Australia’s Sportsbet Sees Profits Slip Amid Higher Taxes and Marketing Spend

Posted on: August 10, 2023, 07:51h. 

Last updated on: August 10, 2023, 12:03h.

Flutter Entertainment has presented a financial health report for Sportsbet, its Australian sports betting arm. It reported a slight drop in revenue for the first half of the year that resulted in new taxes. But it could also be because the company spent much more on marketing than it did last year.

The Sportsbet sign at Pakenham Racecourse in Australia
The Sportsbet sign at Pakenham Racecourse in Australia. The sports betting operator continues to lead Australia’s market, despite a recent slip in revenue. (Image: Getty Images)

Sportsbet comfortably sits atop the list of Australian sportsbooks in terms of money and bettors. It’s a position it isn’t likely to give up anytime soon, even with the recent drop.

Flutter reported that Sportsbet’s revenue for the first half of the year was US$765 million, 2% lower than the first half of last year. Adjusted operating profit lost 31%, closing at $181 million.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at $201 million, 28% less than a year earlier. All this while Sportsbet added more registered accounts.

More Players, Less Revenue

Sportsbet’s average number of monthly players was 1.06 million, a year-on-year increase of 7%. The gains weren’t enough to offset the expenses.

Flutter asserted in its update that increased point-of-consumption tax (POCT), like the one Victoria recently introduced, slowed growth. It said that it’s paying more to do business, with the cost of sales as a percentage of revenue increasing to 52.8%.

Victoria announced in May that it would increase the POCT for the second time in three years. It’s going to be 15% as of July of next year, which Flutter said will cost Sportsbet $34.4 million more in annualized costs.

First-half betting appears to have slowed somewhat in Australia, which is normally seen in the second quarter. Sportsbet took the downtime to focus more on marketing, and this also contributed to the slight dip in revenue.

Across the first six months of the year, Sportsbet spent $12.82 million more on marketing activity than it did last year. That helped it attract more players, but apparently not big spenders.

Market Getting Tougher

Australia is in the process of updating its gambling and betting regulations, just like many other countries. Also like those others, the anti-gambling pundits seem to be gaining ground.

At the top of the list of reforms in Australia is gambling ads, which some people would like to see completely removed from TV, radio, and online. Tim Costello, the most outspoken anti-gambling lobbyist in the country, is once again speaking up and looking to coerce the government into bending to his will.

Costello has recently come out to assert that gambling ads are “grooming kids” to become bettors or gamblers. Various well-placed media outlets have taken his side.

Not all broadcasters are in that camp, though. Free TV Australia, a trade group representing over-the-air broadcasters, is trying to convince the government not to move forward with a complete ban. It warns that a total ad ban could lead to the removal of some sports coverage on free channels.

The ban might also not have the results the government and the anti-gambling group want. Several studies, including one from Jon Nelson, professor emeritus of economics, have found no conclusive evidence that bans are effective.

Nelson’s research focused on alcohol and tobacco and the effect their respective bans had on underage drinking and smoking. He said they don’t work, adding, “My conclusion is that the emphasis on advertising bans and similar regulations in the public health literature is misplaced.”

Instead, what has proven effective is education. Educating the youth on the positive and negative sides of gambling has repeatedly been found to be the best solution.