Leading Australian sports betting operator Sportsbet has pointed to increases in the Point of Consumption (POC) Tax charged by multiple Australian states for a decline in profitability in the first six months of 2023, despite an increase in its average player base over the same period last year.
Sportsbet’s parent company Flutter Entertainment released its 1H23 financial results on Wednesday, with its Aussie sportsbook brand recording a slight 2% year-on-year decline in revenue to £601 million (US$765 million) but a 28% decline in Adjusted EBITDA to £158 million (US$201 million). Adjusted operating profit fell 31% to £142 million (US$181 million).
While average monthly players for the period increased by 7% to 1,066,000, Flutter noted, “The Australian market is currently undergoing a period of disruption due to POC tax increases and a post-COVID softening of consumer demand, most notably in racing.
“Cost of sales as a percentage of revenue increased 540 basis points to 52.8% from the previously guided impact of POC tax changes in H1 of £33 million (US$42 million) across several Australian states.
“In 1H23, the state of Victoria announced it would increase the POC rate to 15% from July 2024, which will add an incremental £27 million (US$34.4 million) annualized cost for Sportsbet.”
The company also pointed to a softer racing market heading into 2H23, likely resulting in lower market growth expectations and impacting Sportsbet’s profitability.
However, it expressed confidence in retaining its market leading position – Sportsbet held 48% of Australia’s online sports betting share in 2022 – due to its “strong heritage in leveraging its scale and superior product expertise to win in the market.
“Sportsbet’s significant scale advantage and superior product provides us with confidence around the future trajectory of our Australian business as it navigates this period of change,” the company explained.
Group-wide, Flutter – whose global brands include Fanduel, Pokerstars, Fox Bet, Paddy Power and Betfair – saw its 1H23 revenue grow by 42% year-on-year to £4.81 billion (US$6.13 billion) while profit after tax of £128 million (US$163 million) reversed a 1H22 loss of £112 million (US$143 million).
