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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:01.558)
A nightmare set of Q3 results details the scars and conflicts that new CEO Dan Taylor must confront. The NYSE gambling group that has no clear pathway to profitability as Q3 standalone losses mount to a mammoth one point two billion dollars. On paper, leadership maintains that Flutter holds unmatched scale in its global business structure as corporate revenues rich yet sorry, rich?
Ted Orme-Claye (00:31.06)
yeah, they've got an unfinished sentence here
Fernando Noodt (00:32.536)
Looks it needs we're missing something.
Ted Menmuir (00:33.505)
After, right, right, eight billion.
Fernando Noodt (00:39.918)
What was it?
Ted Orme-Claye (00:41.556)
group wide revenue was 3.8 billion dollars
Fernando Noodt (00:49.251)
B.
Yeah, sorry about that guys, I missed that. No, it's okay.
Ted Menmuir (00:52.94)
So not sorry that was me
Ted Orme-Claye (00:54.696)
The urge to save billion dollars in Dr. Evil's voice from Justin Powers' film is always so overwhelming whenever I read these, yeah. So juvenile.
Fernando Noodt (00:58.606)
A nightmare set of Q3 results details the scars and conflicts that new CEO Dan Taylor must confront. The NYSE gambling group has no clear pathway to profitability as Q3 standalone losses mount to a mammoth what $1.2 billion.
On paper, leadership maintains that Flutter holds a much scale in its global business structure as corporate revenues reach $3.8 billion. Yet a bid and profitability continue to be interrupted, the fallout of Brazil betting ban, hard adjustments to UK market squeeze, and compounding US costs to reset Funduil competitive edge against new threats. Tough decisions to weigh, Dan Taylor, as there's nothing and it is no hiding, sorry.
Tough decisions to weigh Dan Taylor as there is no hiding from flooder predicaments across all markets. Welcome to another episode of iGaming Daily brought to you by Optimove, the creator of positionless marketing and number one player engagement solution for iGaming and Sports Betting operators. I'm Fernando Nott, Media Manager for SVC, and your host for today, where we are having a new special Ted and Ted Talking Time back.
On I Gaming Daily, Ted Mamier, editor at large at SBC, how are you today?
Ted Menmuir (02:29.475)
Very well Fernando, busy day, busy November and we're seeing how results are playing out across the board here.
Fernando Noodt (02:38.935)
Yeah, absolutely. And to help us with that, is Ted Ormclay, editor for S V C News. Ted, how are you today?
Ted Orme-Claye (02:45.927)
Yeah I'm good thank you Fernando as Ted said it's been a pretty busy day it always is whenever any update for Flutter comes in but as we'll get into and as you've already mentioned it's a pretty significant one obviously just a cute you know another Q3 not an interim or anything but the some of the figures within it are pretty staggering aren't they?
Ted Menmuir (03:02.745)
Mm-hmm.
Ted Menmuir (03:07.82)
Indeed, indeed.
Fernando Noodt (03:08.043)
Yeah, yeah. Absolutely, absolutely. And and I mean of course Flutter being the the giant in in the gaming industry that it is, it creates a a question which is where to begin, where do we even start looking at these results? So to begin with, these are poor poor results by by any measure. So what grabs your attention particularly on Fr on Flutter's trading update?
Ted Orme-Claye (03:34.878)
For me personally, I think it's really hard to ignore just how big the net loss is. $1.1 billion, that's a significant loss just for one quarter. Obviously, it's not like this has been, that's a bad figure. It's not like this has been completely dire. Like revenue is still remaining stable, it's up. They're attaining a good position in the US, but that loss is quite staggering.
And I think one of the things I found very interesting with it was how closely it to have tied that loss to the developments in Brazil, given that the ban on online betting announced by President Lula was towards the end of the quarter, very towards the end of the quarter, it was the end of September. The impact of that is very interesting, I think. I mean, it probably just goes to show how much companies like Flutter
a lot of gambling's big PLCs, how much time and resources and investment they've been pouring into Brazil and then the suddenness of that ban has just pulled the rug from under them. I think that figure and that connection to Brazil has really hammered that home.
Ted Menmuir (04:50.209)
I'll just add it's bad all round and look the the one billion US net loss on Q3 accounts grabs their headlines. But I mean there is so much to poke. It's everywhere. Look if you go to the US and there's that talk of the fan deal refresh but that comes with cost of sales peaking at 900 million. Now it's yes you can talk about headline growth but what is really kind of impacting the bottom line of the business is just
those poor kind of qualified earnings and lack of profits that are now hitting kind of the debt leverage ratio. And this has to be looked at, which is now kind of expanded to 4.5x and corporate debt now stands at the 10 billion pound mark. We can also talk about the UK squeeze impacting the abetum results of the international units too. There are so many conditions and elements that have
factor into a dantated strategy for recovery. And he has so many holes to fix in what is kind of a leaking ship.
Fernando Noodt (05:57.134)
Where do where do we where where do we start? We I have I have one cork. Where do we put it? First area of results like you said for for Dan Taylor as CEO. which area do you think Ted Ted is a Taylor is seeking to to fix more promptly?
Ted Orme-Claye (06:03.149)
Hahaha
Ted Menmuir (06:12.409)
Look, I think all analysts are keeping a close eye on Dan Taylor's statements and movements. And if he's sticking to the script, Fandial is the underlying priority. However, I put that against the US market that is changing its competitive makeup and the dynamics that are playing out, especially with prediction markets. As mentioned, cost of sales on Q3 stood at 900 million and the unit generated just 1.4 billion in revenues.
It was a period of unfavourable results, which saw a beater dwindle to just $3 million. But that just tells you that that is a lot of effort for minimal returns. Across the wider groups, what Dan said on paper was that he was there to simplify operations, remove duplicate costs, and improve gas generations to bring down debt.
And we have seen kind of the first actions taken on here with the UK cost control programme. And we're also at a technical level, we're also seeing that with the migration of main poker brands such as Paddy Power, Sky Bear onto Pokerstar's network, they are starting to execute.
Fernando Noodt (07:26.925)
And actually on these results we are seeing a one point two billion dollar loss and that's of course a huge figure. So let's break it down a little bit. What what does that figure account for?
Ted Orme-Claye (07:41.62)
As I said earlier, lot of it has been accounted for Brazil. There was 873 million non-cash impairment charge related to Brazil. Like we mentioned earlier.
the company, like many others, has been investing very heavily in that market, has understandably seen a huge amount of growth prospects there. We saw how quickly the Brazilian market grew. We knew how much hype there was around it due to the size of the country and its economy, the huge passion for sports, particularly football there. We all knew all the different signs of in Brazil this was going to be a big market and then that has just been...
Ted Menmuir (08:12.491)
Thank
Ted Orme-Claye (08:25.625)
extinguished with one political decision, know, as obviously as the government became more more concerned about the social impact. I think from what it appears on there, the Brazil decision is a big source of the loss. Obviously there are other ones involved in that. Something that they haven't mentioned is associated with the loss will become a
We'll link into that as quarters roll on is obviously the UK tax situation that needs to be addressed. The UK and Ireland fine, it's not as big as the US is. Ted already mentioned about how flutter is obviously the big growth driving.
Ted Menmuir (08:54.424)
Yeah.
Ted Orme-Claye (09:06.235)
No, Fangual, sorry, is the big growth driving brand and asset for Flutter, but you can't forget how significant the UK and Irish markets are for them. It's also their heritage market, where they originate from, and those taxes are going to be really dragging on their portfolio here, which is quite an extensive portfolio. Paddy Power, Skybet, Betfair, Tombola, and so on. So, yeah, with how that relates to the loss, that's something they're going to be keeping a close eye on.
Ted Menmuir (09:31.758)
It must be very, very hard to be a fluttered CFO. And you know, have to consider that last year, this is a company that had to put out an impairment of 600 million for the exit of India by Jhangu Lee. And it would be, and...
Ted Orme-Claye (09:37.007)
Ha
Ted Menmuir (09:47.994)
I think this is going be its third consecutive year of underlying kind of impairment charge, multi-million pound impairment charges, given I think it had legal issues out in the States with Foxbet in 2024, 2025, the India exit, and now Brazil. They just don't seem to be able to catch a break.
Fernando Noodt (10:13.855)
Yeah, absolutely. They were actually re reshuffling their their Brazilian operations. They were like focusing on on the on the local brand Bet Nacional, which they had acquired a fifty percent fifty six percent stake earlier. so they they they did have high expectations from Brazil and now it's all gone and who knows when and if will it will be back. we have discussed this on previous episodes of Five Gaming Daily, so make sure you you go check those out after this one. But we also know that Flutter ha carries a lot of investor anxiety.
Ted Menmuir (10:23.085)
Mm-hmm.
Fernando Noodt (10:43.829)
So where do you feel the greatest concerns will be for Flat Earth investors?
Ted Menmuir (10:50.314)
We reported extensively on the change in make-up of flood-investors.
And I'm sure that there are some that have a kind of a long-term lens to recovery. But however, the issue here is what is kind of the pathway to profitability and is it even visible? Yes, we returned to the US and we say kind of Fandial is detailed as a number one priority. But the US market is being kind of warped by prediction market incumbents. And I say this kind of taking into account that Calchi this week, this investor believed that it has a 40 billion valuation.
So how does that impact vandal status on the overall market? Also international remains exposed to still to regulatory outcomes and the delivery of major projects, that being the merger of science to sell, which is again going to become another billion dollar output there. And I just.
think that these anxieties, quarter and quarter and are kind of compounding with Flutter. It'd be interesting to see how kind of Dan Taylor, especially with his responses, of soothes these anxieties. Ted, I don't know what you make out of that.
Ted Orme-Claye (12:08.115)
I mean, I think you raised a very good point around the prediction market side of things. I think certainly for a lot of US investors, how Flutter continues to respond to that industry, that sector as it continues to grow will be quite an important point for them to keep an eye on. What they do with the FanDuel predicts brand. know, there was already kind of, I think we already got the sense last year
Ted Menmuir (12:33.219)
Mm-hmm.
Ted Orme-Claye (12:37.683)
Around this time last year a little later that there was some investor anxieties about whether flutter had been too late to get involved in the prediction market side of things Obviously the company's been running the bet fair exchange for many years that the similarities between prediction markets and betting exchanges there the whole focus on liquidity and so on so I think people felt our world floor has got a good background to get involved in this and they were beaten to it by fanatics and DraftKings now in 2026 you're in a situation where like Ted said Koushi
Ted Menmuir (12:45.495)
Yeah.
Ted Orme-Claye (13:07.747)
has achieved this valuation that I think is nearly three times that of Flutter's market cap or something, isn't it? I Flutter's market cap today was about $15 billion. think Cal-She is now valued at $40 billion. There's gonna be a lot of people looking at how is Flutter going to react to the continuing growth of prediction markets and how does it plan to get the Fanjul Predicts brand in there and grow it. But also, as Flutter is a gambling company at heart,
Ted Menmuir (13:13.428)
See ya.
Ted Menmuir (13:29.784)
Mm-hmm.
Ted Orme-Claye (13:36.889)
There's this whole debate isn't about whether predictions are a form of gambling or not. The CFTC backs them as financial assets. The various state regulators see them as a form of gambling. So then where does Flutter, how is Flutter going to walk that line? That's a really interesting point I think.
Ted Menmuir (13:49.901)
Yeah.
Yeah, I totally agree on that.
Fernando Noodt (13:56.11)
Yeah, well those those are the investors' anxieties, but the producers' anxieties are that we are way past the halftime mark. So we're gonna do a very quick ad break right now and we will be right back to continue discussing the Flutter's latest results. We'll be right back.
Ted Orme-Claye (14:04.06)
You
Ted Orme-Claye (14:13.267)
Excuse me.
Ted Menmuir (14:13.953)
12.
Fernando Noodt (14:15.661)
You wanna do some glad or something?
Ted Orme-Claye (14:18.867)
No, I'll be alright, thank you mate. I don't know where I've left it.
Fernando Noodt (14:21.175)
Cool. Okay.
And we are back to more talking about Flutter after they issue their the they released their Q three results, a bit of negative news for for the the giant company in the gaming industry. But let's try to look on the find the silver silver lining, no? what positive, if any, are Flutter trying to pitch to market right now with after these results.
Ted Menmuir (14:51.449)
To me that the pitch is still the same. Scale, that is unmatched. In a performance across brands, markets, Flutter still has kind of that enviable portfolio of market leaders. Take the UK where it kind of underlined the performance of Sky Bear and its cross-sale capabilities that really drove iGaming revenues despite that margin squeeze coming in from kind of RGD taxes.
And here I kind of point to the crucial kind of choices or the strategy that Dan Taylor wants to implement. And again, it's like his first movements and his first kind of direction towards simplifying operations, removing those duplicate costs and improving cash flow generation to bring down debt. Easy on paper, much harder on reality.
Fernando Noodt (15:44.791)
Mm h how much yeah, go ahead, Ted.
Ted Orme-Claye (15:45.332)
If I Sorry, yeah, I just sort of jump in if we regarding sort of positives are trying to pitch to market They have if this was quite interesting for a q3 report I think and it was probably this is probably quite indicative of the fact that you know flutter were well aware that this could this would be Not not great public image the huge loss and some of the difficulties have
Ted Menmuir (16:08.131)
Mm-hmm.
Ted Orme-Claye (16:08.829)
So they've gone into quite a lot detail from what we read earlier and then later on in the investment calls they had and so on about some plans they've got and some positives they see in the future. They've kind of mapped out a four pillar, maybe not a plan, but like the four things that they're planning that they hope to seize on and that is gonna underpin sort of a future strategy. They still feel that they're very well poised to...
take on more sportsbook opportunities in the US with Fanjul being quite a strong brand there. Again, revenue in the US was up across both sportsbook and iGaming, so we can't take that away from them. They are still the big player or maybe one of the two big players in the US alongside DraftKings. I found this interesting what they mentioned earlier because think Ted and I discussed this maybe after their H1 results earlier this year.
where we were projecting that Flutter would, despite retaining FanDuel in the US market as its lead, would start to look at how to unlock more value from their international portfolio. And that is literally something they've said they want to do today. They have a very strong portfolio of brands. It's just about how they leverage those brands against the regulatory headwinds they've got, against the pretty fierce competition they've been going up against in markets like the UK and...
Italy and Australia, how they're going to deal with the fallout from Brazil. They're also confident they can keep on gaining ground in predictions, even though as Ted and I have said, that brings in some challenges of itself. And then there's the wider thing that they still see opportunities out there to streamline their business model, whether that could include potentially further job losses like we saw in the UK and Ireland division not that long ago with over a thousand job losses announced.
or with things like what Ted mentioned earlier, with the migration of Pokestars and some cross-brand integrations there. They've got plans in place that they're trying to ease any investor anxieties with.
Fernando Noodt (18:19.691)
And how much faith do you have in in FanJule actually delivering its turnaround and i would it be enough for for for the global business for of of Flutter?
Ted Menmuir (18:29.465)
Again, when we comment on Flandio and it's viewed as that mule that's going to direct the recovery of Flutter group-wide. And I think you're asking a pertinent question because it's what the investors and analysts want to see, that's for sure.
investment in Fandil is needed to kind of ward off that competition. However, one of the things I kind of question here is that perhaps Fandil, and just looking at this, kind of needs to apply kind of cost controls. And I say this because I believe that US analysts will once more probe kind of the expenditure. As I said, you know,
Cost of sales moving on to 900 million but especially kind of the generosity that Fandial has in major markets as bonuses and parlays Fandial kind of always argues that it needs these to kind of drive those kind of big 100 million pounds or you know 100 million dollar market swings But is that still needed and maybe they need to kind of
Find your needs to kind of find kind of a more sustainable route or strategy for growth rather than just expenditure and generosity.
Fernando Noodt (19:49.442)
Very briefly, UK and Ireland are their results account for the biggest squeeze on international units profit margin. So what is being done by Flutter to ride out this storm?
Ted Orme-Claye (20:07.291)
take this one Ted, so you wrote the UK nice section.
Ted Menmuir (20:08.875)
Okay, alright, okay,
Okay, so we returned to the UK and Ireland and here Flutter is restructuring its operations, kind of cutting administrative costs and integrating Skybet more closely with the wider business to offset kind of higher gaming duty brought on by the RGT increase. Overall, on accounts, there is some underlying strengths. The region is still still grew headline revenues by 4 % and it saw a, I think, an increase in, you
iGaming revenues. However, seems that, know, Van de Vlotter is preparing for another headstorm coming in from April next year as we see an increase in sports stock to 25%. Again, growth, nothing in growth is easy for this company.
Fernando Noodt (21:07.263)
And I'm gonna bring back a question I didn't ask in the first half. as the company stands, can things get any worse? And do you have any faith in Flutter and its comeback under the company's current structure?
Ted Orme-Claye (21:24.179)
I guess things could always stand, hypothetically things could always stand to get worse What if, I don't know, we could just run through loads of doomsday scenarios here What if the US Supreme Court decided to ban online gambling again or something? They're gonna follow from Brazil, I don't know But obviously that's not gonna happen Yeah, yeah, I'm just gonna think of various apocalyptic scenarios for the international industry now
Ted Menmuir (21:40.057)
Mm-hmm.
Ted Orme-Claye (21:52.946)
I mean, you know, just even stuff like in the UK, we talked about the sort of tax increases that I know this isn't gonna, this isn't really going to affect Flutter as much as some brands have a bigger UK retail presence, but the MGD rate didn't go up by as much as people thought. You know, it's not all basically, I think that's just indicative of despite a lot of these doomsday conversations that might be had in this industry.
things don't always go the worst case scenario, you know. And in Flutter's case, they still retain, like we said, one of the strongest, if not the strongest sportsbook brand in the US in FanDuel. They have a very strong international portfolio that yes, may have taken a hit from the, a big hit from the ban in Brazil, but it's still a big leader in Italy, a big leader in Australia in the UK.
like said earlier, they've got all these really strong assets. It's just all about how they properly leverage those and respond to a lot of the regulatory market hurdles that we've got at the moment, which I realize is a bit of a vague answer. But, you know, it's just such a huge company.
Ted Menmuir (23:09.077)
Yeah, in terms of.
your first question, can it get any worse? Look, I hope not. And it's not nice reporting on this stuff. Look, this is a company that has implemented a $500 million cost savings program impacting jobs worldwide. And beyond markets, I hope, I really hope that the investor base has a long-term view on recovery and just not fixated on the share price and whether it goes up or down. On your question of faith, Fernando, I just don't think
it is about faith here. I think it's about leadership and execution in very, very, in Flutter contending with a very different era for online gambling. My long-term view is I just can't see Flutter surviving this decade with the same structure as it started with.
It's simply because investors will not want another year of compounding losses. The times are changing and so should Flutter. I'll just leave it at that.
Fernando Noodt (24:14.263)
Put down the rosary and take out the Abacus because it's gonna be a wild ride ahead for Flutter for sure. Of course they have taken a huge hit, but so has everybody else. So we'll have to hashtag wait and see what happens with Flutter in the future. But to do so make sure you are subscribed to all SBC Media newsletter, especially SVC News, and to follow iGaming Daily, not only on social media, but on your preferred podcasting platform, because we will continue to update.
on whatever come next comes next for Flutter and the major global gambling companies out there. So thank you very much Ted and Ted for this very insightful talk. Thank you very much Luke Miles for producing this episode. I'm Fernando Not and to our listeners out there, we'll see you in the next one. Goodbye.