H1 results show the Stars Group acquisition helped Flutter through the Covid-19 storm.
UK.- Flutter is to accelerate its integration of The Stars Group brands as half-year results show its acquisition of the group helped offset the impact of the Covid-19 pandemic.
Former Stars Group Chief Executive Rafi Ashkenazi, meanwhile, has announced he will step down from his position as a Non-Executive Director with immediate effect.
Flutter has announced it will migrate all its sports betting brands to the platform that currently powers its Paddy Power Betfair unit in order to give The Stars Group’s sportsbooks a refresh.
That suggests that FanDuel, which is currently powered by GAN and International Game Technology, as well as Fox Bet and BetStars, currently powered by Amelco, would migrate to the platform.
Paddy Power Betfair’s platform blends proprietary technology and SG Digital’s OpenBet.
Flutter will also move ahead with restructuring to create a decentralised, “federal” operating model with four regional segments each with their own Chief Executive.
The four segments will be: UK and Ireland (Sky Betting and Gaming, Paddy Power and Betfair), International (PokerStars, Betfair International, Adjarabet and B2B risk and trading operations), Australia (BetEasy and Sportsbet), and the US (FanDuel, Fox Bet, TVG and PokerStars’ US operations).
Flutter also announced that it will increase investment in PokerStars, one of the brands acquired through the merger with The Stars Group in May.
It plans to increase marketing investment, which lagged far behind the industry average in terms of percentage of revenue, and will probably increase promotions such as free bets.
It also intends to revamp the product, technology and player experience.
It said: “It is clear that the customer perception of the PokerStars product lags behind competitors in a number of jurisdictions and we have work to do to address this.
“We are looking at ways in which we may be able to accelerate development work on product and operational improvements to address these gaps and to build increased flexibility into the technology stack.”
Flutter has adjusted protocols across The Stars Group brands and has withdrawn the brands from several jurisdictions at a cost of £65million in annual income.
Flutter said: “[The merger with Stars Group] strengthened the breadth of the group’s technology capabilities, with our task now to develop and expand our range of innovative products while delivering the best player protection framework to our customers.
“We said at the time of the merger announcement that we would review the compliance standards and market exposures of the combined group once the transaction was complete. Where standards differed from those of Flutter, we aimed to adopt the higher of the two.”
Flutter’s expansion and diversification through The Stars Group acquisition helped offset the impact of Covid-19 on the business in H1.
Results show a 49 per cent year-on-year rise in reported revenue to £1.52billion, although the costs of the merger led to a fall in net profit from £67.6million in H1 2019 to £9million.
PokerStars made a particularly significant contribution, with daily average gaming customers climbing 70 per cent and revenue rising 40 per cent to £697million in Q2.
That came as Covid-19 and the subsequent cancellation of sporting events hit Flutter’s sports and retail businesses, particularly in Europe.
Paddy Power Betfair saw wagers fall 38 per cent on a pro forma basis to £2.22billion, with sports revenue down 29 per cent to £320million.
Revenue from Sky Betting and Gaming rose 2 per cent to £439million thanks to a to £186million contribution from gaming – an increase of 27 per cent.
Flutter Chief Executive Peter Jackson said: “The group’s first half financial performance exceeded expectations as we benefitted from geographic and product diversification.
“In the period prior to Covid-19 related disruption, our businesses performed well with strong customer growth and favourable sports results.
“In the period thereafter, the cancellation of sports and closure of our shops led to reduced sports revenues in the UK and Ireland.
“However, this was more than offset by an increase in the number of recreational customers playing our poker and gaming products globally, as people sought new forms of home entertainment.
“In Australia and the US, the continuation of horse racing meant that overall sports revenues grew in both regions.”
Flutter said it predicts EBITDA for the year (excluding the US) to be between £1.18billion and £1.33billion. For the US it expects an EBITDA loss of between £140million and £160million.
Meanwhile, former Chief Executive of The Stars Group, Rafi Ashkenazi, has stepped down as a Non-Executive Director of Flutter Entertainment with immediate effect.
Ashkenazi joined PokerStars operator, then known as Amaya Gaming Group, in 2013. He was appointed Chief Executive in March 2016 and became known as dealmaker after acquiring Sky Betting and Gaming in July 2018 then overseeing the deal with Flutter.
He was recently named strategic advisor to B2B marketing platform provider BlueRibbon Software.