Flutter Entertainment PLC (LON:FLTR) has nudged up its expectations for underlying profits outside the US for the current year as customer numbers rose in the third quarter, but marketing investment will result in a larger loss for the fledgeling stateside market.

In the US, which remains a major gold-rush for the betting industry after gambling was legalised two years ago, the Betfair and Paddy Power owner claims Number 1 spot, with 46% of the online sports betting market via its FanDuel and FoxBet brands in the third quarter of 2020 and 29% share of US online overall.

The FTSE 100-listed group, which sealed this leading position with its merger with The Stars Group that completed in early May, said if there is no material disruption to major sporting calendars this year it now anticipates making US net revenue of over US$850mln (£650mln) as new customer volumes have been better than expected.

However, the higher customer acquisition investment needed to achieve these volumes means EBITDA losses in the US are now expected to be around £160-180mln, which is £20mln worse than the previous guidance of £140-160mln.

But the higher customer volumes outside the US are expected to boost earnings and, as long as the coronavirus lockdowns in Ireland and England are not extended past their current six and four weeks, respectively, the group now expects full-year EBITDA to be around £1.275bn-£1.35bn, compared to previous guidance of £1.175bn-£1.325bn.

For the past quarter, Flutter generated £1.33bn of total revenue, up 27% on a pro forma basis on this time last year, with sports revenue up 32% and gaming up 21%.

In a statement, chief executive Peter Jackson said the third-quarter performance exceeded internal expectations in both sports and gaming and said the group is on track to generate more than US$1.1bn of gross gaming revenue in the US this year, “a major ‘first’ for an online operator”.

Shares in the company rose 3% to 13,150p on Wednesday morning, up over 41% since the start of the year. 

Broker Peel Hunt said: “Clearly some of the strong trading is a benefit from Covid-19, which will partly unwind as normality returns next year, and is accounted for in our forecasts. However, Flutter is a market leader in multiple markets, including the US, and we expect it to continue to take market share.”

Analysts at Barclays agreed that trends may moderate a little from here and did not see material changes to 2021 consensus EBITDA, given a £50m contribution impact in Germany from recent regulatory changes.

Richard Hunter at Interactive Investor called it “a barnstorming quarter”, with a number of external tailwinds contributing, such as the return of major sporting events and the previous lifting of the lockdown which enabled the reopening of physical shops, plus the effect of acquisitions coupled with targeted promotional activity.

   –Adds share price and broker comment–

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