DraftKings in early August announced that it will introduce a winners’ surcharge in four high-tax states beginning 1 January 2025. Industry watchers have since been waiting to see if other companies, and Flutter in particular, would follow suit.

“We have no plans to introduce a surcharge to winners,” Jackson said during the Q&A portion of the call. He then declined to entertain the issue further when others asked.

Less than an hour after the Flutter call ended, DraftKings released an announcement saying it would not move forward with the idea.

Other companies didn’t back idea, either

Before Tueday, Rush Street Interactive and Penn Entertainment also publicly said they have no immediate plans to tax winners. The idea has been met with skepticism from analysts and consumers, but DraftKings co-founder Jason Robins in that company’s earnings call earlier this month, said he believed players will pay it for the privilege of using the platform.

For Jackson, the question was a non-issue. He and new CFO Rob Coldrake opted instead to focus on strong earnings, increased projections, and how growth continues to move the company forward. Coldrake, who was elevated to CFO around the time the company moved its primary market listing to the NYSE, and relocated its corporate offices to New York City, said he was “delighted” to share such good news on his first earnings call.

Flutter raised its FY 2024 projections after beating expectations. According to the report, the company adjusted EBITDA up $70m for the remainder of the fiscal year. Flutter reported net income of $297m, an increase of $94m over the same quarter in 2023.

Flutter adjusted revenue up by 20% and EBITDA up $738m overall. In the US, Flutter reported 51% adjusted EBITDA to $260m, which it wrote was driven by revenue growth and “good operating leverage.” Outside of the US, the company increased EBITDA by 4% to $478m.

Flutter’s growth is largely due to FanDuel maintaining and strengthening its position as the No. 1 digital wagering platform in the US. In the second quarter, FanDuel’s betting gross gaming revenue (GGR) market share grew to 47% and online casino grew to 25%. Overall in the US, the company had 38% of GGR market share.

The executives pointed to strong growth in North Carolina as one driver behind FanDuel’s US growth. In Q2, it had 59% net gaming revenue (NGR) in the state.

UK, Ireland and Italy sparked global growth

Across the world, Jackson and Coldrake said Flutter’s products in the US, UK & Ireland (UKI), and Italy continued to outperform expectations. UKI revenue was up 10%. In Europe, “positive” Euros and “continued momentum” in iCasino contributed heavily to increased revenue. It also reported that Australian market trends met expectations, but revenue was down 10%.

The bulk of the call was focused on the US, particularly with regards to iGaming and how to mitigate the effects of high-tax states. Jackson confirmed that FanDuel has completed the migration of its online casino business to an in-house platform. That will allow the company to be more nimble and responsive, as well as to add more titles.

“It’s not a cost play,” Jackson said. “But it gives us more stability and control.”

With regard to taxes, analysts were curious how Flutter will manage the Illinois tax increase. Lawmakers there earlier this summer upped the 15% flat tax to a sliding scale, with the highest-producing operators now taxed at 40% of adjusted gross revenue. The new tax went into effect 1 July, the start of the third quarter. The change could cost the company up to $40m.

“To start with it is important to recognise there is a happy medium for tax rates,” Jackson said. “Most states have taken a sensible approach. But I do think a graduated system punishes the companies that have made the biggest investments and drives people offshore. 

“We do operate in a lot of different markets in the world. We can see plenty of examples where the tax rate was bumped up and the payout to the state declined.”

Acquisitions to continue, but Penn question unanswered

Analysts also asked about rumours around Flutter partnering with Boyd Gaming to purchase competitor Penn Entertainment. Jackson essentially ignored the question, but later said the across the world, Flutter makes acquisitions when and where needed.

Jackson said acquisitions are mainly made “if we think they will help us,” and to “supercharge” local markets. He and Coldrake pointed to the idea that Flutter has four brands and each of those brands in managed by local teams in local markets. The goal in every market is to be among, if not the market leader.

“Internationally, in many markets where we are we are not yet in a podium position or in the gold-medal position,” Jackson said. “So we will continue to make acquisitions. If necessary, we will go above our leverage targets if we see the right opportunity.”

Original article: https://igamingbusiness.com/finance/flutter-beats-street-draftkings-backs-off-plan/

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