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(Alliance News) - Flutter Entertainment PLC on Thursday stressed the opportunity facing bookmakers as the US opens up to online betting, though profit in 2019 has slipped.
Flutter shares were 5.2% lower on Thursday morning in early trade in London at 8,370.00 pence each, among the worst performers in the blue chip index.
Flutter's pretax profit fell 38% to GBP135.7 million in 2019, with the company - recently known as Paddy Power Betfair - saying this was due to ongoing US investment as well as tax and regulatory changes.
These charges hit profit by GBP107 million, Dublin-based Flutter continued.
Flutter's revenue increased 14% year-on-year to GBP2.14 billion. It has kept the dividend unchanged on the year before at 200 pence per share.
"2019 was a very significant year for Flutter, with further successful expansion in the US, enhancement of responsible gambling initiatives within our business and the announcement in October of our proposed merger with Stars Group," said Chief Executive Peter Jackson.
"I am immensely proud of the group's performance given the complex regulatory environment," Jackson added.
Stars Group shareholders will be getting 0.2253 of a Flutter share per Stars Group share owned. Flutter's shareholders will own 55% of the combined business, and Stars Group the rest. The combined business will be worth over GBP10 billion, and will be led by Flutter CEO Jackson.
Stars already has a presence in the UK through the Sky Bet betting brand, while Flutter owns Paddy Power and Betfair.
Flutter's sports revenue rose by 13% to GBP1.67 billion in 2019, with gaming revenue 19% higher at GBP473 million. Retail revenue fell 6% to GBP312 million, hit by the reduction of the maximum stake on fixed-odds betting terminals in the UK to GBP2 from GBP100.
Paddy Power Betfair online revenue rose 6%, passing the GBP1 billion mark, while in Australia, revenue was 11% higher at GBP446 million. Flutter operates there through its Sportsbet brand.
In the US, revenue was nearly double, at GBP376 million. Flutter merged with FanDuel during the year, and the US market is rapidly growing as more US states legalise online betting.
Flutter moved into three new states in 2019, having 350,000 customers in its sportsbook by the year's end.
"In the US, FanDuel finished 2019 as the largest online sportsbook and casino, less than 18 months after the launch of our sports betting operations. Our online market share during 2019 of 44% in the states where we have gone live is testament to the quality of our products, brand and team," said CEO Jackson.
"We remain as confident as ever in the size of the prize in the US and in our strategic approach which positions us well for the future."
Looking ahead, Flutter said 2020 has begun well. The company has the European football championships to look forward to in the summer, though did note a ban on using credit cards in online gambling in the UK will hit revenue by GBP20 million to GBP25 million.
"The new financial year is off to a strong start with good momentum across all our brands. We are very excited about the group's prospects and in particular our proposed combination with Stars Group, which will help us to build a more diversified global business," added Jackson.
By George Collard; georgecollard@alliancenews.com
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