By Padraic Halpin
DUBLIN (Reuters) -Flutter raised its full-year guidance after a much better-than-expected second quarter and said it would not hit customers with a surcharge in high-tax U.S. states, shortly after rival gambling firm DraftKings (NASDAQ:) scrap plans to do so.
U.S. shares of Flutter, where it recently moved its primary listing, were up 11% in extended trading after the world’s largest online gambling company said it expects to miss its previous forecast of a roughly 30% rise in full-year core profit to surpass.
The Dublin-based group, whose brands also include Paddy Power and Betfair in Britain and Sportsbet in Australia, said adjusted core profit rose 17% in the second quarter.
Flutter’s US FanDuel brand and DraftKings are by far the biggest players in the booming US market with a combined share of around 70% and investors were closely watching Flutter’s response to the lawsuit DraftKings announced on August 2.
At the time, DraftKings’ CEO compared the plans to similar levies in the hotel or taxi industry and hoped it would offset the costs of operating in states like New York, which has a 51% tax rate on gambling revenue.
“We always listen to our customers and after hearing their feedback, we have decided not to move forward with the gaming tax surcharge,” DraftKings said in a statement released after Flutter’s results.
While analysts had said DraftKings’ plans could boost cash flow, they warned it also risked losing market share if rivals did not follow suit. The levy would have applied to customer winnings in the four states that currently tax gambling revenues at 20% or more.
Flutter CEO Peter Jackson said the best response to higher taxes, based on his experience in the more established European market, was to limit local marketing or moderate customer offers, as the company plans to do in response recent tax increases in Illinois.
Flutter said Tuesday that it now expects full-year core profit of $680 million to $800 million at industry-leading FanDuel, up from $635 million to $785 million in March and last year’s $167 million, which marked its first full year of profitability in the sector. fast growing market.
The core profit of $1.69 billion to $1.85 billion is now seen in the other global markets, including Britain and Australia. That compares with the previous forecast of $1.63 billion to $1.83 billion.
