Flutter Ent to pay furloughed staff out of its own pocket … for now


flutter-entertainment-rejects-government-betting-bailoutUK-listed gambling giant Flutter Entertainment says it will continue to pay its furloughed staff through the COVID-19 pandemic “for as long as possible” using its own resources rather than rely on government bailouts.

In a Q1 trading update issued Friday, Flutter said revenue over the first three months of 2020 was up 16% year-on-year to £547m, with sports betting up 13% to £407m and gaming up one-quarter to £140m.

The figures are obviously far less flattering in the period following the suspension of UK and Irish racing, which pushed revenue down 32%. However, the fact that racing continues in Australia and the US has helped to offset a 46% decline in sports revenue following the pandemic-related suspension of live sports events.

The Paddy Power Betfair (PPB) Online segment remains the top breadwinner, with Q1 revenue rising 9% to £247m, as gaming’s 17% rise to £88m aided sports’ more modest 6% rise to £159m.

Sports had been up 19% until March 15, when UK racing halted. Taking racing entirely out of the picture, sports betting was up 43% despite stakes falling 10% as margins shot up 3.7 points to 10.1%.

UK and Irish retail revenue fell 8% to £71m, largely due to last April’s drastic reduction in fixed-odds betting terminal stakes. Retail gaming revenue was down 31% to £19m while OTC wagering gained 5% to £52m.

In Australia, the Sportsbet online betting brand saw revenue rise 21% to AU$109m as active customers swelled by 16%, stakes improved 3% and margins hit 11.7%.

In the US, revenue was up 51% to US$120m, with sports betting up 24% and online casino spiking 255% to £33m. The FanDuel brand added over 100k new customers during the quarter and online casino operations in New Jersey and Pennsylvania are enjoying major cross-sell. The TVG race betting unit and FanDuel’s daily fantasy sports saw business grow 3%.

Like its merger dance partner The Stars Group, Flutter’s online casino operations have seen a dramatic uptick since the pandemic began in earnest. While PPB Online’s sports revenue has fallen 57% in the period spanning March 16 to April 12, gaming revenue is up 15%.

The trend is far more pronounced in the US, where betting revenue is down a mere 8% while online casino is up around 200%, which Flutter attributed to New Jersey’s dramatic online casino improvements and its newly launched online ops in Pennsylvania.

In Australia, betting revenue is down only 7% thanks to racing’s determination to stick it out. The UK and Ireland retail ops have been completely shut since mid-March, leaving a giant zero on the ledger where revenue used to go.

Flutter CEO Peter Jackson said the current crisis further underscores the need for the geographic and product diversification that will come via its TSG merger, which the company expects to conclude in the current quarter.

While UK retail betting operators are eligible for the government’s program to pay 80% of furloughed staff’s wages for three months, Flutter said that “for as long as possible, we will endeavour to fund the salaries of all of our employees through the Group’s own financial resources.”

The company reserved the right to “review our position” should the crisis extend to the point that not accepting government cash “would jeopardize jobs.” Investors didn’t seem to mind Flutter’s present willingness to forego free cash, as the stock price closed up 15.7% by the close of Friday’s trading.