Good and bad news
Flutter Entertainment, the parent company of Paddy Power Betfair, has seen its online revenues drop by 32% year-on-year since horse racing largely shut down globally. However, there was positive news as The Stars Group announced on Friday that the Flutter merger will go ahead as planned.
The Dublin, Ireland-based sportsbook holding company has seen more revenue resilience than initially expected in the wake of the ongoing COVID-19 shutdown. It has seen lost earnings from global sporting event cancellations somewhat offset by US gaming and Australian horse racing.
Merger making progress
In The Stars Group’s Q1 and general business update issued on Friday, CEO Rafi Ashkenazi said the company remains fully committed to the merger plan. He added that the group is
confident [the deal] will enhance and accelerate our growth strategy.”
Flutter entered into a merger deal with the Canadian-based The Stars Group in October 2019. The agreement would see the creation of the biggest online gambling company in the world. On April 16, the Competition and Consumer Protection Commission in Ireland gave the merger the green light.
Flutter shareholders will be voting on the deal next week. Stars Group shareholders will have a special meeting on April 24 to vote on the issue.
Not all downhill
The decline reported for Paddy Power Betfair covers the period between March 16 and April 12. During this time, sports betting revenue fell 46%. However, Sportsbet, Flutter’s Australian online gambling brand, saw a 7% drop for the same period. The online betting site experienced an increase in new sign-ups as retail sportsbooks across Australia closed their doors.
performing above initial expectations for the first quarter before the pandemic hit
Flutter also noted it had been performing above initial expectations for the first quarter before the pandemic hit. Its group revenue growth for Q1 rose by 16%. The group’s FanDuel offering in the United States registered 72% growth in Q1 and 100,000 new sign-ups. It now has a market share of 41%.
Timeline in place
The plan is to close the deal before the third quarter, provided it gets final approval from the respective regulators. Flutter outlined how now, it’s more important than ever to have additional geographic and product diversification.
A tricky period
Flutter plans to keep paying salaries for all workers for as long as possible in the current climate. It said it will be using its own financial resources to do so.
The company initially forecasted a £90m-£110m ($112m-$137m) drop in full-year earnings. It estimated a further loss of up to £30m ($37m) more each month if horse racing in the UK, Ireland, and Australia stopped and retail sportsbooks closed.