Flutter Sees Big Losses If Sports Remain Suspended Due To Coronavirus Outbreak

Paddy Power Betfair and FanDuel parent Flutter Entertainment cautions that the widespread cancellation and suspension of sports events would entail a £90-110m hit to full-year earnings.

In the case, horse racing is canceled in Australia, Britain, and Ireland due to the Covid-19 pandemic, the Dublin-based Group projected that such a scenario would cut down earnings before interest, tax, depreciation and amortization (EBITDA) by around £30m a month. In 2019, the company’s EBITDA was £426 million not including its investment in the US.

While the English Premier League and Champions League, as well as the major golf events were canceled due to the Coronavirus outbreak, some Australian sports remain exceptions, which gives hope for Flutter’s Sportsbet brand.

Flutter’s CEO Peter Jackson said:

“The challenge currently facing our business and the industry more widely is unprecedented in modern times. Our focus, first and foremost, is on protecting the welfare of our employees and our customers and we will leave nothing to chance in this regard.“

“While our near-term profitability will be impacted by the essential measures being taken globally, the board will remain focused on protecting shareholder value and managing the business through these turbulent times.”

Pointing out that almost 78% of its gains are generated through bets placed on international sporting events, Flutter commented that the suspension of matches will “obviously have a material impact on the revenue and earnings of the group.“

In October, Flutter signed an agreement to buy The Stars Group for $6 billion and, as a result, to build with the PokerStars operator a combined business – the world’s largest web-based betting shop by revenue.

The company would continue to offer an extensive range of products covering sports betting, poker, casino, fantasy sports but also further diversify its geographical distribution.

This February…

…the epic Flutter-Stars merger was approved by the Australian Competition and Consumer Commission (ACCC) while a number of other necessary approvals from regulatory agencies are yet to come. As things stand at the moment, both sides believe that the deal is likely to be completed during the second or third quarter of 2020.

Flutter’s significant losses negatively affected other big players on the market, with William Hill going down 29% and Ladbrokes-owner GVC 22% in London trade on Monday.

Flutter also said that the first quarter of 2020 was really good for the company but this positive trend stopped with the emergence of sports events suspensions and cancellations.

Source: “Flutter warns of £110m earnings hit from sports suspensions“. iGaming Business. March 16, 2020.