Paddy Power owner Flutter has raised its forecast for full-year profit growth after a six-month-long winning streak for US gamblers swung sharply back in the favour of bookmakers during a better-than-expected second quarter.
Bookmakers tend to suffer when favourites win and Flutter, the world’s largest online betting company, cut its US core profit guidance by $180 million in May following a series of unlikely customer-friendly sports results.
Less favourable outcomes for punters in the second quarter allowed it to claw $100 million of that back and increase its group-wide profit forecast to $3.3 billion from $3.18 billion in May, which would represent 40% year-on-year growth.
Flutter’s second-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $919 million, up 25% year-on-year, were above the $816 million expected by an average of eight analysts with LSEG SmartEstimate.
Core profit at FanDuel, which had market-leading 41% and 27% shares of the US sports betting and iGaming markets, jumped 54% to $400 million during the quarter.
Flutter’s international division, which includes the Paddy Power, Betfair and Sisal brands, grew its profits by 13% to $591 million, with more than two-thirds of revenue growth attributed to recently completed acquisitions in Italy and Brazil.
Revenue for the UK and Ireland for the three months to the end of June increased to $936 million, up from $928 during the same period last year.
Flutter said it is closely monitoring US regulatory developments in the event contracts market and assessing the potential participation strategies this may present.
Event contracts, which allow traders to bet on specific outcomes and profit from predictions on everything from sports and entertainment to politics and the economy, have exploded in popularity in the US since last year’s presidential election.
“There are often times when it’s good to be early, but I think there’s often times when you’ve got to make sure you see how regulatory considerations pan out before you leap in and potentially cause yourself challenges with stakeholders,” Flutter CEO Peter Jackson told Reuters.
