Flutter Entertainment PLC (LSE:FLTR) is using sketchy ethics to distract from a dwindling UK market in an act of “virtue signalling”, an analyst has suggested.
Gemma Boothroyd, analyst at Freetrade, said the betting company’s ‘Positive Impact Plan’ announcement yesterday, which included providing employees with bonsues, was intended to distract from today’s earnings.
The company grew revenues by 37% and recreational customers by 23% last year, but flat UK revenues contributed to a loss before profit of £288mln.
"Talk about a cop-out. Flutter’s trying to sweep its lacklustre UK performance under the rug with some well-timed virtue signalling.
"Yesterday’s announcement performance bonuses would be tied to employees curbing addictive gambling is a well-timed excuse for today’s results.”
Boothroyd said the move to prevent addiction felt similar to tobacco company Altria Group, Inc. (NYSE:MO) funding substance-abuse programmes while simultaneously churning out packets of Marlboro.
“Being able to point the finger at changing legislation while emphasising its safe gambling tools makes disappointing UK performance appear, at the very least, a bit more ethical.
“Make no mistake, its initiatives thus far are an attempt to shy away from the watchful eyes of regulators.
“They’re trying to get ahead of impending legislative changes, this isn’t some moral epiphany. Flutter’s taking a page out of big tobacco’s playbook.”
Flutter has been focusing on expansion, particularly in the newly liberalized US gambling market, where its flagship US subsidiary FanDuel held 40% of the market in the fourth quarter of 2021.
Boothroyd suggested this expansion needed to be ramped up as company’s latest attempt to placate UK regulators appears in vain.
“As an investor, bonuses linked to a firm’s declining revenue might seem at odds with what you’re hoping the firm’s going to accomplish. It feels like a distraction from the truth.
“And when the UK’s gambling white paper is released later this year, Flutter’s going to need to find some more new markets."
If it was a case of attempted distraction, it does not appear to have fooled analysts, with shares in the Flutter falling nearly 14% over the morning to 9,296p.