Flutter Entertainment plc

Good morning and welcome to the Flutter H1 results update call. My name is Jo and I'm your operator today. If you require any assistance during the call, just key star then zero and an operator will be happy to assist. Today's call is recorded. There will be a chance to ask questions shortly, but first I will hand over to Peter Jackson, Group CEO of Flutter. Please go ahead, Peter.

Thank you, Joe. Good morning, everyone, and thank you for joining us. With me today is Jonathan Hill, our CFO. Hopefully, you've had a chance to read our announcement and watch the presentation we released this morning. But for those that have not yet, I'll just cover off a few of the key points. Firstly, we're very happy with the progress we've made in continuing to scale our US business. Flutter US is now 50% bigger in revenue terms than our next nearest online competitor. with the gap between Fangio and each of its competitors widening during the first half. Our sports betting and gaming customer base is now three times as big as it was just 12 months ago, having added 1.7 million customers in the last year alone. We believe that our superior sports products and the strength and reach of the Fangio brand have been the key drivers of this growth. In Q2, we crossed the half billion dollar mark in quarterly U.S. revenues for the first time, with our U.S. division now the second largest in revenue terms within the Flutter Group. As a result of our strong customer acquisition and retention, we now expect to generate between $1.8 and $2 billion in U.S. revenue this year. While delighted with the performance of the business as a whole, our market share in sports betting particularly stands out. We finished Q2 with a 45% share of the US online sports betting market, leading in new and more mature states alike. And while we believe there are good opportunities for us to grow our gaming share as we better leverage more of Flutter's in-house capabilities, it is the shape and pipeline of new state regulation with its emphasis on sports betting that is particularly exciting. We now expect up to nine further US states to regulate mobile sports betting by the end of 2022. close to doubling the proportion of the US population that would be able to sports bet legally online. And of those nine states, just one is expected to regulate gaming initially. Given the strength of our sports betting offering and the key competitive advantages we enjoy in this space, we feel this position's fangirl very well to compound its leadership position. Secondly, our performance outside the US has exceeded our expectations during the first half. In both our UK and Ireland and Australia divisions, online earnings grew by more than 50% year-on-year in the first half. This is being driven by recreational customer growth. We grew our average monthly players, or AMPs, by 44% in the UK and Ireland and by 52% in Australia in H1. These growth rates reflect an ongoing shift for customers from retail to online. In the UK and Ireland, where we've only emerged fully from stay-at-home restrictions relatively recently, it is probably a little bit soon to say definitively how permanent that shift in player behaviour has been. But in Australia, which was largely unaffected by COVID for much of H1, and where our retail competition was open, we now believe that the events of the last 18 months have resulted in a permanent step change in the size of our business there, with customer retention that has exceeded even our most optimistic expectations. In international, the revenue decline following the spike in player activity in H1 last year was less pronounced than we expected, albeit the division did continue to benefit from a tailwind from ongoing stay-at-home restrictions in parts of Europe. We are transforming the shape and quality of our international division by investing more in regulated and high-growth markets with encouraging early signs. Our customer base in H1 was just 3% below the elevated levels of H1 last year. What this all means is that we have today issued 2021 EBITDA guidance for the group ex-US of 1.27 to 1.37 billion sterling, materially above current consensus. Finally, we've announced this morning that we now believe our US business will be profitable in 2023 based on the expected timetable for new state regulation. We believe this will have a transformational impact on the overall earnings, cash generation and balance sheet profiles of the group. To be clear, we are not setting a target date for profitability. The date our US business turns profitable remains an output for us. We remain entirely focused on growing the embedded value of the business by acquiring as many customers as we can, for as long as we can, generate attractive returns on investment. The 2023 projection instead reflects simple mathematics. We now believe we will reach a tipping point in 2023 where the sheer scale of our existing U.S. customer base and the positive contribution those customers generate will more than offset the cost of acquiring additional new customers and the more fixed operating cost base of the business. Slides 29 and 30 of our presentation cover this in more detail. Our projection assumes that none of California, Florida, or Texas launched online sports betting or gaming before 2024. Should one of those large states regulate sooner, our level of investment in new player acquisition would be higher and profitability could be delayed. But such a scenario would represent a nice problem to have, as it would mean our TAM will be bigger again. If the US does turn profitable in 2023, it is not difficult to see what that would mean for Flutter's overall earnings and cash flow profile and the leverage benefits that would bring. Overall, then, I'm delighted with how the business is performing and the longer-term prospects for the group. With that, I'd be happy to take any questions you have. As always, in the interest of giving everyone a chance to ask their question, can I ask you to limit yourselves to two questions each to start with? There's time at the end. I'd be more than happy to take follow-ups. With that, I'll hand over to Jo.

Thank you. Yes, if you would like to ask a question today, please key star then one on your telephone. If you then decide to withdraw that question, simply key star two. Just a reminder, everyone, for questions, you just need the key, start, then 1 on your telephone. Thank you. OK, we have our first question. That's coming from Michael Mitchell from Davie. Go ahead. Your line is now open.

Yes. Good morning, Peter. Good morning, Jonathan. Thanks for taking my questions. Two, if I could. Firstly, on the U.S., And one of the more notable features of your performance in market share terms for us has been, you know, what appears to be a strengthening in your position as each state becomes more established. And you even commented in terms of market share kind of across New Jersey, Pennsylvania and Indiana being 51% in the period. I wonder, could you comment on that dynamic and why you think the gap between Fangio and other competitors tends to widen and how sustainable those structural drivers are? And then secondly, on Australia, if I could, despite snap lockdowns in the country, that country did emerge from the more sustained COVID disruption seven or eight months ago, and yet AMPs in Q2 were up 61% year on year against a high watermark. I wonder, could you comment again, just in terms of how, you know, why you've been so successful in retaining what looks to be the majority of the retail customers you acquired through the COVID disruption? Thank you.

Thank you. Michael. Look, I think the question you ask about the US is an important one because it is true that we are seeing our position strengthening in sports. And I think it's down to the factors that we've talked about for a long time. We do have a fantastic product and we do benefit from having brilliant pricing and risk management capabilities not just in FANGL, but ones which we can leverage from across the globe as well. And if I reference a few pages in the presentation, if you look at page 33, for example, and you look at the benefits we're getting from Same Game Parlay as an example of what we're doing from a product perspective, I think that's a really good example. And it's one thing to be able to buy these products in externally, which often leaves them sat on the side of the product. But it's another thing to actually develop it in-house, as we've done, and have it an integral part of the customer experience. And I think that is important. And if you look at page 35, you can see that we've seen some very structural benefits from margin, which have actually only grown in recent times, as actually customers have taken advantage of some of the range of products we have. And I think one of the things that we're sharing today that, you know, we hadn't commented on before, you see on page 37 is, you know, actually the database we have for DFS has almost doubled, you know, since 2017. And that's, you know, as a result of the big investments we've been putting into the Fangio brand. So I feel like a lot of this stuff is sustainable. We are continuing to invest in product. We are bringing... more of our markets that we're managing from a pricing risk management perspective in-house. And we are continuing to pour more money into building and developing the Fangio brand with all the benefits of that drive. So I think we're in a strong position. With regards to your question about Australia, You know, it is true that the Australians have had a very different path through COVID to a lot of the rest of the world. And unfortunately, a lot of them are now back into lockdown there. But look, I do believe we have seen a permanent step change in the size of the business. And whilst last year there was not a lot of sport going on, but racing continued. And so that has undoubtedly led to a growth in AMP. I think what we're seeing is a lot of customers trialed and sampled our online product in the period and actually found that they really liked it. We've got some fantastic product innovations in the Australian markets. We just launched that with Mates, which has been a fantastic way of bringing in another wave of new customers. And of course, we're offering generosity and value to our customers in the market in ways that the retail monopoly provider can't do. I think that's what's leading to us having a permanent step change in the size of the business. And, of course, we're getting brilliant operating leverage off the back of that as well because we haven't had to grow our business at the same time. And, look, we'll talk more about that in September on the 22nd when we do our investor day. So it'll be a good opportunity for you to talk to Barney and the rest of the team.

Super. No, thanks.

Thank you. The next question is coming from Ed Young from Morgan Stanley. Please go ahead, your line's open.

Hi, thank you for taking my questions and thanks for the additional disclosure on the US. Very useful. My first question is on the US. You mentioned a couple of times, Peter, direct casino acquisition. And I note your well-made point around the next wave of states being sports. Most of what you spoke about in the presentation was it sounded like the pipeline of product improvements you expect to put into that area. But can you talk a little bit more around about brands? I appreciate you've got Stardust. Perhaps you could touch on that. But do you think you need another direct acquisition brand? How do you think about casino or gaming databases in the States? And then my second question is on international, sort of the mirror image of the rest of the group in terms of sort of gaming versus sports, I guess. I know some of your launches over the last year have been even on third-party platforms, I guess, for sort of pace, and you're going to move to in-house. Can you tell us a little bit about that transition, how you think sports and international growth in general might look, and what the timeline for it is? I know you said it won't be overnight, but just to give us an idea of when growth in that area might look a bit more like growth in some of your other markets on the sports side or strength in that side. That would be very useful. Thank you.

Thanks, Ed. Look, and I realize we put a lot of information out to you all earlier this morning, so apologies if I've ruined all of your breakfasts, but there was just no other way for us to do it, I'm afraid. Look, as it relates to the U.S., I think it is right that we've got a very strong position in sports. You know, Fangel has always been synonymous with that, and the DFS, database has given us a strong advantage, which has allowed us to build to the position that we've got to. I think it is also worth remembering that when we think about casino, we run the world's largest online casino business and have tremendous capabilities, knowledge and know-how in doing so. And so the plan that we have for the US is to make sure that we can bring a lot of that expertise into the US market. And we will continue to do so, whether it's the products that we've developed and grown in-house. And actually, when I look at the proportion of our revenues in the international casino business that comes from our own products, it's now sort of approaching 20%, which I think positions as well and shows that we're good at building our own products out. So, you know, that's one thing. But, you know, we're also getting much better at, you know, improving the cross-sell journeys that we see in the US. So, for example, we were able to offer some promotional mechanics to users of the same game parlay product that gave them, in states where it was relevant, access to some free spins on Casino. And having the largest, you know, user base of sports bettors gives us a tremendous, you know, ability to cross-sell into into casino in the US. You're right, we do have the iconic Stardust casino brand, which we're using in the US market. But I think there's a lot of plans and we've got a lot of opportunity to extend and improve what we do for the Fangio brand as well. But I think the most important point is actually the fact that we continue to lead in sports and that gives us a great platform to grow from. And of course, eight of the nine next states to launch are going to be sports only.

I mean, I'd probably add that you remember that where we have states where we're doing gaming as well as sports betting, we have market access partners like our friends in Boyd. We work very hard in terms of cross-sell from those offline databases to online as well. So we do access sports. you know, through our market access partners, you know, more online potential customers as well. So that's another area where we're working very hard.

And look, regarding your question about international, look, it is right that we have used some third-party platforms. So, you know, we've done that recently in Colombia just to give us the ability to get into market quickly. So it's not dissimilar to what we did in the U.S. market, remember, where we used third-party platforms and when the time was right, we've moved that business over onto our core platform. You'll also have seen that during the period we announced the acquisition of Singular, which is the technology stack that powers a JaraBet, our business that's so successful in China. Georgia and Armenia. That gives us an additional set of capabilities that will be useful for us in that part of the world and indeed possibly elsewhere. We are developing out our capabilities in-house. As it relates to putting the global betting platform into the international business, we hope that we'll be able to trial some markets towards the end of this year. But as you say, it's going to take a while before we get that fully rolled out. The thing I'd focus on in international is the success we're seeing actually in casino. The business is doing incredibly well there. It's now become our biggest vertical. And the investments we've been making to grow that business through things like affiliates and some of the campaigns we've put around have been very successful. We've got five times the number of customers coming direct into into that business than uh than we saw pre pre-covid so you know we're pleased with the progress we're making uh in international and casino as well thanks very much appreciate the detailed answers thank you thank you the next question is coming from karen jot gruel from bank of america please go ahead your line is open hi morning guys um i think just building on that question on brands um

We saw DraftKings acquiring Golden Nugget yesterday. You've got five brands already in the U.S. So maybe could you comment on the rationale and potential benefits of having the several brands in the U.S.? Is there going to be a time where you ramp up investment or focus into other brands other than FanDuel? And then the second question is around your U.S. 2023 positive EBITDA. That's really encouraging. I know in the past you mentioned a potential IPO for the U.S. Do you still see much virtue in spreading out the U.S. beyond just the potential valuation crystallization? And if the U.S. were to separate, would you expect the U.S. EBITDA to come down, say, losing some of the benefits of having Flutter's group-level scale benefits? Thank you.

Okay. So look, we've obviously shared quite a lot of information with the market today in terms of how successful we've been using the Fangio brand for customer acquisition. And if you look at the chart on page 27 of the presentation, you can see as we've grown through the number of states, the number of customers we've acquired, and we've now got over 2.2 million sports and gaming customers as a CPO, $291. So whilst we continue to see the results that we're seeing, we are going to invest very heavily behind the Fangio brand, and that's very successful for us. You are right that we have a number of other brands available to us in the market, and we will continue to push on those as well. And I think TVG is a good example where we've seen real benefits as we've helped grow that business, but we've also launched racing under the Fangio brand as well. And we have, as we were just discussing with Ed, the Stardust brand. So I think we like operating, if we can, in markets with multiple brands. I think it gives us a good opportunity to target different groups of customers who've got different needs. And we'll continue to do that and invest as much money as we can when we see as compelling a set of acquisition costs, lifetime value dynamics, as we shared with you, in the presentation. As to the second part of your question, I think it would be worth making a very important point of clarification. Whilst we have been contemplating an IPO of a small stake of Fanjul, if we were to do that, we would consider it to continue to be a sort of control subsidiary of the group. And therefore, nothing would change in terms of the way in which that business would operate in terms of it continuing to provide support to the rest of the group through things like its pricing and risk management capabilities and enhancements it builds to things like the global betting platform. And nor would anything change in terms of that part of the business being able to benefit from the broader Flutter family. And I think one of the undoubted things that's helped driven the success of the Fangio business over the years since we've owned it is the fact that we've had so many cheerleaders on the side supporting it. There's 5,000 engineers across the rest of the divisions in Flutter who are helping support the Fangio business, and that's a very important part of it. So if we were to go down a path of an IPO, it would only ever be for a small stake, and it would be important that it would continue to be a controlled subsidiary, and that would allow us to maintain this symbiotic relationship that we see between that division and the rest of the group.

Okay, perfect. That's incredibly helpful to know the economics will be the same. Great. Thanks a lot.

Thank you. The next question is coming from Simon Davis from Deutsche Bank. Please go ahead.

Yeah, morning. Two from me too, please. Firstly, you talk about 160 basis point decline in net revenue margin across the group. Can you talk a bit about how that breaks down, i.e. how much of that is down to bonusing increases? How much down to pricing? And can you give us a bit of a feel in terms of your pricing strategy in the US now? Are you still increasing bonusing or suppressing pricing to support growth rates there? And my second question is on the international division. Obviously, a big impact from online poker. Can you break out? what percentage of revenues now come from online poker? And has that business finally stabilized year on year? And roughly how is it running as a percentage relative to pre-pandemic levels? Thanks.

So maybe Simon, I can deal with the first question. So we talked about the 160 basis points reduction. Actually, about half of that was due to reduced luck across the group. produced positive sports results. So while still positive about 120 basis points in the half year period in 2020, it was actually 200 basis points of positive sports results. And secondly, we have invested more in generosity, which is the other element. And that's, you know, helped us drive the fantastic performance we've seen in terms of our AMP growth across the across the group. So, you know, we continue to work on optimizing the right level of generosity versus how that plays into driving the top line. So those are, to me, the critical points.

And look, as it relates to our pricing strategy in the U.S., you know, when you look at the page in the presentation on margin, which is on 35, you know, Don't think that the fact that this line is heading upwards is anything to do with us moving our core underlying pricing. We're not moving our VIG or over-rounds, depending on whether you want to take an American way of looking at it or a European way of looking at it. We've maintained our very, very tight pricing. It's actually through product mix that we've actually seen those margins increase. those margins change. I think, you know, the, the other thing to, you know, the other part of the question was around the international, the international division.

Can I just add, can I just add one other point because the, because of our tight pricing in the U S and because the U S is becoming such a, a so much bigger component of the group, actually our expected margin was done marginally in the first half over the first half year before only because of the, you know, the very aggressive pricing we've got in the States. So there's sort of three components, a little bit more aggressive, a little bit more, a small reduction in expected margin due to the U.S. becoming a greater component, a bigger step down in luck, which is the bigger element, and then a smaller increase in the promotional spend, just to give you three moving parts in terms of the overall group. Okay, next question.

And, look, Simon, in terms of the second-party question around what's going on from a poker perspective, you know, look, I mean, if you look at the, you know, gaming amps in the first half and compare them with the prior year, which, you know, was a very tough comparative period. You know, they're down 9%. You know, so we still maintain 91% of our customer levels, you know, in 2021. You know, we had our second-largest tournament ever in poker with Sunday Millions. in the period. I think we're doing great things around the live streaming category in poker where poker stars branded and sponsored content had around two-thirds share of all poker views on Twitch. That part of the business is doing well. I'm pleased that we're making some changes to the way in which we look at reward and generosity for that part of the business. So we're trialing a new reward scheme. But I think we said today that we've seen that business perform better than we expected. I think we saw a large influx of new customers last year and we had expected volumes to be off more than they have been. And I think that the team have done a great job in retaining those customers into things like casinos, and some of the crossover into sports, albeit we know there's a lot more to do, particularly in sports.

Can you split out what the poker component is within international and whether that has stabilised?

Can we disclose that, Jonathan? Well, Simon, we'll come back to you. I don't have the figures to hand. Yeah, OK. Thank you very much.

I mean, I think the easiest way to look at it, Simon, is that in terms of the gaming revenues in H1, you know, it's roughly equal between the two, but actually casino overtook poker in the second quarter. Yeah. Okay.

Thank you. The next question is coming from Joe Thomas from HSBC. Please go ahead.

Good morning. A couple of questions, please. One is the UK responsible gambling initiatives. I think you said that's going to be ramped up in the second half of this year. I'm just wondering if there's any sort of further quantification that you can give as to the drag that that's having and perhaps the tailwind as we go into next year as these sort of comps normalise and indeed whether that's going to be rolled out further across the business beyond UK and Ireland and then the second question I'm intrigued by some of the news coming out of India recently in Tamil Nadu in particular and I'm just wondering if there's any sort of high level thoughts that you could give us about the scale of the market opportunity there and further changes Hi Joe

So look, we're not putting a number on the changes that we're making around RG. It's captured within our guidance. I think it is worth just reflecting that when you look at the brands that we have operating in the UK, particularly with Skybet and also with Paddy Powers, we have the very, very recreational brands. uh, focus brands in the UK. And I think, you know, we are, um, you know, continuously looking for, uh, for additional things we can do. But, you know, I think, you know, when I, when I look at how the market could evolve and what the gambling commission may decide to do, I think we're, we're very well placed. Um, you know, your question about whether we'll be rolling these things out, uh, further, I think if you look at what we're doing, you know, what we've done recently in Ireland, you know, we've, you know, actually decided to introduce a number of, changes which I think are right to put in that market, which we haven't been asked to do. So, for example, the moves we've taken around credit cards. In Australia, we're undertaking a number of activities there specific to that market. I think it is important that we look at this on a market-by-market dynamic, whether that's the focus we've got around deposit limits or the work we're doing around affordability. There are different ways we need to manage this. And of course, where we get learnings from one part of the world, we'll take those elsewhere. Your question about India and Tamil Nadu is a good one. So for people on the call who aren't aware, Tamil Nadu have recently published a change in their view around legislating skill games, which particularly positively benefits you know, our business there. You know, it is a large part, you know, well, it used to be a large part of the market in India before it was temporarily closed down. So, you know, we're excited that it comes up again. And we think we have a well-placed brand to capitalize on it.

Is that just the rummy? I mean, is there any sort of quantification you could give us on or views on where that might end up and impact on different states, et cetera?

Yeah, I think what we'd prefer to do is, you know, it's a relatively small business at this point. We are very excited about the prospects for it. And, you know, at a time when we think it should be on the radar, we'll certainly bring it forward. But, you know, I think it does start to set an interesting... legislative framework in one state and we hope that that might therefore push out across other states which potentially have a less positive view on skill games.

We have a podium position with Junglee in the market and we're taking share. We'll tell you that, Joe.

We'll come back with more detail later. We'll leave it at that, I think. Thank you.

Thank you. The next question is from Gavin Keller from Goodbody Capital Markets. Please go ahead.

Morning, Peter. Morning, Jonathan. Just my first question on the US. Obviously, great detail today in the release and the presentation. We can all guess the multiple competitive advantages you have and the scale advantage. Just on CPAs, you mentioned the $291 CPA you've seen. Can you give any sort of comment on how the CPAs have trended in the business and then how they're trending let's say across states obviously gaming states probably different to sports but how CPAs are panning out across different states and then as you look forward to this NFL season do you expect a big increase in competition are you building up building in a big increase in competition around marketing etc?

Yeah Gavin you're yeah We give you one bit of detail and you want to know the next bit. I think the most important thing is to look at the stat that we published that we get a 1.2 times payback on those $291 CPAs. And the fact that in the second year, and albeit we haven't had that many customers in the second year, but the data we have for the second year shows that actually the contribution we get from the second year is greater than it was in the first year. So I think when you extrapolate that and start thinking about what that means to lifetime value of those customers and how they compare with the CPAs, you can see why we're very pleased with the embedded value we're creating in the business and why we've been acquiring as many customers as we can, frankly. And we'll continue to do so.

Realistically, Gavin, we don't obsess about CPAs. What we obsess about is CPAs versus LTVs. And that is completely our focus. And if we have to spend $400 in one state and $150 in another state, because that's the right CAC to LTV equation, then that's what we do. We analyze it on that level. So we are, you know, almost the CPA is an outcome of how we invest against the LTV.

That's perfect. Very clear. And so just one small follow-up question on the U.S. The Golden Nugget and DraftKings deal yesterday, does that have any implications for your New Jersey license agreement?

You're referring to the fact that we use the Golden Nugget for market access. Look, DraftKings have acquired the online businesses from Golden Nugget, so we don't believe it has any bearing on our licensing. Perfect.

Thank you, Jonathan.

It's an expensive way for them to see our market share data. Cheers, Gavin.

Thanks, Mel.

Thank you. The next question is coming from Joe Sturff from Susquehanna. Please go ahead. Your line's open.

Thank you. Good morning. I wanted to ask a couple questions, if I could, on the U.S. With now the migration of your in-house sports platform completed, I wanted to ask, you know, how to think about maybe the growth in products that you might be able to offer, you know, especially this sort of football season, at least football season in the U.S. this second half. And then the second question was, you know, you provided a lot of data in the slide deck as well as the press release. And you indicated just this is a question on kind of sourcing new OSB customers in the U.S., You had indicated about 40% of your OSB customers came from your Daily Fantasy database, and you indicated about a third came from, I guess, overall marketing efforts. I was wondering if the difference in terms of the rest of customer acquisitions came from your TVG database.

Okay. So, Joe, look, I... To take your second question first, look, we have acquired, as we said, 40% of our customers from our DFS database and a big chunk from Morrissey. The balance isn't coming from TVG. I mean, there is some degree of cost there, but I think the thing that actually we're finding that's really beneficial is there's a lot of businesses coming to us through sort of refer a friend type of mechanisms. And the Spread the Love campaign has been very successful for us in terms of that type of viral acquisition, which is helping us. When we think about the benefits we get on our business from having the platforms all in-house, there's a multitude of them. We had some outages in the last football season because, frankly, the volumes we were pushing through the third-party platforms, they just couldn't cope with it. So we are hoping that now that we have everything under our own control, we'll have much better stability going into this season. We can obviously bring a lot more of our pricing in-house, and it's something that I referenced in the commentary I gave earlier, over the presentation in terms of the proportion of our products that we can price and put in-house. And there are benefits to that in terms of our ability to then manage the models and ensure that we increase the proportion of things like cash out. So there's lots of things that we have on the product roadmap, and there are some things we wouldn't want to share with our competitors, frankly. But, you know, having it in our own gift gives us a lot more control.

And also, I mean, the amount of tech effort that it's taken to actually get all of this stuff done and get across to GBP, we can then repurpose that and get it focused on, you know, really making sure that we can develop all of those bells and whistles for our customers.

I can appreciate that. Thank you. If I can squeeze one additional, maybe the win rate. you know, it's very high in the second quarter in the U.S. in a seasonally weak period. You know, is it fair to assume that, you know, what's the right way to think about that, I guess, you know, kind of going forward in the second half, especially maybe the third quarter?

Yeah, sure. About half of, so, you know, we increased our structural margins very positively in the in the second quarter over the second quarter in the year before. A big uplift in structural margins, really driven by that same-game parlay product. So that was about half of the uplift. Then the other half was sports results, which obviously get magnified by the same-game parlay effect. So it's just a kind of a double positive there. But the more we can keep the penetration going, increasing in same game parlays, the more we can improve the structural margins. And this is what we've seen in other markets. And in Australia, we still see the penetration going up in same game parlays in the UK and I and into sort of bet builder products, which are almost more sort of do it yourself, build your own bet. So we think there's a long way to go on this So, you know, we've certainly, we're only at first base, I think, in your terms, in terms of where we're getting to, in terms of the development of the product and the penetration into the customer base. Thank you.

Thanks, Charlie. Thank you. I will just remind everybody, if you do wish to ask a question, please key star then one on your telephone. So star then one for any questions, please. The next question is coming from Richard Stuber from Numis. Please go ahead.

Hi, good morning. Just two questions for me, please. The first question in Australia, the average player is up 52%. I think you've implied that a lot of it comes from retail customers. Do you think you've also taken any market share from the other online bookmakers over in Australia? And the second question on the US. I guess, as you mentioned on the call, there's been lots of M&A activity in the US in the last few weeks. Do you think there's any sort of product or technology deficiencies within your Fanjul offering which could benefit from bolt-on M&A? Or is there sort of outstanding litigation with Fox or Balance Sheets? Is that a current impediment to M&A?

Right, Richard. In terms of the question, look, we've definitely taken market share in Australia. So that's the simple answer to the question. The slightly more difficult one is precisely where all those customers have come from. Now, We can see a lot of those customers are exhibiting behavior and profiles where we believe that they have come from using the retail monopoly service in Australia. And we definitely have benefited from those customers trialing our products in a way that they may not have done in the past and finding that they enjoy it and like the value and generosity we provide them as well as the enhanced product experience. there's almost certainly been some gains in online, but it's very hard to gauge it when you compare this year with last year because of the fact that the sporting calendar is so different. When we look at our business and compare it with a couple of years ago, to see that the level of profitability is nearly three times, and actually, even if you just look at the growth we've seen in in customer numbers, you know, year and year, 50%. I think that the team in Australia have done a great job and we'll hear much more from them on the 22nd of September. When you look at the US business, you know, I suspect that our continued, you know, growth and strength in our position we have in the market is what's driving people to undertake M&A activity in a way to try and give themselves some capabilities to catch us, you know, We will work very, very hard. We have done ever since we first decided to go hard after America in January 2018 to make sure that we have all the capabilities that we need to set ourselves up to win in the market. At this moment, we think we have everything that we need and you can see the success that we're seeing in the business. I think there's a There's a lot of exciting opportunities in front of us. There's nine new states which are opening up. We've got everything sat on our tech platform. Eight of those nine states are sports-focused. And the size and scale of the Fangio organization now is just at a completely different level to any of the other competitors in the market. So we're getting our flywheel going as fast as we can. And look, we're investing a lot of money in developing companies products, services and capabilities around it. And if we identified something that we thought we needed to acquire as a bolt-on, we would do that. There's nothing that would get in our way at the moment.

Good, that's great. And could I just ask a follow-up? Obviously, FanDuel is going phenomenally well. Are there any metrics you could share in terms of FoxBet, how that's going and what sort of revenue that achieved in the first half or EBITDA losses?

What we shared was that Fangio made up 93% of the revenues in the first half, and we don't split out the EBITDA performance by the businesses. Thanks very much.

Thank you.

Thank you. The next question is coming from James Rowland-Clark from Barclays. Go ahead. Your line is open.

Good morning, everyone. Just two questions, please. They're both on the U.S., The first, are you close to finding a new CEO for Fangio? And then secondly, I wonder if you could just provide a little bit of colour on what you're seeing in terms of the competitive environment going into the NFL season, given there's a number of medium-sized players who want to have a good crack at the market. And should we be surprised at all if we see your highly, very strong market-leading sports betting market share drop off a tiny bit? during the autumn. Thank you.

Well, James, if you're wanting to put your name forward for the CEO job, you wouldn't want to do it in this public forum, but there have been a lot of people who have come and talked to me about it. It's a very exciting job, I think. In fact, I don't think there's many better jobs in sports or entertainment in the United States. So we've met an awful lot of people and we are close to putting in place our long-term CEO in the business. I will say Amy's done a very good job for us since she picked up the reins from Massen. As you can see, the business hasn't missed a beat. In terms of the competitive environment, I remember talking about the competitive intensity that we expected to see when we did our first capital markets day at the Meadowlands. And we're saying that we expected it would be harder with the next season. And that's the way that we continuously think about. We are not at all complacent. We are completely paranoid. We're regularly waking up in the middle of the night, panicking about how people are going to attack us. And state by state, we're taking them on and working out how we continue to win. And that's the way that we're thinking about it. And look, we've never set ourselves a market share target. If we had done, we would never have set ourselves the levels that we find we're achieving. What we will continue to do, as Jonathan mentioned earlier, is we'll look at it on a state-by-state basis and look at the amounts of money we can spend based on the returns that we're seeing from the customers. I think the one thing that we would wish that we were done was we would wish that we'd realized that the customers were going to be as valuable as they've turned out to be because, you know, we've seen better levels of retention from them. We've seen higher levels of cross-selling from them. And we've seen, you know, high usage of the product and actually better margins because of the mix. So actually the customers have ended up being more valuable than we anticipated. And it probably means we should have spent even more money initially acquiring even more customers. But, you know, we'll try to rectify, you know, our models and improve them and make sure we, you know, we acquire as much business as we can. And, you know, The point at which we get to profitability or the market share stuff are all outputs for us. It's the math that drives us to that point where we'll see profitability in 2023 because it'll be the ratio between the number of existing customers we have and the embedded value that they have in the business, the contribution they're generating, and the ratio of them to the volume of new customers we get to. And once you get past the tipping point, then of course the business becomes profitable. That's not our focus. Market share is not our focus. It's building a bigger business with the return characteristics that we can see today as we can. And of course, we're in the nice position that we've got operating leverage in the business. So we can add in those nine new states that we'll launch in in the next 18 months without having to add huge amounts of operating costs. And clearly, there'll be extra marketing investment. We have the risk. We've got the pricing risk management teams. We've got big marketing capabilities. We've got big commercial functions.

Just to reiterate the point, market share is a function of two things. It's a function of how successful you are in acquiring customers, and that's obviously driven by how much you spend and how well you spend it. But the revenue is driven by the quality of your product, the retention and the stickiness of that product, and therefore the wallet share that you gain from the customers who are in the market and are accessing your product. That's why we talked so much today about the product because it is critical in winning in the market. You can acquire as many customers as you want, but you need the product to be able to make sure the customers have a great experience and stick around. That's true.

That's great. Thank you very much.

Thank you. The next question is from Christine Su from RBC. Please go ahead. Your line's open.

Hi, yes, good morning. Thank you. So my first question is just on the percentage of regulated markets. And we showed in the presentation that you've seen that increase from 82% to 90%. Do you expect that to increase more in future, or are you sort of happy with where that is at the moment? And just a second question on the US, specifically on your sort of media and partnerships and partnerships with sports teams and sports leagues, etc., I think on page 38 you mentioned that you believe you have the highest share of voice on some of the regional networks. I just wondered if you could give a bit more colour, just in light of the fact that we're seeing lots of competitors, lots of deals with various teams, leagues, etc. Do you think you've got more partnerships versus others, or is there something else that's given you the highest share of voice? And how important do you actually think these are for you, given that you've got the Fangio base, etc.? So yeah, any more colour on that would be very helpful. Thank you.

Christine, in terms of your first question, we said naturally it would increase from 82 to 90 just because at that time we knew the U.S. would make up a greater component. Obviously, you can see on one of the first charts in the presentation that the U.S. is already in a move to be effectively our second biggest division by revenue in Q2. And as the U.S. grows significantly, that will mean that mathematically you know, that will increase regulated. The other point to note is that, you know, of our unregulated markets, you know, there are three of our top markets, you know, Canada, the Netherlands and Brazil, which are in the process of going towards regulation. So naturally, you know, our percentage is going to move up towards, you know, 95% in the, you know, the short to medium term. You know, there will always be a series of markets whereby, you know, they are moving towards regulation and haven't regulated. So do I ever think it's going to be zero? That's a very long way off. But I'm very comfortable with having a pipeline of markets which sit within unregulated that are moving towards regulated.

Yeah, and look, Christine, in terms of your question about, you know, what we're doing with all the different media assets that we have, you know, the deals with leagues, teams and stuff, you know, We spent more than $300 million in the first half, which is greater than the revenues of most of our competitors. So it's the scale, it's the breadth, it's the depth of the assets that we have that we'll continue to invest behind. And where we find one that works, we'll spend more on it. So there's a lot of flexibility built into this. There's not one of those that I'd necessarily call out. aside from the quality of our team in the U.S., who are executing so well for us. So, you know, I think they've spent the money very effectively and efficiently, and you can see that from the CPA figures and the numbers of customers we've acquired. And it will continue to innovate and push forward, you know, going into this next football season where, you know, everything starts again, really.

Cool. Thank you.

Okay, Joe, I think we're done on questions now. So thank you very much, everybody. And I appreciate your time this morning and particularly the time listening to Jonathan and I take you through the presentation. I think there is some very important information that we have shared in the market or shared with the market today. So if you haven't had a chance, I'd encourage you to spend some time listening to it and going through the materials. Thank you all very much for your support. Thanks.

Thank you. Thank you, everyone. That does conclude your call for today. You may now disconnect. Thanks again for joining and enjoy the rest of the day.