Paddy Power owner Flutter hit by rising gambling taxes

Paddy Power and Betfair owner Flutter saw pre-tax profits tumble as it was hit by higher UK gambling taxes.

The betting firm said pre-tax profit fell 38% to £136 million for the year to December, as it was also weighed down by greater investment in the US.

The company, which is preparing to close its £10 billion merger with Poker Stars owner Stars Group, saw profitability slip despite higher sales.

Revenue for the year increased by 14% to £2.14 billion as it saw online revenues increase by 18% over the period.

However, Flutter said it took a £73 million hit as a result of higher gambling taxes in the UK, Ireland and Australia.

The tax hit came after the UK increased its online betting tax from 15% to 21% last April as part of a regulatory clampdown on the sector.

Regulators also reduced the maximum stake for bets on fixed-odds betting terminals (FOBTs), from £100 to £2, as part of the crackdown.

Flutter said this move resulted in a £30 million hit to profits in its retail business.

The company said trading in the new financial year had a “strong start” with “good momentum” across all of Flutter’s brands.

Chief executive Peter Jackson said: “2019 was a very significant year for Flutter, with further successful expansion in the United States, enhancement of responsible gambling initiatives within our business and the announcement in October of our proposed merger with The Stars Group.

“I am immensely proud of the group’s performance given the complex regulatory environment.

“The entrepreneurial culture of our business and the quality of our people are continuing to drive our global expansion while providing our teams with the opportunities they seek to develop their careers and gain new experiences.”

Shares in the company slipped 3.4% to 8,520p in early trading.