Wednesday 07 August 2019 9:43 am | Updated: Wednesday 07 August 2019 9:57 am

Flutter Entertainment struggles in face of betting tax hikes as profit plunges

LONDON, ENGLAND - NOVEMBER 13: A general view of Paddy Power book makers on November 13, 2018 in London, England. As campaigners continue to call for restrictions or a complete ban on fixed odds betting terminals (FOBT's) in bookmakers, the Chancellor Philip Hammond has put back a planned policy cutting the maximum spend on the machines from £100 GBP to £2 by six months, to October 2019. (Photo by Dan Kitwood/Getty Images)

Flutter Entertainment, the gambling group formerly known as Paddy Power Betfair, has suffered a difficult first six months under its new moniker, with profits falling by a quarter as significant betting tax increases kicked in.

Firms in the gambling sector are trying to counteract the new regulation by boosting revenues. Flutter succeeded in doing this, with growth of nearly one-fifth. Shares rose two per cent this morning.

The figures

Pre-tax profit fell to £81m for the first six months of the year, a 24 per cent year-on-year drop. Revenue grew 19 per cent to just over £1bn.

Earnings per share fell six per cent to 97.8p, while the interim dividend remained flat at 67p.

Net debt was £356m at 30 June, more than doubling since the end of last year.

Why it’s interesting

The UK gambling industry is facing a tightening of regulation amid concerns about the growing problem of addiction.

Earlier this year the government slashed the minimum stake on fixed-odds betting terminals from £100 to £2, a move bookies warned would lead to a string of store closures and job losses.

Flutter estimated full-year underlying earnings would drop to between £420m and £440m, not including an estimated £55m loss in its US business.

The firm recently merged with US-based fantasy sports company FanDuel last year as the potentially huge market opens up. Today, it said sales jumped 46 per cent while there was growth of eight per cent in its main online division dominated by Paddy Power and Betfair which were most impacted by the regulatory upheaval.