Flutter earnings fall on run of punter-friendly sports results
Unfavourable sports results cost the group’s UK and Ireland division £232 million in revenues last year.
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Your support makes all the difference.Paddy Power and Betfair owner Flutter Entertainment has revealed tumbling annual earnings as it was hit by an “unprecedented” run of punter-friendly sports results.
The group, which also owns the PokerStars and Sky Bet brands, posted a 24% slump in underlying pre-tax profits to £620 million for 2021, despite revenues rising 17% on a constant currency basis to £6 billion.
In the UK and Ireland, unfavourable sports results cost the division £232 million in revenues last year, of which £149 million was in the fourth quarter alone.
It said in one week last October, 15 out of 16 of the favourites won in the Champions League, which cost the company in hefty payouts.
Underlying operating profits in Flutter’s UK and Ireland business fell 4% to £490 million as the division was also knocked by lower levels of gambling due to the easing of Covid restrictions.
The group said UK betting levels, which had soared in lockdowns, were now falling back, with the market expected to remain flat this year.
Chief executive Peter Jackson said: “People have more places that the can spend their time and money.”
Results showed that underlying group earnings fell 6% to £723 million, or were 10% lower at £1.2 billion excluding the US business, sending shares down 10% in morning trading.
On a bottom line basis, it swung to a £288 million loss from £1 million in profits in 2020.
Flutter had warned over profits last autumn due to a knock from the run of unfavourable sports results, investment in its US arm and regulation changes.
It said that group revenue growth had slowed to 2% in the first seven weeks of 2022 as it came up against strong results from a year earlier, but expects turnover to pick up as the year goes on.
Flutter added it was monitoring the situation with Russia and Ukraine “closely”, but had “materially reduced” its exposure to the Russian online market since its buyout and merge with The Stars Group in 2020.
The Russian market contributed £41 million to the group last year, with £19 million from Ukraine.
Like the rest of the sector, Flutter is awaiting the results of the Government’s review of the Gambling Act in the UK, with a White Paper due to be published in the second quarter.
It has been looking to launch a number of safer gambling measures as regulations mount on the industry and announced on Monday that it would be tying up 10% of annual bonuses for its staff to initiatives aimed at helping prevent gambling addiction.
Flutter also insisted in its annual figures that it remains on track to deliver earnings in its US arm in 2023, having seen operating losses in the division widen to £289 million last year from £207 million in 2020.
The group is aiming to spin off its US business led by FanDuel, but the plans have been delayed by the departure of previous FanDuel boss Matt King, who has since been replaced by Amy Howe.
Mr Jackson said the group was “still considering” a flotation of the US arm, but added that “market conditions aren’t great at the minute for any form of IPO (initial public offering).