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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Anaya (00:01.685)
FDJ United has posted another lackluster update for its enlarged business, reporting an underlying loss of 16 million euros in the first half of 2026. Investor concerns are compounded by tough 50% tax adjustments in key European markets, mixed with a lottery sales slowdown in France. CEO Stefan Palaise maintains that FDJ has the financial strength, portfolio, and operational discipline to navigate those headwinds.
And return to sustainable growth. Yet nearly two years after completing the Kindred Takeover, Patience is running short for SD FDJ to show its scale and momentum. Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner, and today to discuss FDJ results is our editor at large, Ted Manmuir.
And S B C News editor Ted Orm Clay. Ted how are you doing?
ted (01:02.263)
Bonjour Charlie, ça va? Yes, it's time to dissect the FDJ results. In French, of course.
Anaya (01:13.335)
I yeah, yeah. In f in French only, yeah. Ted, how are you? I'm alright. I'm good, thank you, Charlie. You reminded me of when I was very proud of myself after I successfully ordered a sandwich in Nice last year, and then froze up when the fella behind the counter offered me a bottle of water, which was the the the most most command I've had of French since I was about fifteen. So yeah, I think I'll I'll be well up for this challenge.
Yeah, my my French deteriorated considerably since school. I my my my skill is probably that of a Delboy trotter than than a than a French person. But let's let's park that there because I think our skill set is more towards looking at F D J's results because it it's been a busy morning for the sector. Look, we've had lots of results coming through, but F D J's has been particularly noteworthy. Ted how about you
Kick us off by just taking us through the headline numbers. What stands out from both the top and bottom line?
ted (02:15.373)
Okay, so think kind of branding, as you said in the intro, these results was lackluster. I think it's kind of putting it gently. These are just very poor results in terms of the top line and bottom line performance. So let's give you the breakdown. Headline revenues are down circa 2 % to 4.3 billion and net income has reduced by 5 % to 1.7 billion.
It's okay. Let's separate these out because it's another quarter of a beta decline and that is now kind of dropping towards a kind of 400 million pound mark for FDJ. And you know, this is two years following its expansion. And I think that when you look under the body, it shows where the drags are clearly are for the group. Lotto and retail betting is starting to weaken its footprint in France and the results remain stagnant at
1.2 billion for the interim period. And another kind of concern here is that FDJ again is kind of not seeing any diversification. It's commercial kind of makeup and what online betting or online gambling should be attributing to it via kind of credit assets, which again displaying no growth and stagnant at 400 million.
The only unit that has shown any growth, and that's a marginal one at 1%, is the B2B lotteries that have grown by just 1 million to 81 million. So I think that if you look, stand back, there is so much to pick at, at these results and where to probe at. And it kind of leaves the question of where are FTJ and where are they heading to?
Anaya (04:06.38)
Yeah, lots of pressure on the company really because y y as you say there, Ted, you know, we're we're getting to the two year mark of of the acquisition of FDG of Kindred and we're sort of waiting to see how how that integration is is contributing to the bottom line. Where is that growth coming from? let's not forget that this was a two and a half billion euro acquisition as well. there was a sixteen million euro net loss. I think that's that's one of the headline figures here, Ted.
ted (04:28.343)
Mm-hmm.
Anaya (04:36.716)
What drove that result and what do you think that tells us about FDJ's earnings profile and market exposures?
ted (04:47.093)
I think that here we have to kind of, this really kind of reflects the context of where FTJ are and what they have to handle on their agenda. Look, on a pro-forward basis, the leadership can turn and say, yes, adjusted net profits still stand at 180 million euros, but what's pushing FTJ's reported loss is a 135 million pound impairment charge that was set against assets from the Kindred acquisition. And that is completely...
combined with what it calls an exceptional adjustment to French corporate tax, to the French corporate tax contribution. And I think that when you of combine kind of impairment charges and actually its overall kind of exposure in France with what's going on in the Netherlands, Romania, in the UK, you see where kind of that, there's...
you know, a great depression on FDJ to generate online profits that it was expected to gain from its kindred assets. I think that from an investor level, the question is now how long is this look, what could it last and also how much are they willing to tolerate?
Anaya (05:56.761)
Yeah, I I I wonder and Ted O'C I'll bring you into this now. I I wonder how much this is i you know, a tax story. A are we talking about a an operator who is sort of exceptionally exposed to increased tax pressures across Europe? Or do you think that there are sort of deeper operational issues within the the kindred business? how how do you see this one, Ted O'C? The the tax element of this can't be ignored, absolutely. I mean, y you mentioned
You guys have both referenced the the takeover of Kindred obviously about two years ago. I mean Kindred was already a business that was struggling at that time, wasn't it, which is why it was looking for a buyer. But by acquiring Kindred, they acquired two very proven and reputable brands, Unibet and thirty two red, which you know both have a a good position in the different markets they're in. I do think though that the timing of those has been for many ways tremendously unlucky for FDJ.
ted (06:35.787)
Mm-hmm.
Anaya (06:55.466)
in that, because as you mentioned, Charlie, they've bought these two brands which have a lot of potential in them, both have very good reputations, I could say, very good products, but they've bought them at a time when the markets that these brands are in have have started to look at putting up taxes. Obviously last year we taught risk to death last year, but you know, the the November budget, the increase in in taxes in the UK on online on online gaming in particular, that'll be having a big effect on thirty two red in this country.
The Netherlands has been i is s sort of widely regarded as like the big boogeyman of ta of taxation in Europe. You know, any any gaming industry event you'll go to sure be a big talking point at Lisbon again this year about how we're dealing with the tax situation in the Netherlands. Obviously Unibet and so on are active there. That's going to be affecting them there. And then France last year put up taxes on on all sorts of different verticals.
the I can't remember the exact percentage now, but the online the the tax on online betting in particular is pretty hefty. It's also quite considerable on retail betting, which obviously FDJ is the I think you can comfortably say is the market leader in in France there. So yeah, these this this expansion of something that could have been a a huge opportunity for them and haven't and have a lot of growth potential has really just come up against that.
great big wall of taxation. D do you think though that that is bad luck, Ted Or would you say that perhaps deal makers at FDJ could have had the foresight to see that tax pressures were coming down the track and they perhaps should have seen that and and planned for that?
ted (08:41.069)
In a sense, yes, is really, you know, the conditions have changed completely from 2024 to 2026.
I think in the context of FDJ, it had to make its play to diversify its business and grow its online footprint and then expand beyond France, which Kindred has provided to them. I think that the reality is that the maths has changed all around.
And it's not just in terms of the acquisition itself, but on a market by market basis and that real kind of tight squeeze on margins. And also the fact that there were two, yes, as Ted said, there were two very different companies combining. And I think we kind of seen that in terms of the impairment charges to have hit this business. Again, this goes back to there is so much to probe two years down the line in what is
FTJ United.
Anaya (09:45.986)
You you mentioned the the importance of of diversifying the product portfolio and and turning that more online. And you can see that within these results as well, because the the lottery and retail sports betting unit, revenue down two percent, GGR down two percent and and revenue down nearly four percent. I g I guess, you know, how how is management looking to turn around sales on on the lottery side and the retail side?
What one thing I did notice in in the in the report that they published this morning was heat waves in France. You know, it's it's something quite innocuous and and but but it's important. You know, pe people don't or might not want to go outside and buy lottery tickets as as much because it's forty degrees. how can you how do you navigate for that?
ted (10:23.328)
Yeah.
ted (10:31.969)
Well, okay. As somebody who recently beat the France, that's definitely a fact, the heat waves, which are now turning into wildfires, right? And that's definitely going have an impact that carries on to Q3. So much of kind of FTJ's weakness is structural, of a kind of management, and of how it's kind of been formed by, with...
kindred, right? So straight away, one thing we've seen over the past two years is that FTJ have got through their kind of underperformance and lackluster reporting, bickers of lottery and lottery still contributes 70 % of income.
What we've seen in the past two quarters is that management is quick to respond there. It knows that lottery is, it's still kind of the income engine. So it's gonna have like a new sales strategy coming in from Q3, that activating on a Euro million jackpots, new marketing promotions, appointed sales, really kind of hitting that lottery line. And again, Charlie, we come back to...
where does kind of Kindred fit in the growth profile of FDJ? And it's been two years now, what markets are showing growth. And it hasn't turned out to what was put on the prospectus of what FDJ wanted. It's still lagging very, very far behind.
Anaya (12:04.397)
TED OC, following the publication of the results and and sort of messages to investors, CEO Stefan Palez has emphasised that the scale of the business and long term fundamentals will help to to turn round its fortunes eventually. Do you think that message is is enough to reassure investors or or do you think that markets need to see fundamental changes and and stronger execution?
That's a tough question. I think the the trouble the trouble FDJ may have with investor confidence is obviously that this isn't the first tough quarter they've had lately. and we've not exactly seen many quarters where we you even quarters where they have had some some growth, it's not exactly been off the charts. so I wouldn't be surprised if there's a i if if management do need to do a bit more to ease investor concerns there.
I think what Ted said, the plan that they've got around the lottery is probably the smartest move, because that is always going to be the most consistent one. And especially at a time when, you know, we mentioned earlier we're seeing taxes getting put up on betting and online gaming in a lot of the the in the European markets that they're active in. We're also seeing a lot of discussions around more regulatory restrictions in these markets. the the the planned clampdown on advertising in the Netherlands.
you know, further c an on never ending conversation about regulation in the UK with the, you know, the financial risk assessments and yeah, again seemingly the never ending debate around advertising here as well. So we've got all that going on. Lottery and focusing on that would would make a lot more sense. I guess the part of the issue there though is that lottery is by its very nature quite a static product that can work out for companies in that, you know, contracts are
very stable and long running, you get one for that that can last for d for decades. But it's also one that doesn't really afford as much product innovation as other sectors, I think, certainly in comparison to betting and gaming. So there is kind of an el an element there of what more can you do to maximise lottery sales. You just you've just got to encourage people to buy those tickets, like Ted sort of through marketing maybe and just y yeah, focusing on point of sale and so on. But the the yeah they'll need to they'll need to get
Anaya (14:24.247)
pr the proof they need will be in the next set of results basically. I I know it's quite a simple answer to it, but yeah, there's d I don't really know what more they can do to ease investor concerns there. Sure. Well Ted, Ted we'll take a short break and we'll come back and we'll continue our discussion.
ted (14:29.773)
Mm-hmm.
Anaya (14:43.509)
Welcome back to iGaming Daily. Ted you've been reflecting on this morning's results throughout the day. just reflecting on that, what what do you think the FDJ's top priority should be if it's to return to a sustainable earnings growth trajectory? where do you think that attention to pe should be focused?
ted (14:45.037)
.
ted (15:04.461)
Upon reflection, I just think that everything kind of points to where is kind of current working. And if we kind of take down that into perspective alongside kind of these higher taxes, one of the things that was stated in the report is that their leadership will begin kind of a review of markets. They're now in this phase of implementing a new online leadership team.
So let's see how kind of that plays out. I've always wondered with FDJ and Kindred, what is the kind of cultural fit like for such a kind of big lottery group to take over? was it?
a very kind of effective online business, but one that was in very kind of thin margin of stagnant kind of economies, right? And where could they actually view kind of the pickup coming up for the overall group? And that hasn't been proved. Returning back to the CEO's statement.
I just don't think that investors are going to tolerate another year of, have that scale, we have that operational efficiency. It's got to be witnessed in the numbers.
Anaya (16:20.778)
Yeah, and I think that's a a a point that's amplified or underlined by the the emergence of Banijay as a true competitor to FDJ. And that places more pressure on on that online strategy because Banijay through b bet click has you know, it's it's on it's on a stronger growth trajectory. What Ted O. C. what what do you think that comparison tells us about the progress of FDJ's online strategy and does that sort of expose it a little bit?
It's yeah, I mean it's certainly g the French the French online scene's definitely going to become a lot more competitive. I think I mean it is becoming a lot more competitive. BetClick would be a pretty formidable brand. with their their acquisition of Tip well not Betclick's acquisition, sorry, Banager's acquisition of Typico and the merger between BetClick and Typico is gonna create w has created a very, very formidable brand in continental Europe.
you know, typico is the clear market leader in Germany, which is also a very difficult market to stand out in. So them that, you know, them them standing out as really the the dominant force there. and and that combination of Better Click has, yeah, created a pretty strong group there. And that is one that is gonna be able to challenge FTJ's position in France. You've obviously also had Bet three six five launch in France lately.
and they've they've already been gaining gaining ground, probably benefited quite a lot from the World Cup. We'll have timed that quite well. and you know, they've got a very proven product, a proven ab as we talked about on a previous podcast, I think. a proven ability to launch into various international markets and adapt to the local conditions well, choose their partners correctly.
So yeah, you know, F F D J running into some challenges on a couple of different fronts here. Th obviously the taxation side of things, the regulatory side of things, and new comp new competitors coming coming to the forefront and existing ones further consolidating their position. yeah, it's it's it's a tough place to be in. Ted how do you see this as well? Because Ted's right, this isn't just a competition i within France itself, but also you know, a
ted (18:12.853)
Mm-hmm.
Anaya (18:33.612)
across continental Europe that there seems to be a a battle opening for you know podium positions across the continent. How how do you see FDJ's position within that compared to say Baniger?
ted (18:45.353)
It's interesting because I actually got a view that FDJ via its acquisition of Kindred kind of kicked off kind of a new cycle of &A in Europe and now kind of reflective of like two years in the past two years. My kind of anxiety with FDJ would be that I think it's kind of losing, you know, might be kind of losing its status, but it might be kind of losing like its
It's prominence. what I mean by this is that I think that kind of in that PLC pack, especially in an industry like gambling, it's like you have to have attention. You have to make noise. And I just don't see FDJ doing any of that. And I think that in comparison to kind of other PLCs, even guys, look, every PLC is feeling the way of taxation is, you know, squeeze margins, right? But they seem to be appearing to actually confront, to be
confronting the challenge. FDJ just seems to be kind of in stagnant waters and I think that that could be, that could come to hurt them just in terms of the PLC status. You have to move or you're not going anywhere.
Anaya (20:00.672)
Yeah, I th I think you're right and it it does leave them in a pretty tricky spot. but let's let's bring things towards a bit of a close and and just assess what I guess what the the future holds for FDJ really, because w they are in this difficult spot where they're trying to integrate Kindred and and get that online unit growing. It's it's trying to get the the French lottery side of things growing as well. But
How much patience do we think that investors still have i in this business and in its ability to execute that? do they n really need to start delivering now? Ted what do you think?
ted (20:38.889)
I think we'll be given another kind of six months of grace. And I think another day, but that won't go back into 2027.
I think a lot of investors will have their eyes on this new online leadership team, what they do with the Kindred assets, what market reviews are carried out. And again, against what we're now seeing, which I think is turning out to be kind of a 50 million hit per interim on accounts, I think that they have to of maximise efficiencies here and really kind of start to say, you know, this is what our box, you know, this is how we're kind of maximising the box.
bottom line and profits and earnings and profits. Yeah, mean, FTJ, they're definitely a company that you have to kind of follow in terms of just by sheer scale alone and the kind of concessions that it has out in France. But it's a testing time for them. And I think they've got a lot, a lot of tough choices coming ahead.
Anaya (21:43.828)
TLC, how do you see this playing out over the the short to medium term? I think Ted's hit the nail on the head really. I mean, you know, FDJ are not the only company to have posted some difficult financials lately. The industry's having a tough time. Everyone's having a tough time for the same reasons, you know, across a lot of different companies. Taxation, increasing regulations, cust customer consumers and customers who are struggling with you know, their own finances.
due to the macroeconomic state of things. so I think that that has probably given some of these companies a bit of you know, in in in one way, a bit a bit of relief with investors because investors are aware that the conditions are tough and are probably a bit more willing to give them more time than they might of than they might be during other, you know, economic circumstances. But but at the end of the day that's not going to last forever. yeah, the trick will be FDJ a acquired these
these brands, the kindred owned brands, which like we said earlier, are have have are solid brands have a good product, are active in some quite valuable markets, but are facing some pretty big challenges in those markets. So like Ted says, they're gonna have to make some tough decisions about the future of those brands, whilst also making sure that the lottery section of its business remains a you know, a a good a a consistent bulwark against some of the challenges that the betting and gaming side of things are facing.
ted (23:01.901)
you
Anaya (23:11.113)
Yeah, we're certainly in a transitionary period and I think the decisions that companies make in the next six to twelve months are going to be critical to see who takes the lead and and is, you know, in in podium positions in in the decade to come. So plenty of challenges, plenty of questions for FDJ, and we'll continue to monitor that on SBC News and iGaming Daily. But for now, Ted. Ted, thanks very much for coming on and joining me today. Thanks to Optimu for supporting the show.
And to our listeners, thanks for tuning in to today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news.