Flutter Entertainment plc

Ladies and gentlemen, good afternoon. I would like to welcome everyone to Flutter Entertainment's third quarter 2025 update call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you. And I would now like to turn the conference over to Paul Tims, Group Director of Investor Relations. You may begin.

Hi everyone and welcome to Flutter's Q3 update call. With me today are Flutter's CEO Peter Jackson and CFO Rob Coldrake. After this short intro, Peter will open with a summary of our operational progress and then Rob will go through the Q3 financials and updated guidance for 2025. We will then open the lines for Q&A. Some of the information we are providing today, including our 2025 guidance, constitutes forward-looking statements that involve risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations and we undertake no obligation to update any forward-looking statement except as required by law. Also, in our remarks or responses to questions, we will discuss non-GAAP financial measures Reconciliations are included in the results materials we have released today available in the investors section of our website. And I will now hand you over to Peter. Thank you, Paul.

I'm pleased to report a good third quarter, the continued momentum in both our US and international businesses. During Q3, we saw over 14 million average monthly players engaging with our products, driving revenues 17% ahead year over year and adjusted EBITDA 6% higher. While we reported a net loss for the quarter, this is driven by the non-cash impairment charge following the regulatory changes in India and the previously communicated payments to Boyd for improved U.S. market access terms. Customer-friendly sports results in September and October, which, as we've previously outlined, are transitory in nature, mean we are reducing our full-year outlook for 2025 by $280 million in adjusted EBITDA. But the underlying business is performing well. And I'm really pleased with the strong positioning of Flutter's core business as we continue to execute in the final quarter of the year. Before I provide an update on the Q3 performance of the US and international businesses, I'd like to share how we're strategically positioning Fangio to capture the emerging prediction markets opportunity. I'm very excited to announce our expansion into this market with the launch of Fangio Predicts in December. We will immediately unlock the significant incremental addressable market by offering a compelling sports product to the vast majority of the U.S. adult population in those states currently without sports betting. Entertainment and financial prediction markets will also be available. Flutter is exceptionally well positioned to capitalize on this opportunity. Through our strategic partnership with CME Group, combined with FanDuel's nationwide brand presence, market-leading sports betting expertise, and two decades of our own experience operating the Betfair exchange. Fangio Predicts will also accelerate acquisition of customers into the Fangio ecosystem ahead of the state legalization of sports betting. Furthermore, the strength of our world-class pricing and risk management capabilities present market-making opportunities, which we continue to assess. We believe the sports prediction market opportunity lies solely in those states currently without sports betting access, and we can clearly see prediction markets are having a negligible impact in the states where Fangio Sportsbook is already available to customers. The opportunity to extend the Fangio footprint into these new states is significant, and our aspiration is to be the clear market leader. Our investment will therefore be meaningful by maintaining the disciplined approach that has served us so well since the inception of sports betting in the US. In summary, We believe this is a hugely exciting opportunity for FanDuel and one that we will seize. We have successfully demonstrated that we have the capabilities to win in sports betting and iGaming, and I firmly believe this will also be the case for prediction markets. This is all in addition to our existing regulated business. In the long term, we firmly believe that it is state-regulated sports betting and iGaming that remains the most valuable long-term opportunity in the US. The importance of having the best quality sports betting product combined with the ability to price increasingly complex sports products accurately cannot be overstated. These are both areas where Flutter and FanDuel excel. As demonstrated by international precedent, long-term success in the U.S. gaming sector will be achieved by those operators with scale positions and the highest quality sports betting product. Turning now to our existing business in the U.S. We maintained our clear position as the number one online operator in both Sportsbook and iGaming. AMP growth of 8% year-over-year is encouraging, driven by strong iGaming AMP growth of 30% and accelerating Sportsbook AMP growth of 5%. From a revenue perspective, we delivered growth of 9%, led by exceptional iGaming performance, where our revenue was up 44% year-over-year, delivering 27% GGR market share in Q3. We added over 500 new slots titles during the quarter, with our proprietary Flutter gaming platform enabling faster content delivery. Exclusive content continues to drive customer engagement, including new Wonka and Samurai titles, and the latest Huff & Puff installment, Huff & Lots of Puff, with our most successful game launch to date, setting record engagement in GGR levels. With population penetration currently well below long-term expectations, we see significant runway for growth in existing states, with further state legalization of further incremental opportunities. In Sportsbook, while September and October have been impacted by customer-friendly NFL sports results, we are clear that this is just the normal ebb and flow of sports outcomes, and we maintain our absolute conviction in our pricing accuracy. The NFL has a very concentrated schedule, and this drives intense customer engagements and a small number of events. Average handle on an NFL game is typically five times that of an NBA game, increasing to more than 10 times for standalone games. This can result in greater variability in the short term, as it was seen in recent history. But we are confident that our reported margin will revert to expectations in the longer term. The start of the NFL season consistently sees heightened levels of competition in the market. And Q3 this year was even more pronounced than in previous years, with September characterized by exceptionally high levels of competitor generosity. These dynamics temporarily impacted Fangio's NFL handle growth and same-game parlay penetration in the opening weeks of the season, as we deliberately chose to not match these uneconomic offers. This disciplined approach helped deliver an NGR market share of 47% in September. While market competitive intensity has moderated from the NFL season start, it still remains at elevated levels. Fangio's scale as the number one operator in the U.S. has subsequently enabled us to take action to strengthen our market leadership. We responded in a strong but disciplined way at the start of Q4, with increased investment in customer acquisition and retention, and we've been very pleased with the momentum that this has driven. The NBA season launched in late October, and we off to a good start. Customer engagement, handle, and same-game parlay penetration are all tracking strongly in the early weeks of the season, giving us confidence that growth this season is shaping up well. We're also excited to see what our new strategic MBA partnership Amazon Prime can unlock, including a range of merchandising and product integrations. Our international division delivered a good performance, with revenue 21% higher year over year, including the benefit of our SNAI and BetNational acquisitions. We delivered organic iGaming growth of 10% with strong performance in Turkey and C-SAL's Italian online business. Organic sportsbook performance was encouraging against the strong prior year sportsbook performance, which benefited from the Euros and more favourable sports results. In Italy, we launched MyCombo and C-SAL, the only four same-game parlay products available in the market, in time for the start of the Italian soccer season. Customer engagement has been strong. with over half of sports customers placing a My Combo bet during the first seven rounds of the season. The integration of Flutter Studios into the SEA Italian online platform has enabled in-house content to be offered to our Italian customers with a strong pipeline of future content. The SNI integration has also been progressing well. We've enhanced the iGaming proposition, optimized retail gaming machines and commission structures, and increased customer acquisition volumes by deploying CSAIL's proven retail signup program. The migration of SNAI online customers to the SEA online platform remains on track for H1 2026, keeping us well on course to deliver our synergy targets while bringing our leading platform capabilities to SNAI customers. In the UK and Ireland, the successful migration of Skybet onto our shared Flutter UK platform has enabled delivery of new products and improvements for our SkyBet customers. This included the launch of our highly popular SuperServe offering and the new SquadBet proposition, powered by our next-generation pricing capability. There's been much speculation around potential gaming tax increases in the upcoming UK budget. We remain engaged with policymakers and expect decisions to be based on economic merit, taking into account the industry's substantial contribution to UK tax revenues and employment. We await the outcome in the budget later this month. However, should taxes increase, Flutter's unmatched scale and market-leading position will help to mitigate the impact, as we have demonstrated historically. In Brazil, an expanding portfolio of games and improved generosity delivered record iGaming revenues. On Sportsbook, we remain focused on integrating Flutter's in-house pricing capabilities and generosity functionality to materially elevate the overall customer proposition ahead of the World Cup next year. Outside of performance during the quarter, the sudden regulatory change in India was extremely disappointing. Flutter has invested significantly in India over the last number of years, responsibly delivering innovative skill-based games to Indian customers. Junglee will now only offer free-to-play content as we assess our medium-term options in the market. Looking ahead, I'm extremely excited about expanding our US portfolio to include Fangio Predicts, and I'm confident that our market leadership and diversified international business positions as well for the remainder of the year and into 2026. I'll now hand you over to Rob to take you through the financials.

Thanks, Peter. Group revenue increased by 17% and adjusted EBITDA grew 6% in the quarter, driven by excellent organic iGaming growth and the benefits of our recent acquisitions. Group net loss was $789 million for the quarter, compared to $114 million in the prior year. This was primarily due to three significant one-off items. First, a non-cash impairment charge of $556 million related to our jungly business. Following the legislative change in India that meant we had to cease real money operations there. Second, the previously communicated $205 million payment to Boyd for revised US market access terms. will deliver approximately $65 million in annual savings going forwards. And third, increased amortization costs related to our recent acquisitions and business transformation. These were partly offset by $247 million year-over-year benefit from the Fox Auction fair value adjustments. Adjusted earnings per share grew 29%, while loss per share increased $3.91 from 58 cents in Q3 2024 to the impact of the mainly non-cash items I have just outlined. Turning to the US, revenue was 9% higher with exceptional high gaming growth of 44% offsetting a Sportsbook revenue decline of 5%. This led to adjusted EBITDA of $51 million compared with $58 million in the prior year. Sportsbook performance reflected the competitive dynamics Peter mentioned with customer-friendly sports results and heightened competitor generosity at their NFL season starts. We are pleased with the momentum in the business at the start of Q4. Handle and amp growth has been strong, and the NBA season has started positively. In international, revenue of $2.4 billion reflected growth 21%, with our acquisitions contributing 18 percentage points to this increase. On an organic basis, iGaming performance was very strong, particularly in Turkey and Italy, with sportsbook performance reflecting tough prior year comparatives from the European Championships. Adjusted EBITDA increased by 10% year-over-year to $505 million, demonstrating the resilience of our diversified portfolio. I'm really pleased with the progress we're making across our $300 million cost transformation program, and we continue to identify further efficiencies beyond our original targets. The delivery of the UKI technology re-platforming, the redesign of our UKI organisational structure and the excellent progress we are making on the SNAI integration are all good examples of our disciplined approach to driving incremental efficiencies. Operating cash flow reduced by $81 million and free cash flow reduced by $87 million year over year, reflecting the Boyd payment for improved US market access terms. Our leverage ratio was four times, or 3.7 times, including SNAI on our pro forma basis, and we remain committed to our medium term target of two to two and a half times. We continued returning capital to shareholders with share repurchases of $225 million in the third quarter and a further $245 million repurchased in the fourth quarter. This completed our authorised programme for 2025. bringing the total cash return to shareholders to $1.12 billion since inception, representing 2% of our issued share capital. The program will continue into 2026 with a Q1 2026 repurchase of up to $250 million as we make good progress towards our total commitment to return $5 billion over the coming years. Moving now to the outlook for 2025, Q4 has started very well is in line with our expectations on an underlying basis. We've seen an impact from customer friendly sports results in the initial weeks of the quarter. We're therefore updating our four year guidance to reflect the following factors. First, trading performance in Q3. Second, the impact of sports results in Q3 and Q4 today across both our US and international businesses. Third, increased Q4 investment in US sports has already strengthened our leadership position. Fourth, our strategic investment in Fangio Predicts as we launch this exciting new product. Fifth, the cessation of real money gaming in India. And finally, tax costs associated with the Illinois wager fee. In aggregate for the group, this represents a decrease of $570 million revenue, $380 million adjusted EBITDA with group revenue and adjusted EBITDA now expected to be $16.69 billion and $2.915 billion respectively at the midpoint, representing 19% and 24% year-over-year growth. Additional information on 2025 guidance is available in today's release, including additional income statement and cash flow items. Finally, as Peter outlined, we are very excited about the prediction markets opportunity. and plan to invest meaningfully to harness the growth we believe that this can deliver. At this early stage, we anticipate an incremental EBITDA cost, $40 to $50 million in Q4 2025, and between $200 to $300 million in 2026. We will closely monitor returns with a priority on building value for the future, while also maintaining the flexibility to accelerate investment where performance warrants. With that, Peter and I are happy to take your questions And I'll hand back to Abby to manage the call.

Thank you. And we'll now begin our question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one if you would like to join the queue. And our first question comes from the line of Jeff Stantiel with Stiefel. Your line is open.

Hey, good afternoon, everyone. Thanks for taking our questions. Maybe just starting off on the $200 million to $300 million of planned investment next year for FanDuel Predicts, Peter, could you just Maybe talk a little bit more on the return algorithm for this product, meaning are you planning to acquire users with similar payback thresholds that support the casino or adjust to reflect some of the higher uncertainty for this product? And then when you think about LPDs and return on that spend as strategic positioning ahead of eventual traditional sports betting regulation and cross-sell opportunity factor into that calculation, are you restricting just to gross profits from the prediction wagering?

Hi, Jeff. We're very excited about Foundryal Predicts. The ability to take their sports product into the half of America that you can't currently avail of the sports betting products, I think is something which is tremendously exciting. And the ability to partner with CME and leverage all of the expertise we've had and built over the years of the Betfair Exchange, I think means we're going to be a very formidable investor. And we have to put money behind it. Now, from a customer acquisition perspective, we are going to maintain a very disciplined approach, as we always have done since operating in the US. And we will be carefully monitoring the CAT to LTV dynamics. Ultimately, we do want to see as many states passing legislation to introduce sports betting as possible, and then we'll be able to migrate those customers onto sports betting. But I think it is important that we put strong investment behind this. I think we've got an incredible brand. We're going to have a great product when it launches in December, and I think we'll have the market-leading product by the time we get to Q2 next year.

That's great.

Thanks for, for all that. Then maybe shifting gears over to some of the higher, I think you call it a rational competitor generosity that you saw early on and, and the NFL season has moderated those still is still elevated here. Just, I guess, can you, can you add a little bit more color, you know, how widespread was this across multiple operators? What do you see as sort of the rationale, you know, from some of your peers on, on raising spend, you know, this year specifically, and then thematically, I guess, How do you think about the risks that the broader industry maybe starts to drift more irrational in a type of prisoner's dilemma type exercise following some of this?

Thanks. We've historically seen a lot of generosity at the beginning of the season when customers are trying to reactivate their customer bases and get them back onto the platform. And look, this year we saw a heightened level and there was a lot of irrational behavior It's not the first time we've seen it. We can all call out the difference of competitors in the past to spend a lot of money trying to acquire customers. What's most important is to have the best product in the business. And that's what we have with best pricing for customers. And so when we look at the performance into Q4, we're very comfortable with the level of customers who got on the platform. We're comfortable with the level of same game parlay penetration that we're seeing as well. And so looking at people, they spend a lot of money, but they haven't really managed to move the needle for themselves. At some point, people will realize that it's not worth pursuing these offers because it doesn't deliver for them.

Thanks very much.

And our next question comes from the line of Paul Ruddy with Davey. Your line is open.

Hi, Peter and Rob. Thanks very much for taking the question. Just if you wouldn't mind, would you be able to give us just a little bit more colour on trading in September and into Q4 in the US, please? And then just secondly, on prediction markets, just on the investment next year, would you expect, it's a tricky question because you don't have full oversight maybe, but would you expect that investment to be the entire investment, i.e. you'll do all the unregulated states within that next year? Thank you.

Yeah, I'll pick up on the first part. market investment. So as Peter mentioned, we did see a lot of competitive action at the start of the new NFL season with some very uneconomic losses in the market. We maintained our discipline, our investment posture, as we tend to do. So there was some handle and an SGP share that we lost in the first couple of weeks of September, but we were pleased with the way that we managed through September and subsequently our performance into October. If you look at September share data, we actually took 47% of the NGR share in September, I think, which reflects maybe some of the value that offers were getting for some of the investment that they made. We have seen a moderation of that competitive intensity, but it still remains a little elevated, would say, from normal levels. But we're really pleased with our momentum into Q4. We've got a record number of amps on the platform. We've got double-digit handle growth, and we've got a really strong sports and bet mix with the NBA season starting well. So we're quite pleased with our momentum.

Paul, with regards to those investment levels around prediction markets, we'll know a lot more next month when we launch the product and we see how much traction we gain. You know, I'm excited to think about, you know, all of that marketing that currently lands nationally for customers who can't, you know, avail of the sports betting product. Suddenly they get a bit of that download financial predicts and, you know, find that they've got, you know, access, whether they're sat in California or wherever they are. We think that, you know, the figures that we've created for investment next year, it'll be more sort of back end loaded towards the launch of the football season. But as we've done historically, we're going to be prepared to invest at levels whilst we continue to see great returns and paybacks. And we'll know a lot more in the first couple of quarters next year once we get some traction and see what the LTVs look like, see how they compare with our experience operating Betfair globally. And I think that'll really help inform how hard we can push. OK, thanks very much.

Really helpful. And our next question comes from the line of Ed Young with Morgan Stanley. Your line is open.

Good evening. My first question is on prediction markets as well. You've talked in the release about extensive engagement with regulators and tribes, tribal lands being ring fenced and also then not offering the product should a state regulate. I think it's probably further along than many expected to be able to get access to the whole US in one form or another. Could you perhaps give a little bit of color to the extent you can on the nature of those conversations and how they developed? And does it give you any more optimism in terms of the liberalization path for other states to regulate sports betting going forward? And then second of all, um, just to get a bit more color, perhaps on the NBA, you've talked about Amazon, but that's clearly forward looking bit. You've talked about, you know, much better engagement. You seem much more happy with the performance this year. Can you just give a little bit of color on what lies below that? Is that the, um, the nature of the, uh, the, the sort of games in the leagues this year in terms of unpredictability or was it a product upgrades that have driven that change in, um, in performance related to last year? Thanks.

Hi, Ed. Let me take the prediction markets one and then Rob can talk a little bit about the MBA. We have obviously been having extensive engagement with stakeholders as we get close to launching the prediction markets product. As you well know, sitting in the UK, as a prediction market, it's not in the same ballpark as a fully fledged sports betting product. The breadth of college offering generosity, a bunch of other things are just nowhere near as good. So you know, pragmatically, this is, you know, the financial predicts policy is something very exciting for the half of America who can't currently access sports betting. But you know, if you're sat in a state and you're getting close to passing legislation, you won't want to miss out on the on the tax dollars that we we hope that this does accelerate some of the legalization of states that were previously in the pipeline for launching sports betting, because ultimately that's what we'd like to see, as many states having that as possible, because I think that means consumers will get a much better offer.

Yes, so picking up on the second part of your question around the NBA, there's a few things that we're finding very positive and exciting. One is we're definitely seeing an enhanced handle from where we were at this point last year, and as I alluded to, kind of double-digit growth in the season so far. It would also be the new television deals that are out there are getting good traction, and we've had some data showing that the viewing figures are up. Our new partnership with Amazon Prime, we're very excited about, and the integrations look like they're working well for us From a financial perspective, we've seen significant improvement in the NBA parlay handle mix year on year. So over 1100 basis points improvement year on year, which is flowing through into a healthy product mix as well. I think the other thing as well is just engagement with the products. I think at one point last year, there was potentially less engagement with the NBA product. There seems to be excellent engagement with the NBA this year, and I think of the 80 to 100 matches so far, I was reading the stat yesterday, that half of them have gone down. There's been five points between them in the last few minutes of the game, so there's some really good engagement around it, which is good to see. Thank you.

And our next question comes from the line of Jordan Bender with citizens. Your line is open.

Hey, everyone afternoon. Thanks for the question. You still have the 27 targets out there and prediction markets obviously weren't in those numbers when you provided it. So, as we start to layer in the prediction market in the capital outlay, that's going to happen over the medium term. Is there any kind of sense on your end of do you feel any worse or better about the EBITDA and margins that you laid out during your investor day? And I guess my follow-up or the second question here, would you look to get FanDuel traders involved in prediction markets? And I guess does this present an opportunity just given the volume that you're seeing?

any updated guidance for 2027. Building on what Pete said earlier about prediction markets, we're incredibly excited about it and the additional time that that's opening up for us. We need to see how the investment next year plays through. But from my perspective, it would be a very good scenario if we invest more than we planned because that would be demonstrating that we're seeing good returns on that investment spent. So we're quite excited about where that can go. A couple of other things, probably just to bear in mind, we've done the Boyd deal this year, which delivers some cost of sales savings through to 27. We finished 2024 with a larger business, but we've also had some tax increases. So there's a number of things in the mix, but if you take a step back from the detail, probably the thing that I'm most excited about is the prediction market opportunity.

And Jordan, in terms of being a market maker, for prediction markets. There's a lot of complexity to be a market maker on a CFTC regulated DCM. Yeah, I think, but if you look at what's required for them, the ability to price complex correlated outcomes accurately is something that we do every day in our core business. It is something that we're actively evaluating, but in the immediate term, our focus is you know, the B2C launch of Vangil Predicts next month. Understood.

Thank you very much.

And ladies and gentlemen, we ask that you now please limit yourself to one question, so we may take as many questions as possible in the time remaining. Our next question comes from the line of Jason Tilchen with Canaccord Genuity. Your line is open.

Good afternoon. Thanks for taking my question. Yet another one on prediction markets. I'm just curious from a product perspective, how you're viewing the ability to take learnings from Betfair operations overseas versus maybe what you're planning to do differently based on some of the different product features that have resonated in the U.S. market with prediction markets to date?

Hi, Jason. Yeah, look, fortunately, we're able to get a bunch of the team who've been working on the Betfair Exchange for years, involved in developing the products we have, will be launching in December for Fanjul Predicts. So we can take the learnings and expertise from Betfair, we can clearly, we have a very good understanding of what US consumers want through the experience of Fanjul, and we'll be launching an exciting product next month. And we've got some fast-follow features we'll be bringing in. I'm very confident by Q2 next year we'll have the leading product in the market.

And our next question comes from the line of Sean Kelly with Bank of America. Your line is open.

Hi. Good afternoon, everyone. Thank you for taking my questions. Peter, whoever wants to take it, just wondering if you could give us a little bit more color on how you're underwriting the revenue side of the prediction market formula. I think we all know there's going to be some J-curve and early investment involved. But just how are you thinking about the fee structures here? That environment seems like it's very dynamic in the U.S. So how price-sensitive do you think customers are going to be, and just how are you kind of thinking about the top-line function and maybe your cost structure that sits underneath it? It obviously should be much better, given the lack of state-level taxes, obviously. Thanks.

Well, sure. One of the nice things about offering prediction markets, as we see with the Betfair Exchange, is you're not subject to the vagaries of sports results. You're right, it is a commission-based structure. So we'll launch in December. We'll get early indications of how customers are behaving. But we're excited to see how we can build out our lifetime value models, and that will make sure that we can maintain a disciplined approach to acquisition in the markets.

Thank you.

And our next question comes from the line of Bernie McTernan with Needham and Company. Your line is open.

Great. Good afternoon. Thanks for taking the question. Just to follow up, Peter, twice you mentioned that you expect the product to improve and by 2Q have a market-leading product. So just wanted to get some more specificity there in terms of what kind of product you're launching with and then the major improvements we should expect in the coming months. Thank you.

Well, Bernie, I don't want to tell my competitors everything we've got planned, right? But, you know, look, we're very confident in our abilities to deliver a winning proposition. You know, I mean, I think in the short term, you know, we'll have a great product offering available for consumers. There's, you know, obviously we're not going to be ready for the, you know, we're not, you know, it was not ready for the start of the NFL this season, but, you know, we're really focused on making sure that when we get to 2026 NFL season, offer for customers. I think we've been able to increment and deliver exciting features on our sports book and I think we'll be able to do the same for British markets. We've got a clear roadmap and some of the stuff that people love like the player props and things that they see in the sports book will be available next year.

And our next question comes from the line of Barry Jonas with Truist Securities. Your line is open.

Hey, guys. Nevada just put out a notice saying you've surrendered your gaming license from the state due to FanDuel predicts. Can you talk about the ramifications here? And are there further risks we should monitor for current or future state gaming licenses now? Or was Nevada really the main risk? Thank you.

Sorry, Ali. As I've stated, we have had conversations with different stakeholders over time, and Nevada was amongst that. We did have a license in Nevada, but we didn't have any retail or B2C operations there. We were supporting Boyd as part of our legacy arrangements. So, look, whilst we're sad to have to surrender the license, Nevada are protecting their interests. We need to protect our interests. And Fandral Predicts will allow us to go after the half of the market that we haven't previously been able to go after.

Thank you.

And our next question comes from the line of Clark Lampin with BTIG. Your line is open.

Thanks a lot. Maybe for the sake of variety, I'll switch it up and ask a question about iGaming. Your growth accelerated a little bit this quarter, 45 in the U.S. Just curious how you guys think about product differentiation beyond what you've already done with exclusives and the rewards framework and then maybe bigger picture. What do you think about whether it's U.S. or for the full business iGaming revenue mix going? Thanks a lot.

look you know i don't think we should underestimate how important some of those pieces are you know from you know exclusivity uh of content and looking i mean i think you know the third installment in the huff and puff series uh was the most successful one we've had to date and we're very excited about it um yeah the reward programs you know which have been key for us in other markets and i think we've you know we're demonstrating how important it is in the us market and also the work we've done from a jackpot uh perspective so Some of that stuff is really hard to replicate. The team would do a brilliant job executing. There's loads more improvements and changes to deliver. It's not just in the US market as well. We're taking our capabilities. I know that the team here in the US is spending time with our colleagues in Italy and in Central and Eastern Europe. We're sharing best practices around the world. That's what's allowing us to stay, you know, ahead of our competitors.

And our next question comes from the line of Jed Kelly with Oppenheimer. Your line is open.

Hey, great. Thanks for taking my question. Just as we look out to next year, obviously, you know, with prediction markets, But is anything changed in the underlying earnings power that you see X prediction markets over into next year? Anything with promotional velocity taxes that you sort of touch on banks?

Yeah, let me pick up on this, Jeff. I mean, as we mentioned earlier, we've got some really good momentum in the business at the moment, and our focus is on exiting 2025 with the strongest business possible. we've got a real level of confidence that we'll continue to grow into 2026, both in the US and internationally. We've not talked on this call much about our international business yet, but we're really confident about the growth profile that we've got there next year, especially from an EBITDA perspective with some of the transformation initiatives that we're delivering. So there's not anything that is particularly front of mind. Obviously, the prediction investment will be incremental to what we previously looked at. But, you know, as we said earlier, we're very excited about that and what that will potentially mean for us in 2027 and beyond. So no significant changes to 2026. Thank you.

And our next question comes from the line of Brant Montour with Barclays. Your line is open.

Thanks, everybody. So my question is on the fourth quarter um sort of a sportsbook investment you know could you give us a sense for for if that's all NFL or if that was NFL and NBA and I think the more important point would be you know if you do see good returns on that investment would you be looking to to sort of keep that going or is your number one priority to sort of get back to the levels that you were at prior thanks Brian I mean

And, you know, we can tweak and be agile with that as we as we move from week to week, depending on on what we see in the market. As we said on a number of occasions previously, we've got disciplines of economic parameters that we invest to in terms of paybacks, ROIs and CACs. And, you know, that that model has worked very well for us consistently. And that's not something that we're going to materially diverge from. As we said earlier, you know, the start of Q4, we've seen some very compelling opportunities to invest and lean in and potentially where some others went in very hard early in September, they retraced a bit. But as we said, we are seeing some elevated levels of generosity in the market. So we're very confident with our posture and what that will deliver and the size of business that we'll exit 2025. We do anticipate, as Peter said earlier, that in the medium to longer term, the generosity in the market will moderate. And that's what we've experienced in many other markets around the world historically. So that's what we'll see at some point in time. And in the meantime, we're very confident with our generosity posture. Thanks.

And our next question comes from the line of Ben Shelley with UBS. Your line is open.

Hi, thanks for taking my question. Could you share any early learnings from the measures you took in Illinois and the impact on player behavior there? And how does this guide your response to strategy on potential tax hikes going forward?

Yeah, hi, Ben. I can pick up on Illinois. So obviously with the structure that was introduced in Illinois, as you'd expect, we're seeing a reduction in the number of bets there, but increasing handle per bet. When we looked at the September data, Illinois is definitely behaving in line with other states, so we saw no impact on our Q3 numbers. However, we do still kind of monitor this very closely, and we're looking at the market data closely at the start of Q4 and what that may or may not mean. When you take a step back and approach this higher level, we definitely feel that this is another lever or tool that we've got in our armory to potentially mitigate taxes in high tax jurisdictions. Moving forward, we're hopeful that the regulatory landscape potentially accelerates with some of the production developments as well as we discussed earlier. But yeah, this is certainly something that we'll have in our toolkit moving forward and we'll consider elsewhere where appropriate. Thank you.

And our next question comes from the line of Ryan Sigtal with Craig Hellam. Your line is open.

Hey, good afternoon, guys. I'm curious if you're willing to comment kind of on the initial product launch and predictions, if that will include parlays, your largest competitor in the U.S. that's forthcoming also in prediction markets that they're going to have some prepackaged stuff just to help on the liquidity side. But curious if you're willing to comment on what offerings you're going to have on the parlay side. Thanks.

Hi, Ryan. Look, we are not going to launch Parleys next month when we launch Fangio Predicts, but you can expect us to fast follow with this early next year.

And our next question comes from the line of John Decree with CBRE. Your line is open.

Hi. Thank you. Another one on iGaming. It's probably harder to discern, but curious if you've seen any more competitive, aggressive behaviors in the promotional environment for iGaming in the U.S. Probably easier to see during NFL season, but curious. You get great results in the quarter, but is that equally as competitive as sports betting?

Hi, John. You don't quite see the same to externalities driving high gaming as you do sports, where obviously you have season launches and big games and stuff like that. We've heard a lot from competitors about how focusing, particularly on the direct casino space, which is something that we've been focused on for a while. The team have been focused on what they can control, which is things like exclusive content, which we're very excited about. um it's not just huff and puff we've got wonka and samurai titles we've got vegas matt blackjack in q3 um so you know there's lots of stuff that we focused on here i think we've had 500 new titles in the water um i if i look at the business you know we've got anchor at 30 year over year so i think people are trying to um you know focus on this but i think the team has got really good momentum in the business. And I think there's exciting plans in the pipeline.

Thanks, Peter. All very helpful. Appreciate it.

And our next question comes from the line of Robert Fishman with Moffitt Nathanson. Your line is open.

Good afternoon. Back to the competitive landscape in the U.S., do you think the new partnership with ESPN and DraftKings will change any future competitive dynamics? And are you looking to pursue any other media partnerships, including any update would be welcome with your Fox relationship and the equity stake there. Thank you.

Hi, Robert. Yeah. As you, as you'd expect me, I don't think there are many partnerships that, you know, that emerge in the U S market that we haven't looked at. And as a scale player, if we want to do these deals, we've got the resources to make them happen. We've been very pleased with our Amazon partnership, the tip off of the NBA season, the odds integration and stuff that you can do from a consumer perspective. And also you see on the screen, I think it worked really well and it's going to resonate very well. But ESPN struggled to get their best product to work. We've seen a number of these media deals struggle because of the quality of the product. We have the best product in the market and we think that's what stands us in best in terms of continuing to grow and be number one in America.

And our next question comes from the line of Joe Soft with Susquehanna. Your line is open.

Thanks. Peter, I was wondering if you could comment on the viability of the Parlay product on FanDuel Predicts and whether or not you guys expect to use it to hedge maybe any of the local concentrated bets that you might have in your sports book?

Yeah. Hi, Joe. We're excited about the launch of Angel Predicts. I think, as I stated, we're going to make the Parlay product available early next year. I don't think you should underestimate quite how hard it is to bring parlays to life on these platforms, and they can only really be delivered in a pre-packaged way. You're never going to get the same degree of choice or depth of markets. And that's one of the challenges and why the prediction markets are not in the same ballpark as a small spelling product. I don't think that there will be the right type of depth of market for us to be hedging, and I'm not sure it's something we'd necessarily want to do either. We've got real confidence in our pricing and our platform, and that's not something that I'd be anticipating us doing.

Thank you.

And our next question comes from the line of Chad Beynon with Macquarie Group. Your line is open.

Afternoon. Thanks for taking my question. I wanted to ask about, I guess, the swift message or decision in India in the seizing of that market. I know you've seen openings and closings in different markets in your time. Does it feel like the parliament is vehemently against this industry, or are they just looking to better protect the consumer? And if we see movement to the black market, maybe something opens up in the next couple of years that's just – more in line with what they want. Thank you.

Chad, I can give you a bit of perspective on this. We were frustrated at the speed with which the bill that emerged came into law. And I would hope that in that sort of timeframe you talk about, we might get some more legal clarity around extent to which some of these games of skill may be able to come back. They had had 70 years worth of constitutional protection in India. It's not that long ago that we saw Black Friday in America and look where we are today. We're going to maintain the Junglee products on a free-to-play basis and we'll see what happens. We're doing all the lobbying and legal challenges that you'd expect us to.

Thank you.

And our next question comes from the line of Estelle Weingraub with JP Morgan. Your line is open.

Hi, good evening. I've got one question on the UK, please. How do you see the underlying market at the moment? I mean, sportsbook revenue remains negative year on year. Actually, you're lapping some tough comps there, plus the Euros-related comps. But iGaming also slowed this quarter to a low single-digit number, FX. How should we look at the quarters ahead for both sports and iGaming, assuming broadly normalized sports results? Thank you.

Yeah, hi, Estelle. I think in summary, you know, we're pleased with the momentum that we've got in the UK. As you said yourself, there's quite a lot of results in the mix because we had a very favourable Euros in Q3 last year, which is impacting the comps on the sportsbook revenue. In gaming, you know, we were 7% up. We've got some good new content there. But, you know, we've lapped some of the pricing initiatives that we had in last year. But we're feeling really confident we've completed the migration of our Skybet platform now onto our UKI platform. When we did a similar transition with Paddy Power a few years ago, it really benefited the business and it acted as a real catalyst for growth in that business moving forwards. And we're hoping and anticipating the same will happen with Skybet. They've already been able to launch a number of new products into off of our outcome-based pricing. So, you know, we're really encouraged. We're the market leader in the UK. We've got an exceptionally strong business, and we're very confident about what 2026 will bring.

Thanks. And our final question comes from the line of Monique Pollard with Citigroup. Your line is open.

Hi, afternoon. Thank you for taking my question. It was just one on the commentary that you gave in the quarter about the lower than anticipated parlay mix at the start of the NFL season. So I wondered if you could comment, please, on sort of what was going on there. As you said, it was transitory in nature. And related to that, how the Your Way product is going. Thank you.

Yeah, hi, Monique. Let me start on the parlay mix starter question. based pricing. But as we've mentioned on a couple of occasions at the start of the season, there were lots of quite uneconomic offers in the market, lots of promotional spend. And a number of those were same game parlay based offers. We won't name them by name, but I think people are aware of some of the very generous offers that were in the market. As I mentioned earlier, these handle driving measures don't always convert to revenue. I think that transpired to be the case for some of our competitors that have these offers in the market at the start of the season. We did see a moderation of that later into September and also into October. And actually, when we look at our parlay mix now in NFL and in NBA, we're really pleased with it. And I alluded to the numbers earlier. So I think we're in a good position and we're very pleased with our product mix.

Yeah, Monique, from a Your Way perspective, it's now available for all of our customers this season, including those in Canada. And the more sophisticated approach we have to pricing is helping improve an increase in bets cashed out year to date, which is making a big difference. You've got to remember, it's a very fundamental rewrite. So there's now a sort of matrix of every eventuality that can occur. And so as the game is progressing, it means we've got a much broader array and set of products that consumers can select from. And it even means that whilst the game is playing, we're updating and changing the odds of which team we think is going to win the Super Bowl. If you think about what that's requiring on a Sunday when you've got a full slate of games going on, that's very, very complex. And so there's a bunch of things we can do around daily specials, which we do in an automated way, big improvements around cash out and reductions in suspension. So it's improving speed of fighting updates, it's reducing you know, latency. So, you know, we're excited. And of course, you know, there's also the trials we've been doing around, you know, AI-powered, you know, sort of conversational stuff. So, look, there's a lot of excitement around where it will take us.

Thank you.

So, I think we've reached the end of the questions. And thank you very much, everybody, for joining the call. We spent a lot of time talking about prediction markets today. We've put a lot of effort into getting to this position where we're going to be able to launch this product next month. Huge thanks to the team who've worked on this, but particularly to those folks who've been involved in the very constructive dialogue with lots of our regulators. We've always said that we would never do anything to damage our existing businesses. Nevada's a little bit different. We don't have a B2C operation there, but we're very, very excited to be able to launch our prediction markets product next month, and we're excited about what we've got coming down the line from a product perspective. But of course, it's not just what we're seeing with prediction markets. I'm very bullish about the existing business we have in the US, strong growth in iGaming, and of course, benefiting from the diversification we have internationally. So a lot to be excited about into Q4 and going into 2026. So thank you very much, everyone.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.