Flutter unveils new four-pillar path to “gold medal” growth

Flutter Entertainment has revealed its new “refreshed” four-pillar business strategy to be deployed across the global operator’s product portfolio. The strategic realignment is the FTSE 100 operator’s first since the setting of its original business strategy in 2018, following the acquisition of Sky Betting & Gaming (SBG). A key factor in the decision to revamp the strategy is the May 2020 acquisition of The Stars Group, a multi-billion-pound deal which massively increased the operator’s scale and geographical footprint. Subsequent brand additions including Singular, Junglee and, more recently, the double acquisitions of Tombola and Italian operator Sisal have magnified this need. In addition, the four-pillar strategy attempts to establish more clearly defined sustainability goals, something which was recently highlighted as a key area of focus in its multi-pronged sustainability strategy announcement earlier this week. Progress on each pillar is measured against five so-called “key enablers”: sustainability, speed, customer insight and data, and product technology and scale. Responsibility, while not a key enabler, also forms part of the strategy. “This refreshed strategy is designed to help us defend our number one positions in existing markets and to ensure that we continue to capitalise on future potential opportunities,” Flutter said. Speaking on the group’s 2021 earnings call, Flutter CEO Peter Jackson discussed the need to change. “It was important for us to refresh the strategy, evolving it and reflecting the different businesses that we are today,” he said. “If you go back to the genesis of the 2018 strategy, it was all about recognising that our sector is no different to other big digital sectors, and that scale is important, and recognising the disproportionate effects that economics can have on slowing scale. “Diversification was also important as well from a product and geographical perspective and now that we’ve achieved that aim, we needed to evolve the strategy we’re unveiling now,” he added. The four pillars include growing Flutter’s “gold medal” position across its core markets, through the growth of its recreational customer base and efficiency-based scaling. In its recent 2021 results, Flutter said recreational customers was a driving factor behind 17% year-on-year (YoY) pro forma revenue growth as average monthly players (AMPs) leapt 23% YoY to 7.6 million. The second pillar encompasses a broadbase investment in Flutter’s US business, which continues to be a key source of income for the operator through US market leader FanDuel. Strategically, the investment looks to consolidate the top-tier position in the US, while also strengthening Flutter’s igaming business there. Jackson revealed that an unnamed igaming executive had transferred from Flutter’s European-facing igaming operations to the US igaming business during the year as part of this strategy. Flutter enjoys a 20% US market share in online gaming, just half of its estimated 40% sports betting market share, and something the firm is keen to balance out going forward. In addition, Flutter will look to build on the so-called ‘flywheel effect’ to accelerate growth through a combination of operating leverage, product enhancement and increased scale. In respect of the international business, Flutter has committed to continuing efforts to “revitalise” the PokerStars business through a combination of igaming and sports betting cross-sell and direct acquisition. In a move potentially signalling future M&A activity, Flutter has revealed it is in the market to buy a sports betting-facing business “with podium positions in attractive markets” which can be further developed. Echoing similar drives by rival operator Entain, the final pillar in Flutter’s refreshed strategy looks to take “early positions” in new and emerging technologies which can be deployed across its brand portfolio. “We are already doing this with our PokerStars Virtual Reality immersive digital poker and casino experience, the best igaming experience available in virtual reality,” Flutter said.