Online poker has been the savor of Flutter Entertaining in 2020 as COVID-19 restrictions hurt its sports betting interests.
The company, under which The Stars Group and Paddy Power Betfair now operate in unison, released an interim trading report on August 27.
The standout figure was the 70% year-on-year drop in “profit before tax” caused, in part, by a lack of sporting events. However, drop in profit actually belies what’s an otherwise positive set of financials.
COVID-19 Hurts Flutter Entertainment
As per the report, H1 pre-tax profit fell from £81 million to £24 million. But the report also shows that revenue is up 49% to £1.5 billion thanks to poker and casino gaming.
Flutter Entertainment chief executive, Peter Jackson, noted the impact of COVID-19 on profits. However, he was also quick to downplay its significance when compared to the company’s overall earnings.
“The group’s first half financial performance exceeded expectations as we benefitted from geographic and product diversification,” Jackson reported.
Looking at the specifics, sports retting revenue for the group was up 16% year-on-year to £924 million. However, sportsbook stakes* were down across Flutter’s European network.
- Sky Bet Sportsbook Stakes = Down 30% from £2.3 billion (H1 2019) to £1.6 billion (H1 2020).
- Paddy Power Betfair Sportsbook Stakes = Down 38% from £3.5 billion (H1 2019) to £2.2 billion (H1 2020).
- PokerStars Sportsbook Stakes = Down 21% from £389 million (H1 2019) to £308 million (H1 2020).
*Sportsbook stakes = the total amount wagered by customers.
It was better news for its online sportsbooks in the US and Australia. The former enjoyed a 26% upswing, while the latter saw a 12% increase in sports betting activity.
Online Poker Outperforms Sports Betting
The company’s sports betting interests may have endured a turbulent 2020 so far, but gaming has thrived. When casino earnings are combined with poker, Flutter Entertainment saw gaming revenue increase 165% to £598 million.
This year-on-year jump has been attributed to customers migrating from sports betting to gaming in the wake of COVID-19. However, the upswing is also a product of the merger between Flutter and The Stars Groups.
Neither Paddy Power Betfair (aka Flutter Entertainment) or PokerStars could have foreseen COVID-19. However, given the impact it’s had on the industry in 2020, the deal will go down as a pivotal moment in hindsight.
Prior to the merger, Paddy Power Betfair was a bit part player in the poker industry. PokerStars, in contrast, is the market leader. By joining forces, the former has benefitted from the latter’s position and found a way to survive the COVID-19 pandemic, a fact Jackson himself acknowledges.
“In contrast to our sports betting operations, our poker and casino businesses experienced a major uplift in player numbers during this period as people sought new ways to entertain themselves while staying at home. PokerStars’ average daily gaming customers increased 70% year-on-year in Q2,” Jackson noted in the financial report.
For Jackson and Flutter Entertainment, online poker has offered stability in at otherwise unstable time. That can be seen as a positive for the world’s largest betting company and, in turn, the industry as a whole.