UK-listed gambling operating giant Paddy power Betfair recently announced that it is rebranding as Flutter Entertainment. It noted the double-digit decline in profits last year. The company said on Wednesday that its 2018 revenue was 7% higher than the last year, standing at 1.87 billion pounds. However, the underlying earnings of the company fell by 5% to 451 million pounds. Its pre-tax profits have also slipped by 11% to 219 million pounds.
The company was planning to expand to the US markets and bought the American operations of FanDuel last spring. These efforts are largely responsible for the fall in the company’s fortunes. The investors haven’t been too impressed with the efforts, drawing down the price of its shares by 2.6% on Wednesday.
In this week’s report, the company also talked about rebranding as Flutter Entertainment Plc in May. However, this decision will depend on shareholder approval at the company’s annual general meeting. Flutter brand originally belonged to Betfair rival which ultimately merged with the company in 2001. Flutter’s co-founder Josh Hannah served on Betfair’s board till 2014, two years before Betfair merged operations with Paddy Power.
The company also said that they don’t have any plans to use the historical name for consumers and believes that the new name will also reflect the increased diversity of its operations and brands. Betfair also acknowledged that its 2018 earnings were lukewarm because of its 24-million-pound investment in the new legal sports betting market of the US. Their chief executive Peter Jackson said that the new legal US market is the most significant development to occur in the online betting sector since its advent.
The company experienced an uptick in its online revenue, which increased by 5% to 948 million pounds. Its sports revenue also increased by 3% to 678 million pounds, while betting handle fell by 3%. Exchange betting experienced a 2% fall in revenue last year even though it comprises 38% of online betting. The company said that the fall is because of racing cancellations due to weather conditions.
Betfair’s online gaming revenue jumped by 13% to 270 million pounds after experiencing a 2% decline in the previous year. Last year’s rise is credited to better gaming product embeds in sports apps, the release of new gaming apps and better cross-sells. Its Australian branch Sportsbet also reported a 6% rise in revenue to 403 million pounds. Though it witnessed a 23% rise in betting stakes, margins fell by 1.5 points. The gross profits of the Australian company were also down by 4% to 282 million pounds, largely because of a 9$ rise in the cost of sales.
However, the company suggests that it is progressing in accordance with its expectations in 2019 and is following a four-pillar strategy for growth.