🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

FanDuel owner Flutter lifts guidance, rival betting firm drops US surcharge plans

Published 08/13/2024, 04:28 PM
Updated 08/13/2024, 07:15 PM
© Reuters. FILE PHOTO: Flutter's logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
FLTRF
-

By Padraic Halpin

DUBLIN (Reuters) -Flutter raised its full-year guidance after a much better than expected second quarter and said it would not hit customers with a surcharge in high-tax U.S. states, shortly after which rival betting firm DraftKings (NASDAQ:DKNG) dropped plans to do so.

Flutter's U.S. shares, where it recently moved its primary listing, were 11% higher in extended trading after the world's largest online betting firm said it expects to beat its previous forecast for a jump of around 30% in full-year core profit.

The Dublin-based group, whose brands also include Paddy Power and Betfair in Britain and Sportsbet in Australia, said adjusted core profit rose 17% in the second quarter.

Flutter's U.S. FanDuel brand and DraftKings are by far the biggest players in the booming U.S. market with a combined share of around 70% and investors were closely watching Flutter's response to the charge DraftKings announced on Aug. 2.

At the time, DraftKings' CEO compared the plans to similar charges in the hotel or taxi industry and hoped it would offset the cost of operating in states such as New York, which has a tax rate of 51% on gambling revenues.

"We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge," DraftKings said in a statement released after Flutter's results.

While analysts had said DraftKings' plans could boost cash flow, they warned it also risked losing market share if rivals did not follow suit. The charge would have applied to customers' winnings in the four states that currently tax gaming revenues at 20% or more.

Flutter CEO Peter Jackson said the best response to higher taxes, based on its experience in the more established European market, was to cut local marketing or moderate customer offers, as it plans to do in response to recent tax hikes in Illinois.

© Reuters. FILE PHOTO: Flutter's logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

Flutter said on Tuesday that it now expects full-year core profit of $680 million to $800 million at market-leading FanDuel versus the $635 million to $785 million seen in March and last year's $167 million, which was its first full year of profitability in the rapidly growing market.

Core profit of $1.69 billion to $1.85 billion is now seen in its other global markets including Britain and Australia. That compares to the $1.63 billion to $1.83 billion forecast previously.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.