iGaming Daily

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FDJ United has published its 2025 results, giving us one of the first real glimpses into the damage that a year of tax and regulatory burdens has caused iGaming. Group CEO Stefan Pales was not shy in blaming tax hikes across Europe for slashing FDJ's net income in half during 2025. The announcement was followed by FDJ announcing a change in its C-level ranks as Kindred and online CEO Nils Andern departed the company following the transitionary period as FDJ acquired the Unibet parent. FDJ says the Kindred acquisition will help improve its operational efficiency to return its profitable and sustainable growth path this year. But is that enough to tame investors who now compare FDJ to global gaming giants? Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing. and the number one player engagement solution for sports betting and iGaming operators. Learn how OptiMove's positionless marketing is changing how iGaming teams operate. Discover how operators are using OptiMove's positionless marketing platform to launch personalized CRM campaigns, dynamically change casino lobbies and bet slips, and create engaging gamified experiences. can learn more at OptiMove.com. I'm Charlie Horner and today to discuss all things FDJ are Ted Menmure, SBC's editor-at-large and SBC's media director Martin Elliott. Martin, it's good to have you back on the show. How's things? eh Yeah, very well. Very well, thank you. I I'm feeling well. I'm guessing the fact you've dragged me out of podcast retirement means that some other people in the company are feeling less well today. So, eh but nice to be back. Nice be back with my old sparring partner, Ted Menmure as well. Yeah, I believe the last time you were on, it was the three of us, the three Musketeers out in Georgia. We're in a less desirable location at the moment, just hidden away in our respective offices. Ted, how are you? Bonjour Charlie, bonjour Martin. Right, well Ted, let's have you kick things off for us, because I'm sure you were... of sifting through FDJ's results this week. Let's begin with the top line results. Revenue and EBITDA declined across the board, profits halved. It's not really what investors were perhaps expecting, was it? think the immediate reaction is just this is a reality check across the board for European gambling PLCs, but it doesn't tell us anything new. mean, the tax risers have kind of been cooked in all. been on the stove for a couple of months now. The thing about FDJ, I think that on paper, it looks as one of the more reliable European gamma and PLCs and European stocks, especially with its French lottery contract that it's still very much the headline revenue maker for the business. It's the one generating income. What the markets are looking for now. I think is for FDJ to tell a different story that is yet to be shown via its acquisition of Kindred. And I think it comes at a time of kind of heightened anxieties. And this is especially shown by kind of the slashing of profits. Where can these giants make margins and where can they kind of come back to their old statuses and being kind of secure, profit driven businesses? Everything appears up in the air. at a PLC level. it's certainly the big thing that I've noticed from this report is it is that first real glimpse or the first piece of genuine evidence that we've seen tax hikes and regulatory burdens have on European operators. think FDJ might be the first major European operator to report full 2025 year results. And tax is said to have slashed 50 million euros from FDJ's bottom line. Martin, does this Does this really tell us that the industry arguments against those tax hikes and the warnings that they've provided have been proven right? em Well, that's a big question. It depends which of the arguments you're talking about. If it's the eh flight to the black market argument, which always gets rolled out, not really, no. em If it's going to become a lot more difficult to make a profit argument, Yeah, absolutely. But I think one thing I've noticed is that the reaction of the markets yesterday and with the proviso that share price movement around big announcements like this is often a little bit difficult to relate to the announcement itself. But FDJ share price on the day of this announcement went up 8%. So I wonder if the investors are really see the tax as a new reality. There's a new ceiling on what some of these businesses can achieve in terms of profit and profit per player, I guess as well. And they think FDJ has performed pretty well in the circumstances against that. And they've told a nice story about, they've called it investment, they've called it transition and so on. But actually, if you read between the business lines, it's... we found ways to cut costs in our business. And next year, we found a way to cut even more costs in our business. So I think it's, yes, it is indicative of the new challenge that operators face in a higher tax environment, but it's also, I think, uh indicates a sense of reality amongst, you know, the important people who are, of course, the investors who finance these businesses. that phrase, operational efficiencies, does a lot of heavy lifting when it comes to offsetting those tax rises. m that tax implication for next year, is said to be 90 million. So it's not ending here. How do you look at this first phase of adjustments that we've seen FDJ go through? I I do kind of view the... points that Martin is putting across. And the kind of first reaction from investors wasn't as bad as expected. But I think that you have to kind of take the context of FDJ and since it has become a public company, it's yet to kind of show this, you know, this muscle that it wanted to prove in its prospectus that could expand internationally, that it could acquire, that it could integrate businesses fast. And I think that there is kind of the concern of where does FTJ go to and what has FTJ proved since listing. uh I also think that if it doesn't create new narratives or effective kind of commercial pipelines and kind of profits, I think there's going be more kind of pressure on the top cable of leadership there. let's look at this because you would assume the first big The flexing of the muscles from FDJ since its listing was that 2.5 billion euro acquisition of Kindred, an international operator, an operator with a pan-European footprint, previously had North American exposures as well. um But online units have stalled during this reporting period whilst the French lottery kind of 3 % growth, not to be sniffed at, but it's still quite stagnant. How should we view that figure given that FDJ did spend £2.5 billion on reshaping the entire online business with that Kindred acquisition? uh Martin, do want to take this one first? Yeah. mean, part of me thinks they've reported a set of results which are very much in line with their brand. how people view their brand is just safe, it's steady, it's unremarkable. It's effective and efficient and that's it. I think they'll be disappointed internally with the results of their, in particular the online sports betting and casino bit of the business. They'd have expected to grow, I think, some of the markets for which Kindred had a strong foothold in previously. um And I think they'd have really liked to grow the UK market a bit more before the tax changes come in next year. But I would also say you have to, when we have these discussions, we're very focused on the gambling industry itself. You have to remember the wider economic picture. France in particular has got a real political turmoil there. You could argue the UK is in a bit of political turmoil as well. And in those uh kind of, against that backdrop, people tend to save more, spend less, you know, these kind of um luxury spend, entertainment spend, however you want to term it, goes down because people are worried about, they have a job next year? Will they be able to pay the mortgage in six months' time if interest rates go up again? All these things. So it becomes more difficult to attract more punters and to get your punters to spend spend more in that economic environment. So while they will be disappointed, I don't think these results are a disaster for them by any stretch of the imagination. I just think that for FDJ and since its acquisition of Kindred, the gods of industry M &A have not been kind to this business. We're talking about a company that immediately after kind of triggering A 2.5 billion buyer has to deal with a 50 % tax increase in France. And then additionally, significant tax increases in the Netherlands going up to 40%. And FDJ effectively tells you what the major gambling PLCs are going through. It is that kind of restructure to the bottom line of how are they going to generate profits from 2026 onwards? the end of the decade and will things ever kind of return to that kind of profitability type for the industry? That is kind of the unknown here. ah I think in FDJ, I mean, it can always kind of go back and fall back to its kind of lottery profile, whether that's enough for investors is yet to be seen. I think both of you raised really interesting and pertinent points and just to highlight some of those points that you've made. The online betting and gaming unit, GGR, declined by 8 % last year, primarily driven by the UK and Netherlands, going down 22.4 and 38.3 % respectively. A lot of that is driven by tax hikes and difficult comparatives. The Euros was in 2024, we have to remember, and there wasn't the same level of sporting action in 2025. Let's take a quick break, Marketing and Ted, and we'll come back and we'll look ahead towards the future. Welcome back to iGaming Daily. Today we're talking all about FDJ United as it publishes its 2025 results. em Alongside the release, Ted, m FDJ announced several changes to its C-level team, including Niels Anden, CEO of the Kindred unit and was CEO of Kindred before the acquisition, he's leaving. Other changes that are in there as well, but how do you view those changes at the top table of FDJ? Yes, so this was a statement that kind of accompanied the FY 25 results. And in a sense, kind of the announcement of Nils Anden leaving FDJ's top table kind of did grab kind of further headlines for the company. um oh I really know what to say here. I it's not, I don't think it's a great look when kind of the CEO of your online gambling unit and one that you spend kind of 2.5 billion acquiring leaves off the kind of year one integrations. But I think maybe it came to that point where they believe that FDJ or the Kindred business will now go in, has now been integrated. We know that from March the third, Unibet fraud, m Parion Sports transitions to Unibet France as its online platform and online brand. So that's a big project fulfilled. And I think kind of the, the emphasis here is on where kind of the co-synergies are going to come and start delivering. They really have, you know, pitched them high across the group and it's going to be kind of a key kind of determination for how FTJ is valued this year. Yep. From an editor's point of view, know, Neil's end and leaving Kindred is a great story because he's a well-known figure in the industry and it always drives interest amongst audiences. But do you think it's just the end of sort of a transitionary period where, you know, the CEO or the leader of the business that you've acquired has just completed that transition phase and it just makes sense to move on? Is that how you read it? eh Yeah, I think so. You have to be pretty special as the CEO of the acquired company to then go on and take that seat at the top table for a long period of time, I think. They have to have bought your business because it's got some special technology or some great expertise that they didn't have previously. I think this is just a natural course of events. He will, if he wants to... know, get another senior job in the gambling industry, I'm sure there'll be plenty of takers for him. Now there are a lot of nerves among FDJ United investors, Ted. In the report and probably in calls as well, there's been a lot of focus on technological upgrades, system upgrades, the integration. You mentioned that, you know, Parion Sport is going to become Unibet France. Do you think these So these upgrades, these boosts to the technology and the integrations is going to be able to calm those investor nerves or is there a different story to tell? I think that focusing on kind of integrations and delivering projects is only one part of the narrative that needs to be told to investors. I think what would really be a highlight for FDJ is to deliver some positive news in the markets that Kindred is operating in, be it the Nordics, the Netherlands or the UK. the ground hasn't pitched up for them. Looking back at the notes of when FDJ acquired Kindred, it was quite visible that these markets were undertaking you know, drastic changes. And I think that the kind of, you know, real kind of kidney punch here that was delivered to Kindred was just last, you know, last year's tax plays or tax treatments that were delivered. And, uh you know, talking about a firm that has to kind of reassess kind of all kind of margin, all margins for its online gambling business. It's not an easy period, but You know, is it better to just be upfront about what you're facing to the investors or do you need to tell them something sexy? I'll put that over to Martin. Yeah. Well, I'm always up for people telling me something sexy, but I'm not sure investors buy that stuff. They're pretty, you know, institutional investors. They do in the United States. Well. I yeah, a slightly different matter, but I am amazed by some of the share price movements of particularly draft Kings and Flutter over the past few months. found that staggering the amount they've lost in value as a result of the prediction markets, but that's a different kind of matter. We're talking largely about Europe here. I think they've taken quite a FDJ have taken quite a measured approach in this report and they've been quite honest with investors. And if you note through they've mentioned some areas for potential growth, Finland coming on board in 2027, think. eh International expansion for the 32 red brand. And they've also mentioned the World Cup in 2026, but I don't like to point out that. France have got a very good chance of winning that, which may not be quite that good for the bottom line of FDJ. Yeah, think, oh all you can do is be upfront with investors because the most damaging thing to your share price and to the reputation of the executives is when your results deliver uh a negative shock. And they are very much, and I... apologies for using the overused political phrase. They are rolling the pitch for next year's results coming out and perhaps being at best do think that this is part of a much wider conversation that we'll be having when we talk about European operators throughout the year, the next year, perhaps even through the next decade. We're in a new era now, I think that era of exponential triple-digit GGR net income growth is probably over, given some of those macroeconomic and political m factors that we've spoken about. So do you think that it is just a case of reshaping or changing those expectations amongst the investor class, Ted? Good question, Bob. I think at the same time, we're still seeing consolidation in European gambling. And what we've seen in the past two years is that we're seeing the formation of new gambling conglomerates. Now, case in point, FDJ is now going to be compared to your Allwins. And also, has a brand new competitor in Banjai Group in France, which it didn't have back in the days when it was trading as France's National Lottery. And it really didn't have kind of any kind of active competition in its home market. So I also think that that kind of comparison kind of drives new pressures on the leadership teams. And again, for me, these coming years are not just about kind of the marketing conditions, much more about what is kind of the competitive and leadership strategies of these big European PLCs. Yeah, that is a really important factor to think about. You know, this Bani-J group emerging, Martin, uh that sort of merger between Tipico and BetClick, he's going to provide a real challenge, a real bit of competition for FDJ, it? And perhaps something that they haven't really experienced before. eh Yeah, I think that's right. I think they can no longer regard France as their territory, although... I there a couple of weeks ago and you do see that FDJ logo absolutely everywhere on the streets of the cities, on every street corner and so on. But I think there are... Part of the reason buying Kindred made a bit of sense was for the expertise and the technology and so on that you're bringing in, in the online space where they knew the big competition was coming in for them. ah I believe there've been a couple of other launches in France in the recent months as well. I Bet365 are either live or going to be live very soon in that market as well. there are, despite the sort of negative tales of woe and taxation, some were talking about some of these big players do see potential in the French market. yeah, competition is up. We love to say we like competition. It's good for everyone in the market and so on. I imagine the FDJ chief executive has a different view on whether added competition in France is good for the market or not. yeah, it's interesting times. just to build on what Ted was saying about the wider picture in Europe. I wonder whether the biggest effect we'll see from these tax changes will be killing off smaller brands. And then there are additional players available for the bigger brands to come. you know, they have higher taxation, they've probably got less advertising spent to do, although there are some ways to mitigate your tax bill. around how you do marketing promotions and where you run them from and so on. It certainly in several markets, not all of them. But smaller brands who can't promote themselves and don't have the benefit of being as well known as a 32 red or a Unibet or somebody like that are a huge disadvantage. So I think there's an opportunity to take players from some of these brands that just shut down. I think we saw Aristocrat, I think it was yesterday, announced their white label business in the UK is going. So that's, you know, a lot of very small players will probably disappear here. Those players are up for grabs. We shouldn't assume they're just going to go off to the black market. You know, a lot of the players will just go to another regulated operator. So it might be you need, the way to build is having many more players, but accepting that your profit per player. is going to be lower. But I might just be being overly optimistic in that scenario as well. I think a lot of the tier one and tier two operators said last year when tax hikes were coming down the line that yes, they would make mitigating interventions, but they do see an opportunity to acquire more players and then take more market share just as a result of those. just a bit of a hollowing out of those smaller brands really, so definitely one to watch as we sort of head further through 2026. And this is just one piece of the jigsaw that we've got and Ted, I would imagine that we're going to be able to piece together the rest of that jigsaw over the next sort few weeks as Flutter, Entain, Allwin and plenty of others post their 2025 results. So get ready to work some podcast overtime, Let's put it that way. But for now, thank you very much for joining me Ted, thanks a lot Martin, and thank you to the listeners for tuning into today's episode of iGaming Daily, and join us again tomorrow to keep up to date with all the latest global gambling news.