By Padraic Halpin
DUBLIN (Reuters) -Flutter raised its full-year guidance after a much better than expected second quarter and said it has no plans “at this stage” to follow rival Draftkings in adding a surcharge to customer’s winnings in high-tax U.S. states.
Flutter’s U.S. listed shares were 11% higher in extended trading.
Flutter, the world’s largest online betting company, expects to beat its previous forecast for a jump of around 30% in full-year core profit thanks to a 17% rise in second-quarter profit, bookmaker-friendly sports results and third-quarter momentum.
Flutter’s U.S. Fanduel brand and Draftkings are by far the biggest players in the booming U.S. market with a combined share of around 70% and investors are closely watching Flutter’s response to the charge Draftkings plans to roll out from Jan. 1.
Draftkings announced the first-of-its-kind U.S. measure this month – comparing it to similar charges in the hotel or taxi industry – to offset the cost of operating in states such as New York, which has a tax rate of 51% on gambling revenues.
Flutter’s CEO said the best response to higher taxes, based on the Dublin-based group’s experience in the more established European market, was to moderate customer offers or reduce local marketing, as it plans to do in response to recent tax hikes in Illinois.
“We think that those types of responses is the best customer option, and we have no plans to introduce a surcharge for winners at this stage,” Peter Jackson told Reuters.
While analysts said Draftkings’ plans could boost cash flow, they say it also risks losing market share if rivals do not follow suit. The charge will apply to the four states that currently tax gaming revenues at 20% or higher.
Flutter said on Thursday that it now expects full year core profit of $680 million to $800 million at Fanduel versus the $635 million to $785 million seen in March and last year’s $167 million, which was its first full year of profitability in the rapidly growing market.
Core profit of $1.69 billion to $1.85 billion is now seen its others markets, which include the Paddy Power and Betfair brands in Britain and Sportsbet in Australia. That compares to the $1.63 billion to $1.83 billion forecast previously.
(Reporting by Padraic Halpin; Editing by David Gregorio)
