Flutter Entertainment Set to Leave Asian Grey-Area Markets
Having merged with The Stars Group to form the world’s biggest gambling company earlier this year, Flutter Entertainment has this week decided to ax a whole load of Stars’ pre-existing grey-area businesses.
This is bad news for PokerStars’ online customers in Asia, including Macau, Mainland China, and Taiwan. Could this have something to do with China’s huge gambling crackdown in recent months?
It certainly could.
Just last week, Flutter revealed in its latest quarterly report that it would be “turning off” a few grey-area markets that The Stars Group was formerly happy to supply with online casino and poker services.
“There are a small number of TSG jurisdictions that Flutter had previously determined it would not operate in, and in such cases, we have now switched these markets off,” said a Flutter statement.
At the time, no-one was certain which markets Flutter meant. Many speculated Russian PokerStars would be the first to go, but instead, it was Flutter’s Betfair division that dropped its Russian players first.
This week, it’s the turn of all PokerStars customers in China, Macau, and Taiwan.
Although there’s been no official statement yet, PokerStars players have reported receiving emails about the market exit in online forums since Monday.
“Please be informed that as of 1st of September, we’ll be exiting China, Taiwan, and Macau,” opened the screenshotted emails.
However, Flutter investors have so far not been too interested in the potential fallout from the axing of these grey-area markets. Shares in Flutter Entertainment were down 2.63% today, but that’s still fairly near to its highest ever share price.
Officially, the group’s recently released Q2 2020 report didn’t mention China, Macau, or Taiwan even once. There was an unspecified “Rest of the World” section in its revenue breakdown, and it accounted for about 11% of its income.
How much of that £236 million ($316 million) revenue may have been Chinese poker and online casino players? It’s hard to tell.
However, this latest move does come at a surreptitious time for Flutter. Its overall revenues were up 49% in the first six months of 2020, compared to the same period last year.
Collectively, Flutter Entertainment brands pulled in £1.52 billion ($2.038 billion) during that time—not a bad moment to drop some brands that might cause them legal trouble in the future.
With the outlook for the worldwide economy looking uncertain at best. Now is a better time than ever to trim off controversial parts of your business that are already high-risk.
Flutter is also bursting with brand power at the moment, having acquired a whole host of smaller operators and brands in 2019.
Despite all the revenue, the company has only posted £24 million in profits after tax so far in 2020. This is probably a result of all the outgoings and restructuring resulting from its massive merger.
The company was comfortable enough to decline financial aid from the UK government back in April when its Paddy Power chain was forced to close all of its 600 betting shops due to the COVID-19 pandemic.
The biggest single area of market growth for Flutter in the past six months was its US division. Online sportsbook FanDuel has been a huge success story and boasts over 500,000 customers across six different legal state markets. Keep checking online.casino/news for updates on the financials of the world’s biggest gambling group—and much more.