Paddy Power owner predicts windfall in US
Flutter Entertainment CEO bullish about American market as Paddy Power owner sees profits plunge over tax
FLUTTER Entertainment, the owner of Paddy Power and Betfair, believes the potential sports betting market in the United States may be much bigger than the $6bn (€5.3bn) it previously anticipated, as more states prepare to go live with legal gambling.
Flutter Entertainment's Fanduel division has already captured a 50pc stake in the New Jersey market, where online and retail sports betting was legalised in 2018.
It has also performed well to date in the newly legalised Pennsylvania market, according to Peter Jackson, pictured, the firm's chief executive.
Mr Jackson was speaking as Flutter's first-half profits fell by almost a quarter.
Eight other states have already passed legislation to allow for online sports betting, but this has not yet gone live. Indiana is among the states being closely watched by Flutter as it is expected to go live soon.
The 10 states in which sports betting has been legalised represent almost 19pc of the total United States population.
The NFL football season kicks off next month, marking the beginning of a significant customer acquisition period for Fanduel, which already has 8.5 million registered users.
Mr Jackson said Fanduel has a "huge head start" over rivals in the United States, where it has 800 staff, including 300 developers.
Its staking volumes in Pennsylvania are already at 20pc of those in New Jersey, just days after launching. "We're keeping a very close eye on the size of the prize," he said. "It's fair to say that we're very excited about the momentum behind the online sports betting regulation."
Mr Jackson said that based on the states that have already passed sports betting legislation, the prospective size of the US market in gross revenue terms is currently at $4bn.
"All of which points to the possibility that the final prize could be bigger than the illustration we presented," he added.
However, the US operation is still expected to lose about £55m (€59.5m) this year, as Fanduel engages in marketing to win customers.
"Fortunately, we're a big business with lots of resources," said Mr Jackson, who cautioned that it is not a straightforward process for a US state to let online sports betting go live, given the political process and a final veto that state governors have.
"It can take an awful long time," he said. However, he noted that Fanduel expects to be going live in a number of other states in the course of the current financial year.
"We can cope with the level of investment that would be required if many more states came online much more quickly," said Mr Jackson. "Clearly, it would make the investment we'd have to put into that much greater, but then the returns would be much greater."
Flutter earlier reported first-half results that showed its profits were hit by regulatory changes and new taxes across a number of jurisdictions.
It shouldered an extra £47m in taxes and duties during the period.
The firm's pre-tax profit fell 24pc to £81m in the six months to the end of June.
Underlying earnings before interest, tax, depreciation and amortisation were down 10pc, at £196m.
Excluding tax and regulatory changes, the figure would have been 15pc higher.
In Ireland, the Paddy Power retail chain saw its revenue climb by 6pc during the first half.