Paddy Power owner Flutter’s profit falls on UK tax blow
Betfair and Paddy Power owner Flutter posted tumbling 2019 profit today as UK gaming taxes and the firm’s increased investment in the US both took their toll.
The figures
Profit before tax plunged 38 per cent year on year to £136m despite a 14 per cent hike in revenue to £2.14bn.
Earnings per share also fell 24 per cent to 183.2p per share, down from 2018’s 241.7p.
But the betting giant held its dividend steady at 200p per share. However, net debt also rose, from £162m in 2018 to £265m last year.
Why it’s interesting
Flutter took a £73m hit from higher gambling taxes in the UK, Ireland and Australia. The UK hiked online betting tax from 15 per cent to 21 per cent last April amid a regulatory crackdown on the sector.
Flutter’s share price fell five per cent to 8,380p in early trading as a result.
Despite that Flutter’s brands still saw online revenue grow 18 per cent, up from an 11 per cent growth rate in 2018.
Profits also suffered from the company’s decision to fall to a loss in the US, where it is expanding its business to take advantage of relaxed sports betting laws in most states.
But Flutter pointed to a 44 per cent stake in online gambling revenue as a result in states where its Fanduel venture was live last year.
The blow to profit comes as the UK’s competition watchdog investigates Flutter’s proposed £11bn merger with Toronto’s The Stars Group.
Today Flutter said it still expects the merger to close in the second or third quarter this year, adding it is “working closely with relevant competition authorities globally to obtain the necessary clearances”.
What Flutter said
Chief executive Peter Jackson said:
I am immensely proud of the group’s performance given the complex regulatory environment. The entrepreneurial culture of our business and the quality of our people are continuing to drive our global expansion while providing our teams with the opportunities they seek to develop their careers and gain new experiences.
In the US, FanDuel finished 2019 as the largest online sportsbook and casino, less than 18 months after the launch of our sports betting operations. Our online market share during 2019 of 44 per cent in the States where we have gone live is testament to the quality of our products, brand and team. We remain as confident as ever in the size of the prize in the US and in our strategic approach which positions us well for the future.
The new financial year is off to a strong start with good momentum across all our brands. We are very excited about the group’s prospects and in particular our proposed combination with The Stars Group, which will help us to build a more diversified global business.