Sportsbet growth lags behind Flutter’s global surge

Australia’s biggest bookmaker, Sportsbet, has revealed a 7 per cent drop in revenue across 2023, as its market share fell off the back of higher regulatory costs and a decrease in racing investment.

Sportsbet’s full-year results were confirmed by parent company Flutter on Tuesday, with revenue dropping back 7.1 per cent year-on-year to $US1.45 billion, while market share also retreated from 48 per cent to 45 per cent.

The market leader saw its number of active monthly players actually increase by 2 per cent to 1.1 million, but a reduction in gambling spend per user to what was described as “pre-COVID levels” across the board led to a slump in its revenue, while its EBITDA also took a hit, down by 27 per cent to $US348 million.

“We have also seen a softness in the racing market across the second half of 2023, which we expect to persist through 2024,” Flutter chief executive Peter Jackson said.

“We expect the challenging market, along with increased regulatory and compliance costs, to reduce Australian profitability further in 2024.”

Jackson said higher taxation and product fees were dragging on the Australian business, making it a difficult path to increase profitability.

“Since 2019, point of consumption taxes and product fees have increased as a proportion of revenue by 10 percentage points, which equate to approximately $150 million in costs for the business.”  

“We expect the challenging market, along with increased regulatory and compliance costs, to reduce Australian profitability further in 2024.” – Flutter CEO Peter Jackson

He did point to the fact the softness in the Australian market had come after a period of substantial growth during the pandemic years.  

“We believe Sportsbet’s scale from its 45 per cent market share, which is broadly in line year on year, and its leadership in brand and product leaves us well positioned,” he said.

Jackson elaborated further when questioned about the challenges the Australian brand faced.

“What is important when I look at the (Sportsbet) business is that it has a very lean cost base, it has that 45 per cent market share and the best brand in Australia and a terrific team,” he said.

“They are also developing great products and ideas which we are utilising in the rest of the world. We are enhancing and developing the parlay product on the back of what our team in Australia are doing. Not only are they helping us deliver a great experience for Sportsbet customers, they are helping us globally.”

Sportsbet made up 12.3 per cent of Flutter’s global revenue in 2023 and 9 per cent of its active monthly players. The annual report revealed with around 1250 staff, Sportsbet makes up 5.4 per cent of the global workforce of more than 23,000.

As a means of comparison, in 2019, when Sportsbet made up 27 per cent of the Australian market, its revenue comprised 21 per cent of Flutter’s total group revenue.

Racing leads year-on-year wagering revenue decline for Sportsbet

The parent company of Australian market leader Sportsbet has reported a significant drop in overall revenue in 2023, with turnover on racing cited as a major contributing factor.

The StraightBren O’Brien

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The major change for Flutter has been the explosion in the US market, where it owns the Fanduel brand.

In 2023, the US business grew revenue by 41 per cent to $3.2 billion, more than twice the size of Australia, while average monthly players grew 38 per cent to more than 4.5 million.   

The Flutter annual report announcement comes after another global powerhouse Entain recently announced a $368 million impairment in its Australian business as it too conceded market share, dropping back to 17 per cent.

Entain cedes Australian market share as global wagering challenges mount

Entain expects its New Zealand deal will drive growth for the business despite its Australian brands Ladbrokes and Neds losing market share in 2023.

The StraightBren O’Brien