Flutter and 888 profits boosted by overseas growth

London-listed gambling giants Flutter Entertainment and 888 Holdings saw core earnings supercharged by overseas expansion last year.

Paddy Power owner Flutter revealed its adjusted earnings before nasties jumped by 45.4 per cent to $1.87billion in 2023, while William Hill’s parent company saw a 41 per cent increase to £308.3million.

Flutter benefited from a surge in customer numbers across the US and British Isles, with the latter territory seeing a 5.4 per cent growth in average monthly players.

Celebration: Paddy Power owner Flutter Entertainment revealed its adjusted earnings before nasties jumped by 45.4 per cent to $1.87billion in 2023

In the former market, the group’s Fanduel business gained 3.7 million new customers as it opened in three more states – Ohio, North Carolina, and Massachusetts – and ramped up investment on promotional activity.

US-based revenues climbed by $1.3billion to nearly $4.5billion over the year, more than offsetting declining sales in Australia, which it blamed on ‘softness in the racing market’ during the latter half of the year.

However, Flutter’s net losses soared from $370million to $1.21billion after it incurred massive writedowns related to intangible assets, the PokerStars trademark, and an option allowing Fox Corporation to buy a stake in FanDuel.

It said the PokerStars charge reflected a ‘local hero’ strategy in certain international markets, such as Italy, Spain and India, and its significant presence in ‘lower growth’ countries. 

888 Holdings also recorded a major loss last year due to higher financing costs on the debts accumulated from its £2.2billion acquisition of William Hill, but its losses after tax still fell by 53 per cent to £56.4million.

The Gibraltar-based group’s purchase of William Hill from casino operator Caesars Entertainment boosted its reported revenue by 38 per cent to £1.71billion.

Borrowing: 888 Holdings recorded a major loss last year due to higher financing costs on the debts accumulated from its £2.2billion acquisition of William Hill

On a pro-forma basis, though, the firm’s turnover slipped 7.5 per cent on account of tighter gambling regulations in the UK, including lower stakes limits for online slot games and stronger affordability checks.

It was also hit by weaker performances in ‘dotcom markets,’ particularly the Middle East, where it suspended some VIP customer accounts over suspected money laundering.

The scandal led to chief executive Itai Pazner’s resignation, a £2.9million settlement with the Gibraltar Gambling Commissioner, and a major compliance overhaul at the company.

Pazner was replaced by Per Widerstrom, who is spearheading a new ‘value creation plan’ that includes an ‘operating model reset,’ a greater focus on its ‘core’ markets, and changing 888’s name to Evoke.

‘Today marks the beginning of an exciting new dawn for this business,’ remarked Widerstrom, who joined 888 having been CEO at Fortuna Entertainment Group, the biggest betting and games provider in Central and Eastern Europe, for eight years.

A vote on the proposed name change is due to occur at the firm’s upcoming annual general meeting.

Meanwhile, Flutter shareholders will decide at the start of May on whether to shift the company’s primary listing from the London Stock Exchange to New York.

The Dublin-based business wants to make the switch because FanDuel provides the largest share of its revenues, and US markets enable access to much deeper capital pools.

If that happens, it would further damage London’s reputation as a financial centre following several recent high-profile departures to Wall Street.

Building materials supplier CRH and insulation goods manufacturer Kingspan both moved their primary listing from the UK capital to the US last year, while investors at travel operator Tui voted in February to list the firm’s shares solely in Germany. 

Flutter Entertainment shares were 2.1 per cent lower at £169.25 at lunchtime on Tuesday, but 888 Holdings shares were 9.8 per cent up at 92p.