Paddy Power and FanDuel-owner Flutter Entertainment has cut its forecast for full-year US profit growth, after a winning streak for gamblers dented earnings at the world's largest online betting company for the second quarter in a row.
Bookmakers tend to suffer when favourites win, and Flutter expects US core profit to be $180m lower this year at $1.13 billion due to an unprecedented run of bettor-friendly results during the March Madness college basketball tournament.
That would still represent 123% year-on-year growth at the rapidly growing and market-leading FanDuel.
Flutter nudged up its group-wide profit forecast to $3.18 billion from $3.16 billion in March after a $100m positive foreign currency impact and a $120m acquisition contribution not included previously.
Flutter's first-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $616m, up 20% year-on-year, were below the $658m expected by an average of 13 analysts with LSEG SmartEstimate.
It was the second quarter in a row that a series of unlikely customer-friendly sports results impacted earnings following a similarly high rate of NFL favourites winning late last year.
However, Flutter said sporting outcomes and, as a result, its own gross revenue margins would align to expected outcomes over time. It used the example of previous swings in Premier League soccer results.
CEO Peter Jackson reiterated that he expects gamblers in the US to be resilient in the face of a recent sharp fall in consumer confidence, pointing to the lack of discernible impact in its older Paddy Power, Betfair and Sportsbet brands in Britain and Australia to previous downturns and inflation shocks.
"We're not (seeing any impact)," Jackson told Reuters in an interview.
"Of course we're mindful of the macro challenges but we remain confident in our business and convictions based on the experience that we've seen in the industry in the past and the defensive characteristics of it," he added.
