iGaming Daily

Ted (00:00.066)
Global Gaming's highest valued PLC.

Ted (00:06.297)
Flutter Entertainment, Global Gambling's highest-value PLC, has raised its year guidance by 1%, following exceptional results recorded for Q3 trading. Guidance is elevated despite Flutter warning markets of unfavorable US sporting results in October, which led US analysts to probe leadership on fan deals' pricing and generosity. In the UK, as Rivals founder, Flutter brands continue to take market share.

an element not underestimated by leadership. Meanwhile, edge pricing and product enhancements have been incorporated by Cisal Italia and BetMag Serbia platforms as the international unit moves onto its next market makeover of SNI and BetNacional to guarantee podium places in Italy and Brazil. As 2024 comes to a close, iGamingDaily dissects Flutter's evolution and how its portfolio is changing the competitive makeup of individual markets.

I'm Ted Memwe and joining me today we have Connor Porter, Senior Journalist of Casino Beat.

Ted (01:16.665)
I'm Ted Memwear and joining me today we have Connor Porter, Senior Journalist of Casino Beat. Connor, how you doing?

Conor Porter (01:23.189)
Not too bad said, not too bad today. Usually when me, you are on this pod, we have another individual with us as well in Martin Elliott and we dubbed ourselves the Big Monday News Team. Unfortunately, Martin isn't with us today to share this Big Monday News on a Thursday. yeah, hopefully he'll rejoin us soon for this podcast.

Ted (01:42.243)
Well, for audiences, the big news is that we moved to Thursday. But November just seems to be every day is a big news day in this industry. &A's, PLC's, yeah.

Conor Porter (01:52.383)
Yeah, certainly.

Conor Porter (01:56.299)
Yeah, certainly with all these Q3s coming through, looking like we're near the end of the period is now, and we've got a big one to tackle to conclude it all before we wish the financial period over and we enter into the new year past the Christmas period into 2025 as well. Yeah, so big one here, Ted, Flutter Entertainment.

Ted (02:19.851)
Okay, okay, let's, yeah, Flutter, highest value PLC. So with your kind of journalist hat on, how do you take on reporting on Flutter? Because it's no longer just an Anglophile business, it's moved onto the kind of new markets. And how have you kind of seen this transition since you've been at SBC?

Conor Porter (02:43.702)
Yeah, so I've been at SBC for a couple of years now and Flutter has really grown and has really cemented itself as, know, if you're going to talk about gambling operators across the globe, you have to talk about Flutter beating that top three for certain and it's not looking like it's going to be moving out of that category anytime soon, especially with the angle that they're taking in Brazil. We already mentioned with Bet Nacional earlier on.

We'll see how that progresses in 2025. But from what they said on the call as well yesterday in the earnings call, given a good market breakdown of everywhere that they are in the world, they do have a good set plan pushing forward as to how they want to progress this company into 2025 and into the future as well. But I guess it's a wait and see game as to how this evolves. But we're going to delve into a lot of these topics today on the podcast. I mean, what are your thoughts really on Flutter?

as we enter 2025 now after this 2024 year coming to a close.

Ted (03:47.292)
For me, this is a company that sets out its objectives and achieves them. We've seen them this year. It's the top ranking of global gambling PLCs. That's against very heavily exposed land-based gambling ventures in the US. It just seems that every time these guys publish their quarter earnings,

They put on kind of conceptual trading as we're go through the numbers, but we'll see that. But it's definitely a company that in every market that it enters, it seems to be targeting podiums and kind of reshaping the competitive makeup and making it tougher for its opposition. And it's got so many kind of tools in its armor. And even as you noted, it's getting kind of...

Harder and harder to explain Flutter as an entity because it just has so many dominant brands, right? And you've got to tackle them individually and tackle each market set that they have. So I think it's good to go over the Q3 numbers and say, look, this is where the company are at the moment and this is their vision. So on to that.

Connor, give me the top down of the Q3 results for Flutter, the headline revenues of Beta, and also the period losses that it booked in.

Conor Porter (05:24.905)
Sure. yeah, uptick in revenue and adjusted EBITDA in the third quarter of 2024, whilst their net loss is still a loss, but it has improved. And Peter Jackson ultimately described the quarter as excellent overall. And as a result of that, with that progression throughout the year that we've seen so far with the Q3-2, and as you mentioned at the top, they've improved their guidance by 1 % across revenue and adjusted EBITDA. the numbers themselves up...

by 27 % year over year in revenue to $3.25 billion, whilst average monthly players grew by 16 % on the year to 12.9 million, excluding operations revenue up by 15 % year over year to 2 billion. So you can kind of see how much of that revenue is coming from the US there.

Net loss, as I mentioned, has improved, still it lost 114 million on the quarter, up by 56 % year over year. But the company's saying that's driven by strong revenue growth. as we mentioned, the acquisitions in Italy and in Brazil, that could progress even further entering into new year. And we'll wait and see if that moves towards the net income rather than the loss, but we'll wait and see on that front.

Ted (06:33.026)
Yeah.

Conor Porter (06:45.719)
And then adjusted EBITDA 74 % improvement year on year in the quarter to 450 million. yeah, looking good progression across those fronts there, Ted. And stepping in the right direction with Jackson, Peter Jackson, the CEO describing it as excellent overall. How would you perceive those numbers, Ted?

Ted (07:11.855)
I think for me what the numbers tell you is that Flutter and its valuation of shareholders and its view from investors is that it trades alone. So you're talking about a company that can book in a quarter of 125 million losses, but at the same time it just points to its revenue in a beat and says, look, long term, this isn't even a factor. And by the way, that 125 million loss is primarily attributed to the Fox option.

in which it needed to get out of that to accelerate its US earnings for Fandial, which is achieving, as you mentioned, because it's now it's gone from, I think the swing was, it had a positive EBITDA swing of 65 million, sorry, 58 million EBITDA. So that trajectory is now coming into play for Flutter in its US earnings. Again, a lot to cover and

The clear thing is that the distinction is, know, US is still kind of the very kind of very fast growth element for Flutter, whilst it's still kind of taking up market share in non US markets, but it's spending heavily in the US. And this again, on the InvestiCool, it was an area that really got pro-ed by US analysts. What do you think they're trying to gauge at when they question kind of the generosity?

and the pricing of Flutter in the US.

Conor Porter (08:45.717)
I think they're just looking to get an understanding of the whole situation as to why Flutter and Fandool are performing so well in comparison to other operators in the market that aren't doing so well. And they said it mainly down to their pricing on their parlays that are performing so well in the call itself. But also it just further cements onto Fandool's position in the market being

Ted (09:06.328)
Yeah.

Conor Porter (09:14.699)
that number one leader and they've been able to continue that progression, continue that positive swing in the right direction for Fandool. As you're saying, maintaining its markets and spend and generosity throughout the remainder of the year. So it's looking good for Fandool and it could benefit even more throughout the remainder of the year because they've got this deal with Netflix coming up.

Ted (09:28.611)
Mm-hmm.

Conor Porter (09:43.125)
with the NFL games, you you want to talk more about that. It's looking like it's going in the right direction.

Ted (09:44.556)
Yeah.

Ted (09:51.379)
I mean to me what screams are is I think kind of like even in the US now analysts just believe that it's a two player market between Fandial and DraftKings and I think like every every question probed in the analyst's call is you know where are these two in terms of each other and what are the differential there and I think Peter Jackson kept on you know really stood by the pricing and

It's called generosity in the States. These customers are spending money. mean, it's it's not like they're coming in for free, right? But I think every move that Fandial makes is priced against or it's referenced against DraftKings. I think they're trying to kind of find out who's got the better edge on the parlays and on the kind of individual market, individual markets, especially for pro sports.

Again, Peter Jackson, I think he must have answered like 12 questions directed on parlays and he just stood by the belief that it is a core dynamic for Fandial.

It believes that overall, like the popularity of parlays in the States, that it offers the best premiums on them. And it isn't afraid, he even admitted that in October they got stung by the parlay factor. But Fandula determined to keep their exposure in the market. I think the Netflix deal that's coming in, it's going to be observed pretty closely. And it's also a big deal for Netflix because they're making their

their market, their Christmas play with NFL games in that roster. mean, no, it's apparently they get kind of, the audience is the same level as the Super Bowl. So we'll find out how much.

Conor Porter (11:50.103)
I'm not too sure if it'll be.

Ted (11:50.348)
fan you're kind of paid to get kind of that that excess promotion.

Conor Porter (11:54.367)
Yeah, I'm not too sure if it'll be on the same level as the Super Bowl, these Christmas games, but it'll be close. you know, maybe they've seen what DraftKings has done with Amazon Prime for the Thursday Night Games and those kind of island games that they have in the US, which do get a lot of attention, do get a lot of audience. Maybe they've seen that and see a potential possibility to to generate the same kind of the same kind of outcome with with Netflix. So that's kind of the direction I think they are going in that with with Fandor.

Ted (12:17.282)
Yeah.

Conor Porter (12:21.889)
becoming the sports book betting partner for these games on Netflix later this year.

Ted (12:23.01)
Mm-hmm.

Ted (12:27.917)
Yeah, but what I always find interesting about Flutter calls is that the difference between the questions asked between US analysts versus the European ones that tend to be a lot more conservative, whilst the US ones are really kind of probing as where they're spending the money, know, what are kind of the mitigating factors for Fandual and its growths. But on to...

Ted (12:57.419)
on to the UK and let's go back let's go to our home market and it's another quarter and then another squeeze on market share and look from your editorial perspective on Casino Beats what are Flutter Brands getting right?

Conor Porter (13:18.167)
think particularly in the UK, they said that they're happy with the market share, that they're pleased with the market share that they've got. They've adapted well to, or they believe they're adapting well to the new regulations that are planning on to coming into the UK with the white paper. They've talked about the momentum in the UK market in terms of players, the average monthly players being up by 17 % product

improvements, know, iGaming is cross selling well from sportsbook. you know, it's all intellecting into into linking well there in the in the UK market. And it's it benefited in part as well from from the euros that took place earlier in the year as well. With, you know, the majority of that spend to acquire players, you know, having a rolling on and those players.

know, staying, retaining those players into the Q3 period. So yeah, it's kind of a mixture, I think, in terms of benefiting from the cross selling from the sports book and also the gains that were made in the previous quarter as well. But also, Ted, as you know, we have to keep in mind as to what these new regulations that come through on the white paper, how that impacts

Ted (14:32.76)
Mm-hmm.

Conor Porter (14:43.936)
Flutter on their brands, know, SkyBert and Paddy Power in the UK moving forward.

Ted (14:50.063)
Yeah, true, true. You know, you're very right. It's funny because, you know, when we often kind of report in the UK, there's quite kind of a demural kind of downturn or buy as to what the kind of market looks like. But to have a quarter where you have double digit growth at 29 percent and you're indexing a beta of about three hundred and fifty million dollars. mean, you know, your competitors would like tear off their arms to do that.

to get those results. it's, you know, yes, the UK market is changing, but it's still a primary market for them. And it's still a market where they believe that they can get long-term growth and long-term market share over key rivals. And again, that's such a kind of determining factor for their shareholder value. It's another...

you know, very, very good narrative for them to have.

Ted (15:58.01)
And I guess, well, let's close out and start thinking, you know, look at kind of the international unit and.

Ted (16:17.39)
Okay, yeah, let's close out and look at the international unit because there's a lot going on there in the markets of Italy, especially with Cissau and also kind of the key upgrades. Look, how is Flutter kind of transforming its international brands and how is it kind of enhancing its overall product to market?

Conor Porter (16:47.701)
So yeah, we've already mentioned it with the Sni acquisition earlier on. You know, they mentioned during the earnings call that this is a brand that is very much well recognized with sports betting in the Italian market. Whereas the the CIS cell brand, they said it complements that. So the there may have been concerns that, you know, they would take market share from one another when they when it was acquired and things like that. But they

Ted (17:05.165)
Yeah.

Conor Porter (17:17.009)
that this was expressed on the call itself. know, Rob Cauldray, the CFO said that they're not expecting to eat into one another, expecting it to complement one another. So they've got that direction going in Italy and progressing there. And obviously the other big one is Brazil. And we don't know yet if they have been confirmed for the market. Obviously it's still

a ongoing situation in Brazil as we wait for the launch of the regulated market next year. But within the call itself, Flutter expressed optimism and confidence that they believe that the market is going to launch on Jan 1st next year. We're waiting to see if that is the outcome itself. But with the better national acquisition as well, that's another market in which

Ted (17:47.79)
Hmm.

Conor Porter (18:14.433)
Flutter has confidence that they could potentially be a podium contender or at least one of the top operators in that market. with the history that they've got in other markets as well, they'll have that confidence to enter in Brazil, believe, Ted. And what do you think?

Ted (18:36.334)
All right, let me take it back to Italy. They're taking a big bet in Italy and they're playing a premium on SNI. But at the same time, mean, it's a market that, you know, via the regulations that coming into play, it's seeing kind of a huge transfer from retail to online. And I think it's at about, it peaks at about a billion a year, the transfer. And again, the thing about Flutter here is that

you know, their bet is big. So it's not just a case of like, well, we're going to launch, you know, a couple of new brands and we do a couple of new sponsorships. No, they're going after one of the top, you know, top tier operators. They're moving into to SNY. SNY is, you know, proven kind of top three in Italy. And even if it gets a makeover by, by Flutter Edge, it's still got the market dynamics there where of it is in that kind of premium spot.

Now in Italy will compete against Lottomatica for that golden like number one place. I think it's going to be a straight shootout between those two. But I think again, it's another market in which Flutter is kind of rearranging the terms of play. And it won't. I think it It accepts that it's back up with Lottomatica, but I think it's going to get a lot tougher for its European PLCs below that. So it's again.

Italy's second biggest gaming market in Europe. Again, Flutter are going in there and transforming that market and reshaping it into how it wants to play in it.

In Brazil, from the call, I think they are preparing for a January launch. I think that there was some frustrations there about how the communications that they're getting from the government and kind of the kind of certain uncertainties at present. I think one of the things that they're very aware is of the 100 brands launching at the same time.

Ted (20:51.17)
But apparently that's kind of minimizing at the moment. I'm very much quite cautious to say anything on Brazil until the market launches. That's my take.

Ted (21:13.592)
And I am, the one who's trying now.

Ted (21:21.398)
Alright, okay, okay.

Right, okay. So, Connor, PLCQ3's, they're slowly coming to an end. let's reflect back on 2024 for Flutter. I mean, what has this business proved to the market? And what's your take regarding, well, the biggest company in our sector?

Conor Porter (21:52.599)
Yeah, I think that's it. think throughout 2024, they've proven that they can be one of the if not the top operators in the gambling market globally. You know, they've they've shown that emphasis, you know, for numerous years now in the US and in the UK. And now they're looking to to continue expanding their market share in other regions across the globe. already mentioned about Italy and

the acquisition that they've had there in Brazil too. And they're just going to look to keep on building on that. But there will be challenges on the horizon, in Brazil already you mentioned about that. So much in wait and see in the situation there. And then in the UK too, with these regulatory changes to come through with the white paper. So there are certainly challenges on the horizon, which could cause some some bumps along the road. But at the moment, you know, this this

Flutter vehicle is cruising, you know, and it's very much on its way towards, you know, further cruising down that highway in 2025. those are my thoughts. What do you think Ted?

Ted (23:02.287)
I fully agree with everything that you said really. I think you covered it very well. It's gonna take a lot to stop Flutter. And I think kind of the challenges, gonna, the challenges, they're gonna have to kind of compete with them in a much more kind of localized level. One I will be keeping, one market I'll be keeping an eye on is the Brazilian one. Because I think that is gonna.

going to be kind of a fair ground for kind of all market competitors. So let's see. mean, a lot can happen in a year and maybe I don't think they're going to be taken off the top podium, but I think maybe we will see one or two challenges rise up.

Ted (24:02.446)
Mm-hmm.

Conor Porter (24:03.479)
Yeah. Yeah, I can hear you.

Ted (24:08.514)
That's it, yeah.

Ted (24:12.494)
Anyhow, so... Well, thanks for joining us and this is Ted and Connor signing off for our gaming daily. Have a great Thursday.