Paddy Power and Betfair owner Flutter Entertainment is set to report a dip in underlying earnings on Wednesday, as it invests heavily in long-term opportunities in the US and tackles tighter regulation elsewhere.
The gambling firm, which changed its name in March to reflect its ownership of multiple brands, is expected to report underlying earnings of £193 million excluding US operations for the first half, while its American unit will make a loss of £21 million.
This time last year the group reported half-year underlying earnings of £217 million.
Increased duties in both the UK and Australia will have an impact on the bottom line while Britain’s tighter regulation on betting machines is also expected to have had an effect.
But operations in the US will be the focus of investor attention, with hefty start-up costs balanced with the possibility for long-term gains.
“Flutter has a great opportunity to maximise the value of its 58% share in its US business,” said Ivor Jones, analyst at Peel Hunt.
“Strategically it is probably doing the right thing by investing. But the payback is uncertain and way in the future. Meanwhile 2019 is a dispiritingly tough year for the rest of the business.”
British bookies have rushed to expand in the US following a change to gambling laws allowing individual states to legalise sports betting.
Prior to May 2018, the Professional and Amateur Sports Protection Act (PASPA) effectively banned sports betting across the US, with the exception of a select handful of states.
But the law was overturned in the Supreme Court after a challenge by New Jersey, opening up the market as individual states legalise the practice.
Investors will also be watching for news of mergers and acquisitions as the company targets entering new markets, though it is also thought that Flutter could itself be a takeover target.
Last month the group’s share price surged on the back of speculation that a buyout could be on the horizon.
In afternoon trading on Friday, shares were priced at 6538p, down 19% on the 8080p at which they were trading one year ago.