A Merger With Stars Saved Flutter’s Neck From Covid-19 Aftermath

Article by : Helen Sep 4, 2020

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Updated: Apr 6, 2023

Casinos that were able to diversify their business on time survived several months of downtime much easier. Flutter Entertainment has become one of the most striking examples of how it was possible to overcome the coronavirus’s consequences. This became possible after the acquisition of the successful and promising service The Stars Group. This move helped to avoid serious financial difficulties that many casinos faced in the second half of 2020.

This successful deal took place in 2019 and allowed Flutter Entertainment to significantly expand its influence on the gambling market. Investors also responded well to the equally important FanDuel acquisition. As a result, the company’s shares on the London Stock Exchange soared by more than 50%.

The funds that the company used to purchase such large gaming services exerted a very tangible pressure on net profit volume received in 2019. According to official data, revenue for 6 months of 2020 showed 49%, reaching 1.69 billion euros. The acquisition of The Stars Group allowed the gaming brand to increase revenue by 21% in 6 months of 2020 to 2.4 billion euros.

The first quarter of 2020 also showed a very positive financial result. Total revenues are up 26% since mid-March. This period was marked by particularly good development dynamics for Sky Betting & Gaming and FanDuel, which managed to expand its share of the US market. The global coronavirus pandemic has negatively impacted the company’s business since mid-March. Most of the sports matches have been canceled. This caused an instant drop in the number of online bets for all operators. The good news was that some Australian and American races continued to operate as scheduled. Therefore, these areas became incredibly popular and helped the company to stay afloat.

The restriction on sports betting has been a real blow to the gaming brand. Meanwhile, online casino betting has shown steady growth. After several months of downtime due to Covid-19, the number of PokerStars clients increased by 70%. The company officially admitted that it had to reduce the number of marketing investments. In any case, most online customers were forced to stay at home due to the governments’ restrictions. After the return of the sports to the big screens, the situation has become more encouraging. Sky Bet informed that the number of clients and the volume of bets is gradually returning to the pre-crisis level. Therefore, the company managed to get out of the problematic situation in a brief period.

The brand has witnessed significant revenue growth in both directions. At the same time, sports betting showed an increase of 16% over the year and amounted to more than 1 billion euros. Growth in gambling revenue was over 668 million euros, up 165% over the same period last year.

The company’s US business has also benefited from the fact that customers replaced betting with gaming. This affected primarily such states as New Jersey and Pennsylvania. Revenue in these regions immediately increased from 25 to 126 million euros. In the future, the company may experience possible complications due to further Covid-19 outbreaks. Moreover, some markets may additionally introduce stricter measures.

Suppose the company can do business at the same pace in the year’s first half. In this case, EBITDA could range from 1.32 to 1.49 billion euros. This volume can be obtained, taking into account further marketing investments of at least 55 million euros. The same figure for the American market can show a total loss of 156 to 178 million euros.