- »Stars Group Pushes Flutter to H1 Growth Amidst Changes
Stars Group Pushes Flutter to H1 Growth Amidst Changes
The merger was one of the largest in the history of the gambling history. In the first days of May 2020, amidst a global pandemic and economic uncertainties across the world, Flutter Entertainment officially acquired and absorbed The Stars Group.
From that point forward, a significant group of companies gathered under one umbrella. That group then included PokerStars and Paddy Power Betfair, Sportsbet and BetEasy, FanDuel and Sky Betting & Gaming. In all, fourteen companies became a part of Flutter.
The entire deal took less than one year from its announcement to its completion.
The part of the Flutter deal that most affected Aussies and their betting options was the Sportsbet and BetEasy collaboration. An original plan to operate both companies via a dual brand strategy changed by the close of the Flutter-TSG deal, leading to the announcement that Sportsbet will absorb BetEasy this year.
In fact, the entire BetEasy brand would retire, hopefully by the time the Spring Racing Carnival began. That begins in the coming days, however, so the timeline is a bit off.
Visiting the BetEasy site now, players will find information about the transition. “In the coming weeks, simply login to your BetEasy or Sportsbet account and we’ll take it from there,” the website reads.
Players will find that their account balances, betting and transaction histories, pending bets, bonus bets and promotion progress will all be transitioned to Sportsbet. If similar mergers are any indication, players will receive another message in September with an official closing date for BetEasy accounts. Bettors will be directed to Sportsbet for all further action.
Flutter H1 Revenue Overview
This past week, Flutter revealed its first-half year performance statistics. While most companies showed a very tough period of April-through-June, Flutter showed progress and growth despite the backdrop of the coronavirus pandemic.
Some of the highlighted numbers were:
- Revenue = £1,522,000,000, up 49% year-on-year from £1,020,000 in 2019
- Adjusted EBITDA = £342 million, up 59% YoY from £216 million
- Profit before tax = £24 million, down 70% YoY from £81 million
- Earnings per share = 18.1p, down 81% YoY from 96.2p
- Adjusted earnings per share = 187.5p, up 29% YoY from 145.5p
- Net debt = £2,899,000,000, up 714% YoY from £356 million
Pro forma group revenue growth came to 22%, with global online growth of 29% added on.
The sports market delivered favourable results in the first quarter, with strength following in the second quarter due to the continuation of horse racing in Australia. In the US market, FanDuel and TVG propelled the group to acquire more than 350,000 new customers in the first half. Overall, Flutter declared global online growth of 29% in H1.
And amidst the pandemic disruptions, Flutter claims it “enhanced player projections” and put a “strong focus on employee wellbeing, without taking advantage of furlough schemes.”
Flutter CEO Peter Jackson noted, “The group’s first half financial performance exceeded expectations as we benefitted from geographic and product diversification.”
Focus on Australia
Jackson hailed “excellent performance” in the Australian market during H1.
While sports betting dipped significantly from March into May, the comeback began in May and returned to a normal average by the first weeks of June. Racing, on the other hand, accelerated in March and April, hitting a high in May and dipping slightly in June.
Australian revenue was already up 24% before the Covid-19-related shutdowns, but it jumped 57% after many activities restarted.
Growth drivers included:
- Favourable sports margin and underlying customer growth before coronavirus
- Customer activity shift to racing and migration of some from retail to online
- Racing average daily actives up 30%
- Expected margin increase due to higher-margin racing and its appeal to retail customers
- Racing resiliency after sports resumed
Organization and Executive Changes
Per the Flutter results released last week, these are the executives in charge of various Flutter entities:
- International: CEO Dan Taylor (PokerStars, Betfair, Adjarabet)
- Australia: CEO Barni Evans (Sportsbet, BetEasy)
- US: CEO Matt King (FanDuel, TVG, PokerStars, FoxBet)
- UK & Ireland: CEO Conor Grant and Chairman Ian Proctor (Sky, Betfair, Paddy Power)
Interestingly, the former CEO of The Stars Group left the company. Rafi Ashkenazi originally planned to become the Flutter Chief Operating Officer. Then, he was going to be a consultant to Flutter CEO Peter Jackson. But by May 2020, he agreed to become a non-executive director. After all, his input was crucial, as he had been with the company since it was Amaya Gaming in 2013 and served as its CEO since March 2016.
As of August 27, Ashkenazi departed the company altogether.
Flutter Chairman Gary McGann acknowledged Ashkenazi’s contributions “in creating the exceptional business that is TSG.” He noted that he transformed the company from a poker operator into a diversified global gaming company. “We wish him well for the future,” McGann said.
One of the latest post-merger revelations involves all sports betting moving to one platform.
Flutter determined that the Paddy Power Betfair platform is the best global platform to host sportsbook options. FanDuel and OpenBet will move to that platform, as well as Fox Bet, FanDuel, and BetStars. The moves will mimic the aforementioned transition of BetEasy to Sportsbet.
The company also plans to increase its overall investment in PokerStars. While The Stars Group’s focus on internet poker decreased significantly in the past several years in favor of online casino games and sports betting, Flutter wants to change that trend.
Flutter will invest more in the sales and marketing division of PokerStars. There may be more promotions and rewards, reversing another PokerStars trend over the past several years. Flutter will also improve the overall product with some updated technology to improve customer experiences.
Some of these issues hit the spotlight during the pandemic, when the popularity of online poker grew enormously in the absence of live poker. And while PokerStars did offer some tournaments during the past few months, sites like PartyPoker and GGNetwork’s GGPoker and Natural8 became wildly popular. As PokerStars fell from its position as the king of online poker, Flutter decided to boost its place in the industry once again.
Flutter will also spend more time investing in the US market, moving its online gaming and/or sports betting options into three more states in the second half of 2020.
Investments going forward will extend beyond customer acquisition, Flutter reported. It will include proprietary technology, risk and trading capabilities, and people.