Flutter Entertainment is highly confident of maintaining and securing leadership positions across several major markets, according to group CEO Peter Jackson in a recent earnings call. 

The FTSE100 international betting and gaming firm published its H1 2022 trading update last week – revealing revenue growth of 11% to £3.38bn, albeit with losses of over £112m, including a 4% decline in its founding markets of Ireland and the UK.

Although acknowledging regulatory challenges across Europe, Flutter holds a positive outlook, with Jackson using Olympic terminology by pointing to Flutter’s continued ‘Gold Medal’ standing in the UK and Ireland, despite revenue declines there. 

“At home, we’ve delivered a range of new products helping address the issues,” Jackson explained, highlighting Sky Bet’s BuildaBet feature as an example, which has now been used by nearly a third of its football bettors. 

Moving forward in the British and Irish markets, the group hopes to capitalise on the packed football schedule this autumn and winter, with the domestic seasons having resumed and the World Cup on the horizon – although admittedly with the Gambling Act review casting regulatory uncertainty across the British sector. 

“We plan to migrate Sky Betting and Gaming onto our proprietary technology stacks in 2024, and we are already simplifying our operations in our UKandI business,” the CEO continued.

“We expect the benefits of these programmes to both offset the high inflation and cost headwinds in pay and data feeds, and to position as well given the pending Gambling Act review.”

Perhaps the most significant development for Flutter’s European activity during H1, was the acquisition of Italian operator Sisal for €1.9 bn (£1.6/$2.2bn), completed earlier this month. 

The merger, Jackson argued, has enabled Flutter to secure the number one spot in the rapidly evolving Italian market whilst also granting the firm ‘competitive advantages’ via its new holdings’ omni-channel offering that will Flutter compete across all Italian gambling verticals (lottery, retail betting and online).  

“Sisal’s performance in H1 was very strong, somewhat flattered by COVID-related retail restrictions of the prior year, but with revenue and EBITDA of over 70% a head.”

The acquisition has ‘further transformed’ Flutter’s international business, that following its merger with The Stars Group (TSG) had dragged against multiple regulatory headwinds. 

“Since our merger with TSG, the business has been rebased through regulatory changes in our markets, improvements to compliance practices and corrective investment to stabilise its operational and technological capabilities, and now the acquisition of Sisal.

“The business is on a more sustainable footing, with 86% of revenue from regulated or regulating markets, and poker representing less than 20% of our international revenues or 6% of group revenues.”

Increase market share and drive profitable growth by consolidating its number one position in Italy, Spain, Georgia and Armenia – which consisted 56% of International group income during the first half of the year. 

Outside of Europe, the firm is planning ‘significant investments’ in the Brazilian, Indian and Canadian markets, with the end goal of securing a leadership position.

The third category will see the group focus on optimising returns in existing regulated markets through targeted investments in jurisdictions deemed to have the most potential for good returns. 

Finally, Flutter’s fourth objective is to maintain its existing position in un-regulated markets – although Jackson was keen to stress that such jurisdictions account for only a small fraction of group revenue, with the largest amounting to 0.3%.

However, of these markets, the group has pinpointed India as having particularly strong potential, where the group holds a presence through a stake in online rummy operator Junglee.

“The Indian market has many attractive characteristics as one of the fastest growing gaming markets globally, through significant increases in disposal income and a doubling of internet and smartphone penetration,” Jackson continued. 

“This has driven compound growth of 54% in the real money gaming market over the last three years, with rummy the fastest growing vertical at 57% of the market in 2021.” 

Although betting and gaming is a grey area in India’s federal legislative system, Flutter is confident in the ‘positive regulatory momentum’ of rummy – due to the game having defended its position as a game of skill in federal courts. 

Of the group’s four category approach, the first two categories were highlighted by the CEO as the key growth drivers for Flutter for the remainder of 2022, having accounted for 14% of total revenue growth during H1. 

Summarising the group’s position at the close of H1, Jackson concluded: “Our Group ex-US business is very well positioned. We have gold medal positions in our key markets, and podium positions in a multitude of other geographies.

“Bringing Sisal into the portfolio strengthens our position even further. The ex-US Group has delivered good growth at a high margin, and our increasing scale and diversification provides a resilient and robust model for further growth and cash generation.”

On European operations, he added: “In the ex-US group, revenue and EBITDA were in-line with expectations, and we’re excited to welcome the Sisal team into the Flutter group and begin integrating our businesses in due course.”