Flutter and 888 profits boosted by overseas growth

London-listed gambling giants Flutter Entertainment and 888 Holdings saw their core profits soar last year due to overseas expansion.

Paddy Power owner Flutter announced its adjusted profits before nasties rose 45.4 percent to $1.87 billion in 2023, while parent company William Hill saw a 41 percent increase to pounds 308.3 million.

Flutter benefited from a strong increase in customer numbers in the United States and the British Isles, with the latter region experiencing 5.4 percent growth in the average number of players per month.

In the former market, the group’s Fanduel division gained 3.7 million new customers thanks to the opening in three more states (Ohio, North Carolina and Massachusetts) and increased investments in promotional activities.

US sales rose by $1.3 billion over the year to almost $4.5 billion, offsetting declining sales in Australia, which were blamed for the ‘softness in the racing market’ in the second half of the year, more than compensated.

However, Flutter’s net losses skyrocketed from $370 million to $1.21 billion after it incurred massive writedowns related to intangible assets, the PokerStars trademark and an option that allowed Fox Corporation to buy a stake in FanDuel.

It said PokerStars’ charge reflected a “local hero” strategy in certain international markets, such as Italy, Spain and India, and its significant presence in “lower growth” countries.

888 Holdings also posted a big loss last year due to higher financing costs on debt built up by its £2.2 billion takeover of William Hill, but after-tax losses still fell 53 percent to £56, 4 million.

William Hill’s Gibraltar-based group’s purchase of casino operator Caesars Entertainment increased reported revenues by 38 percent to £1.71 billion.

However, on a pro forma basis, the company’s revenue fell 7.5 percent due to stricter gambling regulations in Britain, including lower betting limits for online gambling games and stricter affordability controls.

The company was also hit by weaker performance in the ‘dot-com markets’, particularly in the Middle East, where it suspended some VIP customer accounts due to suspicions of money laundering.

The scandal led to the resignation of CEO Itai Pazner, a £2.9 million settlement with Gibraltar’s Gambling Commissioner and a major overhaul of compliance at the company.

Pazner was replaced by Per Widerstrom, who is leading a new “value creation plan” that includes an “operating model reset,” an increased focus on “core markets” and changing the name from 888 to Evoke.

“Today marks the beginning of an exciting new dawn for this company,” noted Widerstrom, who joined 888 after eight years as CEO of Fortuna Entertainment Group, the largest betting and gaming provider in Central and Eastern Europe .

The proposed name change will be voted on at the company’s upcoming annual general meeting.

Meanwhile, Flutter shareholders will decide in early May whether to move the company’s primary listing from the London Stock Exchange to New York.

The Dublin-based company is looking to make the move because FanDuel accounts for the majority of its revenue and the US markets offer access to much deeper sources of capital.

If that happens, it would further damage London’s reputation as a financial center, following a number of recent high-profile departures to Wall Street.

Building materials supplier CRH and insulation products maker Kingspan moved their primary listing from the British capital to the US last year, while investors at tour operator Tui voted in February to list the company’s shares exclusively in Germany.

Flutter Entertainment shares were 2.1 per cent lower at £169.25 at lunchtime on Tuesday 888 Holdings shares were 9.8 percent higher at 92p.