Peter Jackson bet big when the US overturned a ban on sports gambling.
Flutter Entertainment Plc, the company he runs, sprayed hundreds of millions of dollars in advertising for its American betting brand FanDuel. It was a fierce land grab for customers and Jackson endured a “lot of pain” from critics who asked if FanDuel would ever stop losing money.
That wager will pay off if Flutter finally makes a profit in the US this year. “People now understand that we’re going to make money in America,” says Jackson, sitting down for an interview with Bloomberg News.
The jewel in the crown of Jackson’s empire has become the market leader in US sports betting. Flutter’s business partner and rival, Fox Sports, did not even show Fox Bet TV adverts during the Super Bowl — the nation’s biggest night of sports bets — while FanDuel had a prime slot. Fox Bet is controlled by Flutter but uses Fox’s brand.
The US has made a major U-turn on gambling, which was largely illegal in most states for years. Fintan Drury, the former chairman of Paddy Power — now part of Flutter — said he was taken off a flight from Dublin to Chicago in early 2007 by US border officials, who searched his bag and laptop because of his gambling job.
Still, a Supreme Court decision on May 14, 2018 to overturn a federal ban on sports betting provided a growth opportunity for British and Irish bookmakers who brought technical know-how to a nascent industry that had been dominated by land-based casinos. It’s a day that Jackson jokes should be a “national holiday” for Flutter.
Little wonder that Flutter, a constituent of London’s FTSE 100, has decided to list shares in the US. It won investor approval for a secondary listing in New York later this year, and a primary listing is expected to follow in 2024.
The lure of the US was too hard to resist for Jackson, who became chief executive of Flutter — then known as Paddy Power Betfair — just four months before the Supreme Court’s ruling. He looks enviously at DraftKings Inc., a FanDuel rival, which enjoys a higher valuation multiple.
“We think that there’s an equivalent business to Flutter, listed in America, that sees two and a half times the volume,” he says, referring to the investor demand to trade its shares.
Fox Decision
We meet weeks before Flutter is due to make a decision on Fox Bet, its partnership with Rupert Murdoch’s Fox Corp. If it wants, Flutter can walk away from the project from August. Jackson will only say that it was “the right answer” to snub Fox Bet for the Super Bowl.
Ivor Jones, an analyst at Peel Hunt, says the deal was conceived “at a different time by a different company.” After Flutter bought Stars Group, which had the deal with Fox, “it was clear that FanDuel was going to be the leading brand for the group.”
Jones says Fox Bet “sits in that pool of really quite small competitors that don’t look like they have a great opportunity.”
Flutter endured a fierce court battle, ending last year, over Fox’s option to buy a stake in FanDuel — but today Jackson says the company has a “good relationship with all the broadcasters.”
Dressed casually in jeans and black Tom Ford trainers, Jackson — who commutes by bicycle — prefers an informal workplace, and doesn’t have his own office. At Flutter’s headquarters in Hammersmith, west London, we squeeze into a modest meeting room overlooking a building site.
After growing up in Harrogate, in the north of England, Jackson spent three years at McKinsey & Co Inc. before joining Halifax Bank of Scotland, and then Lloyds Banking Group Plc. At 34, he was hired by Lloyd Dorfman, the founder of Travelex Holdings Ltd., as CEO. When Travelex was sold to the billionaire B.R. Shetty in 2014, Jackson went back to banking, arriving at Banco Santander SA, before becoming UK chief executive of payments processing firm Worldpay Group Plc. Jackson, who has three children, was already on the Paddy Power Betfair board when he was made chief executive in 2018.
Back then, the business was “in danger of falling out of the FTSE.” Today, it has a market capitalization of £27 billion ($35 billion). Analysts are expecting sales of £4.6 billion, including £2.1 billion in the US, when it reports results for the first six months of the year on Aug. 9, according to a Bloomberg survey. That includes £23.7 million of adjusted earnings before interest, tax, depreciation and amortization in the US.
Jackson has a hint of a swagger. The business, he says, is “incomparable” to the one he joined.
Clampdown
The liberalization of sports betting in the US came at a time of greater political scrutiny in Britain. The UK government has cracked down on lucrative betting machines and introduced a series of measures designed to protect customers.
In May, Flutter apologized after it was fined £490,000 by UK regulator the Gambling Commission for mistakenly sending promotional push notifications to customers who had asked to be excluded.
Last month, Betfair, which is owned by Flutter, was criticized for failing to intervene in the case of customer Luke Ashton, who killed himself in August 2021 after losing thousands of pounds in the weeks before his death. The coroner said that Betfair should have made more efforts to intervene. At the inquest, Richard Clarke, Flutter managing director of customer relations for the UK and Ireland, said it looked like Flutter “should’ve done more.”
The industry argues that consumers should enjoy freedom of choice. Campaigners, who include families bereaved by gambling-related suicide, argue that it provides dangerous products — and that more stringent affordability checks should be enforced.
Jackson acknowledges the “very small number of people who get themselves into trouble with gambling,” and adds: “The question is how do you help them, without causing pain for the vast majority of people who don’t.”
Flutter expects to take a hit of as much as £100 million to revenue as a result of new UK government reforms — a sum it will more than offset through business in the US, where Jackson is most bullish.
Sports betting revenues in the US reached $7.5 billion last year, according to the American Gaming Association. The US is now Flutter’s largest country by revenue, with sales up 67% to £2.6 billion in 2022. Flutter’s total revenue for the year was £7.7 billion.
Part of the attraction of the US is that regular day traders will find it easier to buy Flutter shares, via platforms such as Robinhood Markets Inc. “For retail investors, if they want to participate and buy the owner of FanDuel at the moment, it’s complicated to do so. It’ll be much more straightforward.”
American Pay
British politicians and prominent figures in the City of London have worried about a wave of companies looking across the Atlantic for a better stock exchange experience. But Jackson insists Flutter’s shift away from London to New York is due to greater liquidity in US markets, rather than anything the UK could have done differently. “Probably more than any other business in the FTSE, we understand the concept of liquidity.”
Jackson says this makes a difference to US investors who will be “more prepared to get into a stock now they can get out of it,” even if it also creates a more volatile stock.
If Flutter eventually pursues a primary US listing, it will have to accept a “full American approach” on corporate governance. That will likely include the trappings enjoyed by US chief executives — such as higher pay. “For an American exec, we can pay people as they would do in America and that is exactly the right thing to do.” Does that include him? Jackson, who received total compensation of £4.1 million last year, bristles slightly at the talk of pay. “I’m not an American exec.” Should he become one, his pay would be for “other people to decide.”
Jackson is keen to present today’s Flutter as a digital business that has broken away from the other British and Irish bookmakers. But for punters in the UK and Ireland, Flutter’s Paddy Power business maintains its reputation for cheeky stunts. In June, Paddy Power attempted to hang a picture of Manchester City footballer Jack Grealish in front of the Mona Lisa in the Louvre, Paris, after the player posted a Tweet that went viral. When staff said no, the Paddy Power employee hung it in a toilet stall instead.