iGaming Daily

Charlie Horner (00:01.84)
If been watching the stock market closely in the last 12 months, you'll have noticed it's been a particularly rough time for iGaming operators. think that will be putting it mildly. Flutter Entertainment investors are noticing, and at SBC, we've been monitoring the activity of Flutter investors, some of whom are revising their positions. Once regarded as the blue-chip stock of the global gambling sector, a traumatic 2025 caused Flutter's shares to

fall by roughly 50 % on a 12-month basis, the steepest decline of all gambling stocks apart from Evoke. The downturn has prompted funds to revise their positions and their strategies, and while some funds are revising down, activist fund Parvus has become the second-largest shareholder in Flutter. The reshuffling of its shareholder deck raises the question of whether investors are simply cashing in on discounted stocks.

or whether a new shareholder base signalled a forthcoming shift in Flutter's strategic direction. Welcome back to iGaming Daily, supported by OptiMove, the creator of positionalist marketing and the number one player engagement solution for iGaming and sports betting operators. I'm Charlie Horner, and today I'm joined by SBC's editor-at-large, Ted Menmure, and SBC News editor, Ted Orme-Clay. Ted?

How are you? Ted that is. How's things?

Ted Menmuir (01:27.342)
Good Charlie, great to be back on the Tent Tentangle on a Monday and discussing the complexities of investor makeup in the industry.

Charlie Horner (01:40.308)
It wouldn't be the start of any week without a bit of light investor relation chat with Ted and Ted. Ted Dalsey, how are you?

Ted Menmuir (01:43.02)
Perfect.

Ted Orme-Claye (01:49.785)
Yeah, I'm doing all right. Thank you, Charlie. Yeah, it's good to get back on the Monday tradition with Big Ted Mania. yeah, good start to the week.

Charlie Horner (02:04.424)
Brilliant. All right, well, it's been a busy couple of weeks since Flutter published its 2025 results, and we've been tracking a lot of those sort of changes in Flutter's investor portfolio over the last couple of weeks. Ted perhaps you could just give us an overview of what's changed recently that's sort of caught our attention.

Ted Menmuir (02:27.534)
Well, since Flutter announced its FY 2025 results, in which it posted in circuit 450 to 500 new balance and losses, we've seen a lot of kind of activity track its investor profile and its relationship with institutional investors. Primarily, what we saw is activist fund, Pravis, become its second biggest shareholder.

taking I think it was certain kind of 12 to 14 percent of the shareholding in the LSC and NYC gambling group. It's lost LA fund capital management INC. They've kind of downgraded their position by 10 percentage points. And then finally we saw

Sorry, can we go again? Ted, do you want to take this one?

Charlie Horner (03:28.498)
Show.

Ted Orme-Claye (03:32.089)
Yeah, sure. Right. This is the starting one. Yeah, yeah, that's okay.

Ted Menmuir (03:35.138)
Yeah, couldn't remember that guy's All right.

Ted Orme-Claye (03:42.713)
Okay, Charlie, to, let me see. Okay, Charlie, so to give us a bit of an overview, like you say, we've been tracking a few different changes, a few announcements coming out of Flutter over the past couple of weeks since the publication of their full year and Q4 financials for 2025. That was a year that obviously saw Flutter, their revenue remains still very formidable.

Ted Menmuir (03:42.99)
Sure.

Ted Orme-Claye (04:10.265)
I believe off the top of my head, think, what is it? About 13 billion, was it something along those lines? Their market cap was still pretty hefty at the time as well. But what we did see was a pretty big blow around profitability. Their net loss was pretty substantial in the hundreds of millions of dollars. And after that, we saw Flutter's share price dip quite considerably for the first time in quite a while. In the weeks since then,

We've seen, as you said, a few, few changes regarding shareholding, which I think probably point to maybe just, just a different perspective. Some different investment firms might have on the outlook of the gaming industry, and the outlook for firms like flutter entertainment, and perhaps even on a geographic basis as well, because the company who recently reduced their shareholding, the capital group based in Los Angeles, obviously in the United States, whilst part of us who were weak for.

as you said, double their investment are based in the UK, in London. there could be perhaps that might be an indicator maybe of different views on the industry's prospects this year and going forward in different markets and different jurisdictions, perhaps. We have also seen Flutter initiate a share buyback program as well though. So perhaps they're seeing this as, know, a chance.

a chance for them to regain some control of their shares. Perhaps they see that as being more beneficial for around like stability and things like that as we go into what could be quite a volatile year for the sector with, you know, the tax rises in the UK and other European markets. Some uncertainty in Brazil now with their new tax framework and some calls for tighter regulations and the prediction markets in the US. So there's a lot of things for them to consider.

And there's also a lot of things for investors to consider. And it seems as there may be some differences of opinion.

Charlie Horner (06:10.056)
Fantastic, Ted. Thanks for that. If you say it's going to be a volatile year ahead, I think it's safe to say that 2025 was a volatile, if not traumatic year for Flutter. Well, in the last 12 months, the share price has basically halved, which is, you never want to see that if you're in company leadership. Ted M, I'll just bring you into the conversation now. What do you think has contributed to that?

Ted Orme-Claye (06:20.844)
You

Charlie Horner (06:38.854)
decimation of the share price in that last 12-month period.

Ted Menmuir (06:43.948)
When analyzing Flutter, you have to kind of separate the investor sentiment from the actual corporate performance. Yes, 2025 underwhelmed and questions are being asked about the kind of commercialization or the ability for Flutter to return back to kind of its profitability status, especially from its operations. However, the 50 %

tumble in the share price, I think it's more reflective of the wider sentiment of what Flutter is facing in 2026 and beyond and towards the close of a decade. It is spending more money. It's not this kind of an economical beast that it used to be. And I think there's also these big question marks coming over kind of its growth child market of the US.

and how it's going to compete in that market against new incumbents coming from prediction markets. I think what worries Flutter the most is that this is a situation that it has not been in since it became a listed company. It's had unprecedented growth year on year. Its status has not been challenged to date until now. And this is very new grounds for it.

Charlie Horner (08:08.169)
I think you're right on that. This is sort of uncharted waters and we had a much wider discussion on this a couple of weeks ago when their results were published. if listeners want to go back on and listen to that, was episode 723. But let's look at the market and investor sentiment towards Flutter's share price because as Ted OC said that there's differing approaches based on whether groups are...

of European-based or US-based. So what do you think that investor sentiment is towards Flutter at the moment considering some of those challenges and perhaps opportunities that it has?

Ted Menmuir (08:50.254)
Well, look, if we're being blunt, yes, you see a company of fluttered size, take a 50 % tumble on share price. There will be companies that will be looking to take advantage of that. They are picking up a blue chip stock in Phillies at a half 50 % discount. In terms of long investment, how long are you looking for and what kind of pathway do you give?

for Flutter's comeback? it 2026? Is it 2027? There are so many kind of stumbling blocks in how it gets there, primarily number one being it's recovering the UK. is it going to react to taking a 40 % share on tax coming down on the beta? That, and I think we mentioned this in the last podcast, it's going to be its kind of first benchmark. Again, spending a lot of money in Brazil and Italy, but what is the kind of path of profitability there? And what is it going to generate for its underlying beta?

Also in Brazil, the cost of onboarding, is there going to be another year of losses there? The risks are becoming bigger for Flutter as a PLC. And I think that's beginning to kind of show in the bottom line and it's begun to scar the company in the way it operates.

Charlie Horner (10:06.249)
It seems like what was their huge strategic advantage, that being they have such a big position in so many global key markets, is now becoming a bit of a threat because it has so much exposure to those markets which are now much less favorable than they once were. Ted OC, do you think that investors are looking to get that significant discount on that blue chip stock? And if you're...

Ted Menmuir (10:12.118)
Yeah.

Charlie Horner (10:36.039)
Looking at it from Flutter's perspective, how do you think you get back to being that sort of blue chip share?

Ted Orme-Claye (10:44.577)
Yeah, I mean, think Parvis are obviously the big example of a company I think has seen this. I can only speculate. You know, we can't we can't say entirely what their motives are. But yeah, it seems like they may have seen the share price dip and I thought this is a good chance for us to get a discounted get a discounted rate on the on some more shares in this very big company. I think that probably does show some investor confidence, at least from them, that they expect Flutter to

ride out these storms and continue to stand out as one of the industry's biggest names and one that they can get some good dividends from. I do find it interesting with Parvis. Obviously, like I said earlier, they're a London-based firm. And from their perspective, I would expect their outlook on the industry to be shaped by what they know is coming in the UK, what Ted referenced with the taxes and the impact that will have on EBITDA and profit and so on. But...

In the UK, Flutter has a number of very prominent brands, very well established brands with pretty solid market share between them. We're talking Paddy Power, Betfair, SkyBet, Tom Bowler, obviously. So maybe from some investors, might be, if we just look at the UK, perhaps there's a bit of an outlook that...

The Flutter may be able to do what a couple of companies have talked about potentially doing. that's as the market shrinks, as companies get forced out because the tax burden's too high, Flutter will be the one that has the resources and the prominent brands to be able to secure more market share and get a more favorable position against those tax hikes. So perhaps it's that, and that's why Parvis have seen this motive to get some discounted shares while they can.

Charlie Horner (12:32.115)
What?

Ted Orme-Claye (12:33.228)
And then obviously there's also the US situation to factor in, like FanDuel is still one of the two biggest, if not the biggest sports books in the US. The big questionnaire hangs around how are they going to respond to this prediction market situation.

Charlie Horner (12:47.049)
You mentioned Parvus there and I was going to talk about this after the break, but let's do it now. Ted, do you think with this interesting footer from Parvus that footer is going to dragged into activist movements? We've seen how disruptive that can be. We saw it with Penn and HG Vora. Do you think we could see a similar situation play out there?

Ted Menmuir (13:04.93)
Yeah.

Ted Menmuir (13:15.246)
Yes, and what I call the media attention is that Pravis do have a background in the kind of activism, especially in gambling stocks. They really pushed for a change at William Hill and they got that circa 2017, 2018. And I feel that if you look at the entity that Flutter has become, it's not just a case of its investors, but where you kind of see that activism happening.

Could it be for a breakup of the European unit? Maybe they think that's too enlarged. break up, break away from Australia. The sale of Pokestars, for example, a company that is, you know, kind of reaches peak and no longer gaining any kind of foothold in any market. And also the big one here always, and this has been talked to, talked about at the high levels of Flutter is maybe the separation at one point of the US and international business.

It's always been that kind of big strategic option of do you let that fund go on its own or do you keep it entwined with Flutter and its international and its massive corporation. There's a lot of points where an activist fund can pick and demand changes or just probe out.

Charlie Horner (14:40.987)
It's going to be really interesting to see how that develops once Parvus really get their sort of feet under the table at Flutter and maybe look at board positions and things like that. We'll take a quick break, Ted and Ted, and we'll come back and we'll continue the discussion.

Welcome back to iGaming Daily. 2025 was a bit of a bloodbath to be honest for many iGaming operators and their shares, not just Flutter. So Entain, down 18 % on the last 12 months. Evoke, down 60. If you want to compare to other US operators, DraftKings, down 33%. It doesn't look good for the sector, but...

Why is Flutter being picked on over some of the others? Ted OC, what do you think?

Ted Orme-Claye (15:36.313)
I'd say, if I just compare it to, mentioned Evoke and Entain, Evoke have been having some problems for quite some time. mean, you know, dating back to the William Hill acquisition, I think, you know, we've seen their financial statements come back with not entirely rosy figures, lots of losses, lots of debt, think. So perhaps, and you know, at the moment with Evoke, we're starting to hear rumors and murmurs about potential sales, potential.

whether that's a sale of the entire group itself or of certain assets, maybe if they'd offload William Hill. There was some rumors going around in the iGaming media, when was this? Was this earlier this year? Was it towards the end of last year about Betfred maybe having a look at William Hill acquisitions or something like that. know, perhaps there's just people might not, investors might not be wanting to bank on Evoke just because.

there's a bit of uncertainty about their future right now. And Entain on the other hand, obviously seems to be in a bit more stable position, I guess. Their latest financials saw, I think, their third year, a third consecutive year of a multi-million loss. Whilst Flutter, know, finding they may have had a loss, but it wasn't a consecutive one. So maybe that's helped.

build up some investor confidence around them as being they're the one who will be able to weather these storms the most. I guess there's also the thing of Ventane having some legacy investigations into it. There's the Oz Track one in Australia. There's this one in the UK, the legal matter regarding GVC holdings, but with some court dates set over the coming years. So that might be casting some uncertainty over them as well.

I think there's just a couple of factors there that I reckon will set Flutter out in the minds of investors.

Ted Menmuir (17:39.48)
If you're asking why flutter is being picked on.

You have to explain a 50 % drop. And I hear we have to point back to.

Flutter's previous status. It was untouchable. It shouldn't be in this position. It's the market leader and it should be unscarred from the realities of the industry. And that hasn't happened. We're kind of starting to see Flutter get bruised and its investor base ask questions because it's still susceptible to the same kind of traumas that others are going through.

And I think in previous investor cycles, it was believed to be untouchable that Flutter had the scale to just run through everything. And that's not the case anymore.

Charlie Horner (18:36.329)
Yeah, I mean, there seems to be a bit of a change in the investor base and that's something that we've touched on and we'll see how Flutter can sort of roll with these punches that it's taking. Do you think that might signal sort of changes at the top in terms of leadership for Flutter? Is that something that we might have to keep an eye on? Ted, I'll say.

Ted Orme-Claye (19:01.823)
sure to be honest. mean, think, you know, Peter Jackson's been leading the company for quite some time as CEO. I think from what I've seen in a, from conference calls have been on things like that, there's still quite a lot of confidence in his leadership. But it's like you've said with the changes in the investor base of the income, the incoming of more activist investors and so on, you don't know how pressure will change.

It's obviously, it's always something to keep an eye on and it will depend very, very heavily on how they respond to the, the sort of the challenges of this year, how they respond to the UK tax hikes and ones in other markets, how they respond to the emerging predictions in the US. they, do they really double down on this new FanJour predicts platform and try and build that up as more of a, a big competitor to Cal-She and Polymarket or do they, do they

Ted Menmuir (19:39.299)
Mm-hmm.

Ted Orme-Claye (19:58.497)
think right, sports betting, running a sports book, running online casinos, that's our foundational product, we'll stay more on that. Yeah, it'll all depend on how they respond to these things.

Ted Menmuir (20:11.39)
I think there's going to be much, much more scrutiny on Flutter's top deck and leadership. And primarily also in terms of I think there are clear splits between the European base and the US base. The other thing is that as Ted mentioned, is maybe it is coming to a time where they think that they need a leadership refresh.

that being Peter Jackson has been there for a significant time. The company's changed structure. It's much more American facing now. And also kind of its strategy and vision are much more US kind of profiled since its NYC listing.

Charlie Horner (20:54.18)
It seems like Flutter's reaching somewhat of an inflection point and it just depends on, you know, how the board and how leadership views that as a way of looking into its future strategy. But that's how we'll end, I think, is just going to each of you and asking, you know, what will not just Flutter but...

just gambling business leadership, be thinking about in the long term to help turn around the fortunes of some of these massive listed operators who have struggled in terms of share price in the last 12 months. How do you see leadership and investors reacting? Ted

Ted Menmuir (21:35.63)
Good question to finish the podcast on. I'm to keep this separate to Flutter because I think Flutter is a very unique case in what it's going through and its structure in terms of its U.S. and international play. In terms of overall leadership in the industry, I think that this is about agility and this is about skill sets coming down and what the investor has to have trust that...

the um that the gambling plc that they've invested in has a unique strategy to scale and to position themselves within markets and with a distinct offering um i think kind of prior to 2025 there's been too many too much of this kind of copy and paste strategies that

I don't necessarily think investors, I think investors have accepted, but I don't think they're going to be too kind to now. You've got to be going unique to survive in these next four years for gambling.

Charlie Horner (22:36.201)
How do you see this one?

Ted Orme-Claye (22:38.585)
Yeah, I think just to kind of build on what Ted said, agility and product differentiation, having a unique product, unique platform and so on will be definitely on their agenda. think coupled with that is going to be cost efficiency and cost reduction with all the pressures that this year has got particularly. I know I keep banging on about them, particularly the tax ones. I think both corporate leadership.

Ted Menmuir (23:02.254)
But you have to because they're a real test.

Ted Orme-Claye (23:05.195)
Yeah, yeah, it's hard. You can't avoid it, can you? You can't avoid it. And investors can't avoid it either. It's something they're going to factor in. they're going to what corporate leadership needs to make sure that both they and their investors are getting the most out of every pound, every dollar, every euro, whatever, as much as possible this year. And I think that will be, yeah, that'll be playing high on the mines.

Charlie Horner (23:31.273)
So it's going to be fascinating to see how things develop over the next year or so, because like you say, Ted, we can't avoid it. We have to talk about these tax increases, the regulatory pressure all over the world, really. So we'll continue monitoring it and we'll continue reporting on it. But for now, Ted, Ted, thanks very much for joining me today. Really appreciate your time and your expertise on this one.

And so our listeners, thank you for tuning into today's episode of iGaming Daily. We'll throw a couple of links into the show notes so you can read up about the stories we've covered today. And as I said earlier, check out episode 723 to hear Ted and Ted's takes after Flutter's 2025 results. And join us again tomorrow to keep up to date with all the latest global gambling news.