Doubts remain over whether Paddy Power owner Flutter Entertainment can continue selling its shares on the Irish Stock Exchange once it takes a secondary listing in New York late this year or in early 2024.
Flutter, owner of Paddy Power and Betfair, reported a big jump in earnings on Wednesday on the back of soaring sales in the US.
In a trading update, the company said adjusted group revenue for the six months to the end of June rose by 38 per cent to £4.8 billion (€5.6 billion) following an “exceptionally strong US performance and strong momentum in UK and Ireland and international markets”.
Flutter reported profit after tax of £128 million for the six-month period compared with a loss of £112 million for the corresponding period last year.
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“The first half of 2023 marks a pivotal moment for the group, with our US business now at a profitability inflection point, helping transform the earnings profile of the group and significantly enhance our financial flexibility,” chief executive Peter Jackson said.
Flutter intends taking a secondary listing on the New York Stock Exchange once it completes preparations in the final three months of this year or early in 2024.
However, Mr Jackson acknowledged that it has yet to find a solution to technical problems that would prevent it remaining on the Dublin market once it has begun selling its shares on Wall Street. These include difficulties in dealing and settlement between the New York and Euronext Dublin markets that the gambling giant identified earlier this year.
Mr Jackson confirmed that Flutter was still attempting to find a solution to the problem, but indicated that the position had not changed much since the group first outlined the problem following its annual general meeting in April.
At that point, its chief executive said the business could not guarantee that it could keep its Dublin listing, but emphasised that this was the preferred option.
The loss of Flutter would come as a further blow to the Dublin market, from which long-time heavyweight, building materials group, CRH, is due to depart this year.
Speaking on Wednesday, Mr Jackson pointed out that a secondary New York listing would give the Irish group access to a huge pool of US investors. He noted many of them preferred to see companies listed on their domestic stock exchanges and reporting their results according to US accounting principles.
“It helps us to grow our profile in the US and to have local equity for doing deals,” he said.
Mr Jackson stressed that Flutter would “remain headquartered and domiciled” in the Republic after listing in New York.
“It’s not just valuable to us culturally, it is also a fantastic source of talent as well,” he added.
Flutter has spent heavily developing the US market through its main US subsidiary, FanDuel. Commercial online sports gambling has been opening up on a state-by-state basis in the US having previously been banned. The company said it acquired an additional two million users in the US in the first six months of this year.
Revenue at the company’s UK and Irish business was up by 13 per cent on the back of product enhancements and recreational customer growth.
“Group performance in the period was very strong, with delivery of our strategic objectives resulting in pro forma Ebitda growth of 37 per cent,” Mr Jackson said in a statement.
In the UK, he said his firm took market share while its Italian Sisal unit continued its “strong trajectory”.
Meanwhile, Mr Jackson noted that the Republic’s Gambling Regulation Bill needed work. He said that Flutter strongly supported the legislation, but that it appeared to have some unintended consequences.
The Irish Bookmaker’s Association recently wrote to Helen McEntee, Minister for Justice, and James Browne, Minister of State at the department, warning that provisions on advertising could hit live sports coverage where bookmakers’ brands were visible. The association also pointed out that other elements of the law were poorly drafted.
