Flutter Entertainment plc

Good morning and welcome to the Flutter Entertainment PLC 2023 interim results call. There'll be a chance to ask questions later on, but first I'd like to hand you over to Mr. Peter Jackson, CEO of Flutter. Please go ahead, sir.

Good morning, everyone, and thank you for joining Paul Timms and I for this call this morning. As noted in the presentation, which hopefully you've all had a chance to watch, Paul Tims is standing in for Paul Edgecliff Johnson, who's out of the office this week due to a family medical emergency. Before we go to questions, the first half marks a pivotal moment for Flutter. Our US business is now structurally profitable. We've found you're delivering an H1 adjusted EBITDA of $100 million, including a Q2 EBITDA of $153 million. This has occurred six months earlier than we were forecasted when providing this guidance back in August 2021. And as outlined then, our U.S. customer base is now a sufficient scale to more than offset the cost of future customer acquisition. This effect will continue to compound and drive significant profit growth, which in turn will transform the earnings profile and financial flexibility of the group. FanDuel attracted over 2 million new players in the half, which drove revenue growth of 63%. We maintained our position as the number one online sportsbook operator, with a 47% share of the market, and grew our iGaming share to 23%. And outside of the US, pro forma revenue grew 8%, and EBITDA was up 4%. In the UK and Ireland, we grew amps and revenue by 10% and 13% respectively, as our recreationally-focused brands took significant share due to product enhancements and new gaming content. In Australia, while we have successfully retained our COVID-enlarged customer base, our expectations of market growth in H2 have moderated somewhat due to reduced spend levels. International is also a growth inflection point, underpinned by the strong performance of our consolidated invest markets, which grew revenues by 19%, and represent 77% of the divisional revenue. The second half has started well, and we remain focused on delivering against our strategy and capitalizing on the significant opportunity ahead, both in the second half of the year and beyond. And with that, I'd like to hand it over to George for questions. And I'll ask if you can limit it to two questions per person, please.

Thank you very much, sir. Ladies and gentlemen, if you wish to ask a question, please press star 1 on the telephone keypad. Please also ensure your meet function is not activated in order to let your signal reach your equipment. Our first question is coming from Paul Ruddy of Davie. Please go ahead.

Hey, good morning, Peter and Paul. Just two quick questions, if I may. The first one is just on the U.S. So H1 EBITDA came in at around 50 million or 79 million ex-PokerStars shares. and Fox. Just thinking through, that looks a long way ahead of H1 consensus and just thinking through the midpoint of the guidance range which looks to be in line with consensus expectations. Could you kind of give us some colour on that kind of H2 outturn? What level of additional investment you might make? Is there anything we should think about in H2 which colours that number? And the second one is just on Australia. So you've obviously reset the guidance down in Australia. Just wonder, could you give some context on what the underlying market is declining at in Australia at the moment and what your expectations are for that for the rest of the year, or maybe some context on when you might think the Australian market returns to growth? Thanks, Mel. Thanks, Paul.

Look, in terms of the first question, I think it's important we go back and remember the context a couple of years ago when we first told people that we'd see the US business make money this year. And the reason we saw that was because we knew that this year would be the tipping point where we'd have more customers in the back book or sufficient customers in the back book to generate contribution to cover our fixed costs and the customers that we were going to be acquiring. Now, we've actually reached that milestone earlier, and we've reached that milestone earlier because the business is bigger than we anticipated it would be a couple of years ago. And look, I think the important thing for me is in terms of the shape of the business, which I think is where you're getting to with this H1, H2 space, I'm not really focused on that. What I'm focused on is the transition there and the pivotal moment this year as we become profitable. I'm thinking about the shape and the trajectory and momentum into next year. You think about The very material shift in earnings for us from making a loss last year to the profit we made this year, of course, will get compounded next year because we're going to have another huge set of customers that we've acquired this year that will make a positive contribution. So we knew this year would be profitable. We've already reached that milestone. So the business is now structurally profitable. We've proved the model works. And so we will continue to acquire and invest in acquiring as many customers as we possibly can do. whilst ever they meet our CAC to LTV hurdles. I think we were very pleased with acquisition in the first half, and we'll try and acquire as much business as we can do in the second half. I think with regards to Australia, I think the context there is we saw a very significant benefit going into COVID for the Sportsbet brand. We've got a customer base that's two and a half times the size of anyone else's, and we're a real COVID win in the market. There's been some reversion, though. As we saw in the UK, we're now seeing in Australia, and that is impacting the business. When we look to next year, we hope the business will get back to growth, but I think we have to acknowledge that going into the second half of this year, we're going to see some ways. Paul, you'll give us some thoughts.

Yeah, our view of the market is we can see the racing market down about 8% to 10% in Q2. Sports is ahead. We can see the market growing about 5%, and we're taking market share there. I think our view for sports bet for the rest of the year is revenue broadly flat and returning to growth next year.

Okay, that's really helpful. Thank you.

Thank you, Witcher. We'll now move to Ed Young, colleague from MS. Please go ahead.

Good morning. First one on US investment. I understand how you've laid out the ambition to invest more into growth. That's clear. But just in terms of that investment itself, I mean, sales marketing is coming in. very nicely with the gearing and the business. So could you perhaps give some colour on how that is being spent? You mentioned, obviously, you're staying to CAC to LTV ratios. Are you spending on higher CACs because your LTVs are higher? Is that why spending is higher? Are you finding more or better channels to allocate it? Just be interested about if you could talk a little bit about the how as well as what you're doing. And then the second one was on capital allocation. there isn't a customary one to two times that you've spoken about previously. And there's a lot of pink countries on slide 36. So are you sort of broadly expressing that you might run leverage at a higher level than you've previously talked about getting to? And perhaps on that, could you reflect on the operational capacity of the business to absorb, say, a big acquisition, as well as your balance sheet capability to do it?

Thank you. Thank you for the questions. Look, I mean, on the US, we're continuing to see good returns across the board. I think we've talked in the past about how delighted we were with the performance of this year's Super Bowl and actually the nature by which we acquired the customers leading up to the Gronkskis kick campaign meant that the quality customers were much better. But just in general, in the first half, we've been really pleased with the performance. Of course, channels and look our lifetime values have proved to be better than we had originally anticipated and we think the quality of our product, the levels of retention, the structural margin changes we're making particularly through pricing accuracy and things like that have all contributed to give us higher LTVs and we've got real confidence in that. So, you know, we're still sticking with our CACT LTV framework of 12 to 18 months. And as we mentioned, you know, in the Q1s, we're coming well within that in some of the newly launched states, for example. But, look, we're very pleased with it. With regard to your second question, you know, you're right. There are a lot of pink countries. And I think it's, you know, on that map. And it is an indication that there are a lot of opportunities for us to expand. I think we have to be thoughtful about what is the right level of leverage for us to carry as a business. And there are factors in that which we need to think about in terms of the earnings profile for this business now, and also whether a US listing would change investors' views on any of those things. I think from a capacity perspective, we've been very pleased with our ability to integrate the assets that we've acquired to date. And whilst it's something we have to be thoughtful of, I think our ability to make both on acquisitions and into the business, particularly across the international division where we've got a real platform capability now, is something that we're very comfortable with. Paul, I don't know whether you want to add any comments to this.

As soon as I answer your question, sir.

That's it. Thank you.

Thank you very much, sir. Our next question is coming from Clark Lampin, calling from BTIG. Please go ahead. Your line is open.

Hi. Thanks. Good morning, guys. Two questions, please. Peter, you've laid out some detail, I guess, in previous presentation decks and reports around performance and payback periods for newer FanDuel player cohorts. I didn't see that this morning. You may have just sort of confirmed what I'm about to ask with the prior question, but would it be possible to update us on performance and whether you've seen any meaningful change in what was otherwise a pretty healthy trend? The second question that I have is on U.S. product. You saw about a third of your NBA players engaging with shorter duration micros during the playoffs. Were those betting options driving incremental spend? Was that maybe more of a reallocation? And as we're approaching NFL season, is there any reason to think differently, I guess, about the opportunity with engagement or stand with football? Thank you.

Yeah. Morning, Carlton. Thank you for getting up so early. Let me just take the second question quickly, and then Paul will talk to us about the performance piece. Okay. Clearly there will have been some reallocation, right? So when customers are picking up some of that newer products we've made available, those products available in the NBA, we will have seen some substitution. I think the point we were making there was less around whether it was incremental, it was just our ability to continue to innovate and drop new products into the market. And the fact that we capture 50% more revenue than our competitors from the handle means that we've just got a bigger war chest to invest in, in product marketing and generosity more generally. And so, you know, we're excited to see what we can do with the product. We're not a, you know, we're a fast-moving target for people in terms of trying to sort of replicate what we have. And, you know, they're the team who've got some very exciting plans for the upcoming season and, in fact, the years ahead. Paul, do you want to talk about the performance?

Yes. The customer cohort analysis, which you're referring to, that's something we've used over the last six to 12 months to demonstrate our confidence in profitability, which we've now achieved. And you can see how we've laid that out on slide 11. And I think it's been pretty successful in demonstrating our confidence in profitability. It is very difficult then to take that forward and use that as a basis for modeling. And as you can see, if you listen to the presentation this morning, we've transitioned from using customer cohorts to now state cohorts. And I think that is a much better basis for modeling the business going forward, particularly if we think about the complexity of what does our business look like in 2024, 2025. In terms of any changes to underlying trends in that customer cohorts, I mean, there's a lot of moving parts in there, but no, we're still seeing the very strong returns that we've seen for the last 12 months.

Thanks, Paul. Thanks, sir. We'll now move to Mr. David Broad, calling from Gilbody. Please go ahead.

Morning, guys. Just two questions for me. Firstly, I wonder if you'd give an update on India, how the recent proposed tax changes factor into your long-term thinking in that market, And then just secondly around, I know the Fox Bet losses are going to ease off in the second half of the year. I'm wondering could you give a timeline on when the PokerStars losses will reduce, be it this year or next year? Thank you.

Morning, David. In terms of India, I think we've now got clarity around the new basis for calculation of GST, which is effectively going to be on on deposits and we think it will be, we anticipate it will be introduced on the 1st of October. We've been very pleased with the performance of our business since we acquired it. You know, Jungley is one of the fastest growing renminbi players since we acquired it. You know, GGR is up to four times since we made the acquisition. From our perspective, the tax base has changed does impact the business, but what it effectively does is means that there's a slug of essentially tax costs in the EBITDA, in the revenue line, which means that the EBITDA profile is probably going to look more similar to the U.S. business in the long run than would otherwise have been the case. So we're still very excited about it, and I think it probably means a bit like the U.S. you'll need to have... real scale to win in the Indian market. Paul, do you want to talk about the Foxbet, please?

Yeah, so we've talked previously about our 2022 losses for Foxbet and PokerStars, $91 million. We'd expect to retain probably just under half of those losses going forward on a current run rate for the PokerStars business. In terms of what happens to those losses going forward, I mean, we're setting up the business for the long term. We do expect the losses to reduce over time. It is a good brand for when the gaming TAM expands, clearly dependent on the poker regulatory framework in the U.S., but we think there's definitely a very strong brand there that resonates that we can utilize going forward.

Perfect. Thanks, guys.

Thank you much, Eric. And now move to Ryan Signal calling from Craig Holland Capital Group. Please go ahead. Your line is open.

Good. Thanks for taking our questions. I just want to start with, Fox, that quick question. I guess you have licenses in several states, New Jersey, Pennsylvania, Michigan, Colorado. Curious what your plans are to do with those, whether you're going to sell those or launch a different brand there. And then secondly, on FanDuel, The app consistently ranks at the top for virtually every category of testing you can imagine, which is kudos to you guys and the product. The one, Bet365, has a reputation internationally, now in the U.S. as well, for having the fastest in-game bet settlements. How important is that in your mind when you think about innovation and improvements going forward? Thanks.

Morning, Ryan. And look, kudos to you for getting up so early. I appreciate it. I'll take the questions. With regards to Foxbat, we have a separate entity in the U.S. which operates what is effectively now the Poker Stars business in America. So that has its own market access partners, and we don't intend to make any changes as a consequence of the deal that we've done with Fox to close down Foxbat. So the PokerStyles business will continue to exist in those entities in the US. With regards to Fangio, we've continued to invest and develop our product in a way that we think really resonates and works for the American audience. Ultimately, we have great products in all of our businesses, in all of our different markets around the world. We give them the freedom to operate and and develop whatever is required for a local audience. And that's what the Fangio team has done so successfully over the years. So if I look at the quality of the product, we are very proud of the fact that we rank so highly. Speed and ease of use are crucial. And we continue to develop and innovate the product. We've got plans for the short term and plans for the long term. Clearly, I'm going to disclose those today to competitors. But rest assured, we're investing very heavily in maintaining our product leadership in the market.

Thanks, Peter. Good luck, guys.

Thank you. Thank you, sir. Thank you, sir. Our next question is coming from Dan Pulitzer calling from Wells Fargo. Please go ahead, sir.

Hey, good morning, everyone, and thanks for taking my questions. First one, just one of your competitors in the U.S. last night announced a partnership with ESPN. I just wanted to get your sense of One, did you look at that type of deal? And two, how do you think about promotional expectations going into the third quarter? Does this change anything? And also, there's another big competitor, Fanatics, here. So just the extent you're thinking about this promotional season with the NFL. And then the second question was about 12%. I think there were some favorable sport outcomes in there. So what was that on a normalized basis excluding those outcomes? And how do you think about this trending over time, given it seems like you're bumping up against that 12% 2025 goal? Thanks.

Good morning, Dan. Another one who's up early, so I appreciate it. Look, the start of every football season, and football as you know it, is always one which is, we have a degree of trepidation for us, because we reactivate and re-energize our booker business. We've done this many times now, but still we always anticipate a highly competitive environment when we see the season be starting. This year will be no different. As you rightly point out, there are a few people who have stated that they intend to make a bit of a splash this year. We will stay focused on what we've always done, which is making sure we deliver a brilliant experience for our customers by having the best product and using NASA's fantastic, leading, engaging brand. You asked me whether we look at deals and transactions in the US market, and of course we do. And I think we do the ones we want to do, and we leave others to do the ones that we don't want to do. And that's probably all I'd say. about that particular one. Paul, do you want to talk about the margin?

If I just, yeah, if I cover the margin. So our actual gross win margin in the period was 12.2%, and as you saw in the presentation, expected gross win margin 11.3%. That does benefit from 170 basis points of structural margin improvement. That's, again, a combination of what we've seen over the last 12 months, so increased pricing accuracy, increased parlay penetration, We did talk about a target of 12%, expected gross wind margin target by 2025. And I guess the question is, how quickly are we getting there? We're making very good progress towards that 12%, clearly already at 11.3%. There are quite a few moving parts in there, though. So is it a question of do we go through the 12% potentially, but a lot to work through? It may just be a question of we're getting there quicker.

I mean, Paul, I'd add, I mean, I think that the scale of our business in the U.S. now and the investments we're making to risk and trade in the amount of data that we see and our ability to really focus on pricing accuracy is something which I think makes a particular difference, especially when people are thinking about some of that. So there's complex parlay bets, which I think that's one of the things that's really helping support that structural margin and help sort of accelerate our path. Thank you, Dan.

Thanks. Thank you, sir. We'll now move to Monique Pollard calling from Citi. Please go ahead.

Hi. Morning, everyone. I just have a couple of questions on the U.S. from the slide that you gave where you were showing sort of how we should think about modeling those cost items out to 2025. The first one was on the U.S. COGS. I just wanted to question, again, whether the 47.5% to 52.5% of revenue is a bit conservative, given obviously New York relative exposure shrinks as new states launch. Is there some tax creep being assumed in there, which I guess might be reasonable given what we've seen in Ohio? And is there any fall in generosity of the proportion of GGR that's embedded in that guidance? And then the second question on the U.S. expenses is on sales and marketing expense. Your 2024 to 2025 framework outlines that you're going to approach basically your 2030 target on EBITDA margin pretty quickly, you know, maybe by 2026. So just trying to understand what drives the material scaling of the marketing budget from here.

Morning, Monique. Look, let me give you some sort of overall context of shape about this stuff, and then Paul can come in on the specifics. I think when we look at the COGS, I think we have to acknowledge there's quite a lot of moving parts here around cost of data and rights, the tax changes, those types of things. And here, where we are today, this is our best view of what we think is going to happen. You're right to highlight the tax creep in Ohio, but we don't anticipate there being a wholesale shift in the tax burden, and I think you're right to highlight that New York does something to get diluted. I think when we think about generosity, the big driver for us is actually around a very focus and an increasing focus on personalized generosity. It's something we've done very successfully in the UK. We've done it very successfully in Australia as well. It makes a really big difference, and it's obviously a very large cost item for us. From a marketing perspective, we operate in a pretty saturated environment and actually it's quite hard to significantly scale that. So I think you do get some natural benefits. I think what we're really showing here is the benefits of our scale. I think that's right.

Just on the sales and marketing, you're right, Monique. We do at the scale that we have and quite simply the The new states are a smaller proportion of the overall revenue mix, which means that we do start to see that leverage come through pretty quickly on the sales and marketing line. We've said, I mean, the midpoint is six percentage points leverage benefit per year. That will be quicker in the first year than the second year, through to 2025. Got it.

Thank you.

Thank you, Ms. Pollard. Our next question today is coming from Alistair Johnson, calling from BNP Padiba, Exxon. Please go ahead, sir.

Morning, guys. I had a couple of questions on the same slide, actually. On the OPEX increases, it looks like you're expecting some quite material growth there. So just if you could provide some color on what's driving that. And then secondly, within the OPEX number, how should we think about management incentives, because I think on your guidance slide further in the deck, it looks like some of the cash costs are being adjusted out, but under the understanding that you historically have included management comp within your EBITDA numbers, I suggest if there's any change to the accounting there. Thank you.

I can very quickly deal with that second one. Unlike the way that some people account for these things, we fully account for all management incentives, all the share-based comps. included in those numbers. Paul, I don't know whether you want to talk about the OPEX, please.

So on that slide, we talk about one percentage point leverage benefit per year through our 2030 targets, which does get us to OPEX of 10% revenues, so pretty much straight line. In terms of OPEX movements in the half, 45% increase, we still think that demonstrates good leverage versus the revenue growth of 63%. We still are in an investment phase. We do, I mean, coming back to the share-based payments point again, we do include share-based payments within our OPEX. You know, and we've always been disciplined throughout the group on our OPEX spend, but the business is still growing quickly, and we think we're demonstrating good leverage.

Great. Thank you. Thank you much, sir. We'll now move to Richard Stuber, calling from Numis. Please go ahead.

Hi, good morning, both of you. Just one question for me. Your U.S. active... Richard, your line is open. Hello, can you hear me?

Yeah, we can. We can hear you, Richard, yeah.

Cool, thank you.

Richard, can you just check your line is open from our side? Yes, I think you can hear it. Sure, we can hear him. Richard, I want to remove you from the queue. We'll move to the next question.

I can hear you. I can hear Richard.

We'll now move to James Rowland-Clark of Barclays. Please go ahead. Hi there.

Can you hear me? Yes, we can hear you. Sorry. Sorry, Richard. Richard, we'll get you in next. I apologise. I've got a couple of questions, Steve. The first is just on the deferred tax asset that you've outlined in the modelling assumptions of £166 million. I wondered if you could give any colour on how long it would take for that to unwind. And also, could I just check that the recognised preferred tax asset is the full extent of the US losses built up so far? There isn't any sort of off-balance sheet you haven't yet recognised, for example. And then on the US, we're seeing your closest and largest competitor taking a little bit of share on online sports betting. And I think you've slowed down a little bit on improved products. And they're also talking about having the leading products going into the second half. I just wondered if you could give any colour on whether you're seeing your customers spend change at all, or whether you're aware of engagement metrics suggesting that they're playing on multiple or more products than they previously did. And I suppose a follow-up would be, given the intensity of competition on products, or so it seems going into the second half, how does that make you feel about leaning into customer growth from here, or new customer growth from here?

Thank you. James, let me take the second question first, and then Paul will talk to us about the third asset next. I think when I look at our performance in Q2 with a 47% market share, I'm very, very pleased with it. I mean, yes, it is down a bit on the same period last year, but I think for context, we should remember that a number of operators were sort of pulling back from the market last year, but still, 47% is a very, very strong performance. And I think that the... We should also recognize that people are making changes and improvements to their products. Of course they are. But we are a fast-moving target. We make 50% more revenue from every dollar of handle from our customers and our competitors do. And we're taking that money and we're investing it in further product enhancements, getting smarter around our application of generosity and in general just boosting the business. And that means that our product, which is the best in the market today, is a very fast-moving target for people to try and catch up with. We're not going to share on the call today the plans that we have, but we remain very paranoid around our posture to maintain our product leadership, but confident that we can do so at the same time.

On the deferred tax, so we'll recognize 166 million sterling credit for U.S. deferred tax this year. In terms of how does that unwind, we can't comment on how that unwinds because obviously that relates directly to our U.S. profitability going forward, but would say that we expect the group tax rates, so Group X U.S. and U.S. to be roughly in line with the current Group X U.S. tax rate going forward.

Thank you. Sorry, can I just follow up on the, is there any change in your spending within your existing customer mix to suggest that they're using more products than they previously did? No. Okay, thank you.

Thank you, sir. Well, I'll go back to Mr. Richard Stuber. Please go ahead, sir. Here we go.

Hi, morning, Peter and Paul. Just one question for me. I'm on the U.S. U.S. active has fallen from 3.5 million in the first quarter to 2.8 in the second quarter. I was wondering how do you keep your players engaged? Is it such as more product or other sports? And do you think you'll ever be able to maintain and grow active quarter on quarter like you do in the rest of the world? Or is it just the seasonality in the U.S. just too big from sporting events such as Super Bowl and March Madness?

Richard, you've answered your own question. That's the nature of it. In the years that we've been operating there, we've seen that seasonality. There's seasonality in other parts of the world. Our Italian business is pretty quiet in July and August. We see seasonality in Australia. as well, you know, particularly early on in the year. So, yeah, it's not an aberration to find ourselves in that situation in the U.S., and I think the team have got pretty accomplished at making sure that we can sort of, you know, re-engage the customers who've been active on the platform as soon as things come back to life.

Okay, great, thanks. So you don't see that you can sort of try and cross-sell extra product or anything like that to those sort of sports betting customers during Q2? You think that's just the nature of the U.S.?

Look, you know, tennis and sports like that, which are popular year-round, you know, are always there for people to bet on. But, you know, just the degree of seasonality, and, you know, we're comfortable with that.

Great.

Thank you very much. Thanks, Richard. And apologies for earlier.

Sorry about that, gentlemen, again. Our next question is coming from Kiran Jowd-Rewal, calling from Bank of America. Please go ahead.

Hey, hey. So my first one's on the US iGaming. I think on slide 29, we can see that your iGaming market share ramped up quite a bit from mid-22, but it's flatlined in recent months. Do you think there's more you can do to increase that share, or do you think you're comfortable with where you've got to? Thanks.

Do you have any other questions going to drop?

The only other question I have is around the secondary list. I'm not sure how much you can actually say, but any implications to existing lists, and would you look to drop one of the listings to just maintain two?

Okay. So, look, on the iGaming chair, we're ambitious, okay? And we knew last year when we talked about iGaming that our product wasn't good enough. And, you know, look, we... We saw this as a sort of multi-year operation, and we started to address some of the things that were not in place, frankly, last year. Having a dedicated team, brand, content, capabilities, etc. We did that, and we've been really pleased with the way in which the business has grown and taken share. We've got a bunch of improvements we've made this year, which we cover in the presentation, which we think or provide further support for the business. And we've got exciting plans into next year as well. So, you know, we think we'll get to product leadership in iGaming. And obviously that will enable us to continue to take significant, you know, share, both in the, you know, casino direct market as well as the cross-selling market. You know, look, we are, you know, the world's biggest regulated online casino operator. We know how to do this stuff. We just haven't always brought those capabilities into the U.S. market, but we've done that now, and that's why I think that share is stepping up. With regards to your question around the U.S. listing, I think as you mentioned in your question, we're working through the implications for our other listings on securing this U.S. listing. There's a lot of work we're doing with the SEC at the moment in terms of preparing our application for the SEC, which is ongoing. And, you know, we'll continue to work in the background on what the implications are for, you know, for our other listings.

Perfect. Thank you.

Thank you, ma'am. Our next question is coming from Joe Stoff, calling from Susquehanna. Please go ahead, sir.

Good morning, Peter and Paul. I did want to follow up maybe on an additional question on slide 29, just kind of talking about your USI gaming position. I wondered if you could maybe give us like a read on kind of your relative market share of, say, the sports-first iCasino customer versus, say, the online iCasino-first customer. And then the second question to that is, you know, with PokerStars essentially freed up, you know, in the U.S., I was wondering if you would use that possibly as a second brand.

Yes. Morning, Joe, and thank you again for another one for getting up so early. Look, in terms of iGaming, we've been really pleased with the market share growth we've taken, which has mainly actually been in the direct casino market. So that's where we've seen the majority of our of our games. I think that's just simply because we've been fixing some of the issues that we knew were there in the product, but also bringing some of the innovations to market, such as the daily free-to-play mechanics that we know have been successful elsewhere. In terms of how we will utilize the Poker Stars brand, We now have clarity around the future of that and the ownership structure of it. We've had it in market a while. Clearly, it's been primarily focused on Coker first, and we're pleased with some of the performance we have. But we're not adverse to running multiple brands, and we will figure out how we utilize that in the most effective way moving forwards.

Thanks, guys. Thank you much, sir. Our next question is from Joe Thomas from HSBC. Please go ahead.

Good morning, Peter, and good morning, Paul. A couple of questions, please. Firstly, Australia margins, I think, down 950 basis points in the first half, down to, if I recall, about 25% or so. Can you just clarify, 26.4, just looking at the slide. Is that business long term impaired now? And if not, how do you expect to get back towards that sort of 30 plus percent level? That'd be the first question, please. Second question really regards the UK. Obviously, a very good UK performance, despite having removed some generosity around things like Best Dogs Guaranteed. I'm just wondering if you can give a bit more clarity about what you think is driving that in particular. And is it sports or casino? Thank you.

Yeah, Joe, morning. And apologies if that has impacted you in terms of the changes to the best alternative. But no, look, I think from a UK perspective, we are very pleased with the product changes we've made. The BetBuilder stuff has had a profound impact on customer engagement. We've been really pleased. I think, as we mentioned in the presentation, 90% of customers who are betting on the World Cup are still on the platform, which I think is a good testament to the product uplift we've made. And it's not just in sports either. We've made a bunch of changes around gaming as well, whether that's some of the Paddy Power branded slots and some of the live products we've brought on stream for Vegas as well. We've also made a heap of changes to the way in which we tackle and present generosity to customers, which we think is really important. It's a very large cost item for us, and we know around the world how important it is to drive the performance of the business. I think all of those product changes have helped getting ahead of the safer gambling stuff in comparison with our competitors. I think it's also set us in good stead because we've been able to work out how to manage the business in this new environment and other people are having to jam on the handbrake to try and do it. I think that's what's contributing to the performance. The team in general, we've got our mojo back. I'm just delighted with what's happening from a UK perspective. Look, in Australia, and Paul will give you some more specifics about this, I'll give you a bit of context. I think we need to remember, we're sat in a similar situation to the one that we saw in 2019, where there was a step up in taxes at that point. And what we saw happen as a result of that was, you know, there's a bunch of generosity changes, there's some consolidation in the market, and There was also, you know, a bunch of competitors, not us though, made changes to their over-arms trying to protect their positions. Ultimately, scale is the most important attribute to the market and we have by far the best position in the Australian market with Sportsbet, the market-leading brand on the side of the customer base. Paul, I don't know if you want to add. I think that covers it very well. Okay. Thanks a lot. Okay. Well, look, that's George, I think that's done for questions now. So thank you very much to everybody for participating.

Thank you very much, gentlemen. Ladies and gentlemen, that will conclude today's conference. We thank you for your attendance. May I disconnect?