customer numbers swelled 166 per cent in the first half, when the average number of US customers betting with Flutter every month grew to 1.47 million from 552,000 in the first half of 2020. The group spent £292 million recruiting new punters.
The division lost £108 million as a consequence of the sales and marketing spend. Flutter believes it will begin making a profit in 2023, assuming that none of California, Florida or Texas legalise digital sports betting before then. Their big populations would require that Flutter up its sales and marketing spending, delaying profitability. Consequently, the group is not setting an absolute deadline for this.
Jackson argues that the “more states that open up the better”. He made it clear on Tuesday that, as each territory legalises, Flutter would spend to recruit customers at a rate rivals would struggle to match.
“We spent £300 million in the first half. That will be more than most of our competitors’ revenues in those markets,” he said.
A further nine states could legalise through this year and next, according to Jonathan Hill, chief financial officer. “Arizona and Connecticut could open up in the second half of the year,” he said. New York, Massachusetts and Ohio, all with big populations, could follow in 2022.
Flutter has captured 45 per cent of the sports betting market so far, from a standing start in 2018, when a US supreme court ruling paved the way for individual states to legalise the practice.
The group is not simply relying on spend and recruit. Flutter has been applying the technology and expertise built at operations such as Paddy Power and Betfair, to manage risk and boost its US margins.
Good risk management, which determines the odds it offers on individual events, allows it to take bigger bets, along with a greater variety of accumulators – single wagers on multiple outcomes – from its US customers.
This translates into greater margins. These rose to 6.2 per cent in the first half from 4.9 per cent during the same period in 2020. This means that for every $100 bet by one of its US customers this year, it kept $6.20, against $4.90 last year.
That led to a near trebling of sports betting revenues to £452 million for the period. At the same time, revenue from poker, casino and other games, almost doubled to £200 million.
Originally Appeared Here