Flutter Entertainment’s senior leadership kept their cards close to their chests yesterday following the revelation that Peter Jackson will be vacating his role as Chief Executive Officer in October.
Jackson has been Flutter’s only CEO since the company’s 2019 transition from Paddy Power Betfair (PPB), which he had also been CEO of for two years prior. He has overseen a huge expansion of the business including the takeovers of FanDuel and The Stars Group.
With Flutter’s share price having dropped 50% year-to-date and the company revealing a net loss of $296m (£219m) in Q2, the publication of its interim financials was accompanied by the announcement that Jackson will be replaced by Dan Taylor, President and CEO of Flutter International, as Group CEO.
“Dan has been very involved in all of the strategy work that we’ve done as a group over the years and execution of the plans for the business,” Jackson told investors yesterday.
“(He) is clearly very supportive of all the stuff that we’re announcing today as well. I think you’d expect to see a continuation of the strategy and the execution against it as he picks up the reins from 1 October.”
Whether Flutter will adjust its strategy under Taylor is anybody’s guess – according to Jackson’s response to an analyst quoted above, it seems things will remain more or less the same.
Nonetheless, questions are still abounding around Flutter’s future.
What course of action will it take on predictions, with FanDuel Predicts launched late last year? How will it secure recovery for its share price and recovery of profits? And what actions will it take around its international activity.
Rob Coldrake, the firm’s Chief Financial Officer, asserted to analysts that the cost transformation programme Flutter initiated back in 2024 is progressing well.
“We’re actually tracking ahead of that,” he said.
“We’ve delivered all of the key component parts, largely in terms of the activities. We’ve got the new UKI operating model in place.
“The Sky Bet migration is complete, the PokerStars migration is going really well and it’s in its final stages, and the Snai migration went really well earlier this year. We’re really pleased with that.”
What’s ahead for Flutter’s international agenda?
Flutter has become an increasingly US-led and focused business in recent years. The takeover of FanDuel, which has become one of the two biggest sportsbooks in the US alongside DraftKings in the post-PASPA era, set this trajectory up.
Two days before publishing its Q2 financials, Flutter completed its delisting from the London Stock Exchange. It is now solely trading on the New York Stock Exchange, where it has had its primary listing since May 2024.
Readers will notice, however, that the achievements Coldrake reeled off to analysts yesterday largely concerned international developments – Sky Bet in the UK, Snaitech in Italy, and PokerStars, active in various European countries including the UK, France and Sweden.
Flutter’s international activity is incoming Group CEO Taylor’s forte, given his background as CEO and later President/CEO of Flutter International, covering all of the firm’s non-US assets.
While Flutter may be US-led, International still brings in a lot of cash – international revenue was up 10% to $2.6bn in Q2, with Brazil revenue up 64% to $72m, Southern Europe and Africa revenue up 36% to €896m, Central and Eastern Europe revenue up 23% to $170m and UK and Ireland revenue up 4% to $971m.
It is also a division which faces a lot of challenges, not least among them tax. While revenue from international operations was up, the tax impact could clearly be seen on Adjusted EBITDA, which was down 19% year-over-year at $476m.
Examples include a hefty new tax regime in the UK which has left Flutter’s Sky Betting and Gaming, Paddy Power and PokerStars brands there heavily exposed. Jackson responded to an analyst query about this yesterday.
“I think the important point that we (should) flag is the sequential improvement we’re seeing in Sky Gaming. I think you know customers have adapted to the new interface post migration, and we’ve had a very strong World Cup for all of our brands in the UK.
“We’ve obviously guided to our sort of first order significance in the market, and we’re adapting our approach around that, probably taking a little bit more focus on headcount savings rather than marketing because we want to maintain our posture in the market.
“We do think we’re beginning to see some of our competitors coming back as we anticipated. I think the second order mitigants are going to be significant, and we’ll be well positioned to capitalize on those.”
According to the Blask index, Flutter has four top 10 brands in the UK in Sky Bet (fourth), Paddy Power (fifth), Sky Vegas (ninth) and Betfair (10th). In Brazil, a market on the minds of many companies’ minds right now, its Betnational brand, acquired last year, is in seventh place.
“In Brazil, we’re really excited about our potential in this market,” said Coldrake.
Flutter’s CFO listed off a “number of improvements” made to its Brazilian operations, such as launching new products, pricing and technological capabilities during the first half of the year.
As with other key markets, Brazil brings regulatory difficulties. The government is turning against gambling advertising and online casino operations, and a tax rate of 18% on gross gaming revenue (GGR) is due to come into effect by 2028.
“We’ve improved the iGaming proposition and improved the generosity metrics around that. We’re feeling quite confident about our product and how we set up it into ‘27,” Coldrake said.
“There is quite a moving piece with regards to the regulatory backdrop in Brazil, and that’s somewhat stifling the overall market growth, but within the context of that market, I think we’re happy with our performance, and we’re still encouraged about the medium to long-term opportunity there.”
The UK and Brazil are just two of some 100 countries Flutter is active in – Italy, Spain, Germany, Australia, Canada, and many more. Maximising return on investment across this portfolio is not an easy task.
To top this off, there is the matter of debt – probably the firm’s biggest consideration.
According to Bloomberg Intelligence, Flutter is due to run ahead of its leverage target until 2028 even if it stays away from acquiring companies.
The trouble here is that acquiring what it calls “gold medal” brands across key markets has been instrumental to Flutter’s growth over the past decade.
To put things simply, Flutter’s incoming CEO and his colleagues on the leadership team will have their work cut out in 2027…