Paddy Power-Betfair Changes Its Name to Flutter Entertainment

Sunday, March 10th, 2019 | Written by April Bergman
Paddy Power-Betfair Changes Its Name to Flutter Entertainment

Paddy Power-Betfair is changing its name to Flutter Entertainment to reflect its “increasing diversity”. The company is shifting away from the UK market to focus on US sports betting, so Paddy Power-Betfair’s US-focused divisions (FanDuel, TVG, TVG2) have taken on a greater weight in recent months.

Paddy Power-Betfair’s press release to announce the name change emphasized that the rebranding would not affect consumer brands. The announcement came during a 2018 earnings report to shareholders, which contained good news and bad news.

On the positive front, revenues grew by 7.3% to €2.17 billion. Profits, on the other hand, declined by 11%, due to €28 million in spending on the company’s US division. Paddy-Power Betfair has made a concerted effort to gain market standing in the United States sports betting market, which promises to be the largest area of growth for bookmakers in the coming years.

Underlying earnings were relatively flat at 2% excluding currency effects once the US investments were taken out of the equation. Earnings were €551 million througout 2018.

Paddy Power-Betfair: “Regained Its Mojo”

Peter Jackson, the CEO of Paddy Power-Betfair, said his company has “regained its mojo” in the United Kingdom after several straight years of market share losses. Whether the reversal of share loss is due to the retreat of competitors or the gains of Paddy Power-Betfair are another matter.

The chief executive said 2018 was a “challenging year for the sector with regulatory and tax changes,” a reference to the bet limits on fixed-odds betting terminals (FOBTs) by the UK parliament and the raising of Point-of-Consumtpion Taxes (POCT) by the Chancellor of the Exchequer.

£2 FOBT Bet Policy

Both policies go into effect in April 2019, but UK gaming companies have been investing large sums to prepare for the FOBT and POCT strategies — both of which were moved up several months for the sake of British politics.

The FOBT bet maximum was lowered from £100 to £2, which caused Ladbrokes and William Hill to close over 1000 betting shops apiece. That alone should allow Paddy Power-Betfair to gain market share in the United Kingdom in 2019, though it is no sign of underlying strength.

The newly-christened Flutter Entertainment has 626 betting shops across the UK and Ireland. Their underlying earnings dropped 19% to €59 million, with a revenue decline of 1% on the year. Online revenues increased by 11% in 2018, which is vastly better than the 1% growth recorded in 2017. Still, Paddy Power-Betfair declined on the year — just not as much as its chief competitors.

Why Flutter Entertainment?

All in all, the 2018 numbers show why the company must focus on the US gaming market — and why a name change makes sense. Peter Jackson said the name change to Flutter Entertainment reflected a need to have a single brand for the company’s many products.

When Irish bookmaker Paddy Power merged with UK sports betting exchange Betfair, it was a merger of near-equals and the resulting Paddy Power-Betfair name change reflected that reality.

At the same time, the name is somewhat unwieldy. Since the US Supreme Court repealed a 46-state federal ban on sports betting, though, Paddy Power-Betfair acquired the second-biggest daily fantasy sports operator in the United States: FanDuel. The New York City-based, Scottish-controlled DFS operator has a database of over 6 million American fantasy sports competitors, a natural customer base for marketing legal sports betting.

Joe Brennan of The Irish Times did not like the name change. In an article about Paddy Power’s rebranding, Brennan published the quote, “The name Flutter Entertainment plc couldn’t be more tone deaf, at a time when the entire gambling industry is already suffering from an image problem.”

Others were more sanguine about Flutter Entertainment.

Referring to the fact Betfair acquired Flutter in 2001, Ivor Jones of the Peel Group repeated the logic Peter Jackson gave about the name change, noting, “At least the Flutter name is presumably owned by the group and so there won’t be any brand consultancy fees. And perhaps shareholders should take it as a good omen, Flutter was bought by a larger, more-successful, rival.”

FanDuel Acquisition

FanDuel also has live gaming apps designed to appeal to US players. For those reasons, the FanDuel acquisition is key for the US sports betting market. It would be too much to rename the company Paddy Power-Betfair-FanDuel, though, so a new name was in order.

Jackson explained: “With a growing portfolio of brands, we plan to rename the group as Flutter Entertainment plc….There are no plans to use this historical name for consumers, and we will seek shareholders’ permission for the change at our forthcoming AGM.”

Flutter Entertainment’s Future in the US

The optimism about the American gaming market is cautious optimism. The United States has disappointed UK gaming groups in a big way in the past (see: UIGEA), mainly due to the mercurial nature of the US federal government. At the height of the US poker and casino markets’ profitability in 2006, the US Congress banned all forms of online gambling by tacking an unpopular bill onto the Safe Ports Act — a bill few American lawmakers would vote against in the post-9/11 era.

Publicly-traded British and continental European gaming companies had to pull out of the US market almost overnight. Ivor Jones described the situation in the US market, stating, “we can’t know when, or whether, this will pay off and medium-term it will continue to be a drag on profits.”

Will US Congress Pass Federal Sports Betting Bill?

While the US Supreme Court decision undermines attempts to ban single-state sports betting on a 50-state basis, it could happen under the right circumstances. The big American sports leagues – NFL, NBA, and MLB — tried to install integrity fees in various state sports betting laws, but largely failed. The leagues have threatened to lobby the US Congress to pass sports betting regulations with integrity fees, which would force bookmakers to pay a 0.25% to 2% fee to sports leagues for betting on their games.

In a low-margin industry, such a law could upend all previous calculations. It is unlikely to happen, because a federal sports betting law would undercut the sports betting industries of Nevada, along with the 11 states which have passed single-game sports wagers in the past year. Another 28 states have draft legislation in some form that would tackle sports betting, so the state governments would oppose a federal solution — and their representatives in the US Congress would be lobbied hard against voting for such a bill.

The possibility mainly underscores the complicated nature of US politics, which leads to unpredictability. Even with no federal sports betting bill, the patchwork nature of American gambling law means companies must be able to move quickly and decisively, while signing strategic partnerships with casino and racetrack operators, app designers, sports franchises, and even sports leagues.