管理層發言
Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Flutter Entertainment Q2 2026 earnings call. I will now turn the call over to Paul Tymms, Group Director of Investor Relations.
Hi, everyone, and welcome to Flutter's Q2 update call. With me today are Flutter's CEO, Peter Jackson; and CFO, Rob Coldrake. After this short intro, Peter will open with a summary of our operational progress, and then Rob will go through our Q2 financials and our updated guidance for 2026. We will then open the lines for Q&A. Some of the information we are providing today, including our 2026 guidance, constitutes forward-looking statements that involve risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations, and we undertake no obligation to update any forward-looking statement, except as required by law. Also, in our remarks or responses to questions, we will discuss non-GAAP financial measures. Reconciliations are included in the results materials we have released today available in the Investors section of our website. I will now hand you over to Peter.
Thank you, Paul. Good morning, everyone, and thank you for joining us. Before we get into the results, I wanted to say a few words about the announcement we made this morning. After nearly nine years as CEO, this is the right time to hand over to Dan, and I'll be stepping down at the end of September. It's been an enormous privilege to lead this business, and I do so with tremendous confidence in Flutter's future and the team we've built and in Dan's leadership. One thing I've always tried to do throughout my time as CEO is to take a long-term view of how we create value for shareholders. That has sometimes meant making decisions that weren't universally welcomed in the moment because we believe they will strengthen the business over the long term. In 2019 and 2020, for example, we continued to invest heavily in FanDuel at a time when many questioned those decisions because of the impact on near-term earnings. Looking back, those investments proved to be the right thing to do. They strengthened our competitive position and laid the foundations for the business we have today. And we're making the same type of decision again today. We see a significant opportunity to invest behind our leadership in U.S. sports betting and iGaming, strengthening our proposition and positioning the business for future growth. We recognize that this weighs on near-term earnings, but we're convinced it's the right thing to do to maximize long-term shareholder value. With that, let me turn to our results. We've delivered an encouraging quarter relative to our expectations, and I'm pleased with the progress we're making across the business. In the U.S., we've implemented our new leadership structure, made good progress on our sportsbook improvement plan and further expanded our prediction market offering and capabilities. For H2, we'll be delivering an improved value proposition for our customers, a move we believe is critical to strengthening our number one position in the highly competitive U.S. market, aligned with our new customer-first strategy and better positioning the business for market share gains in 2027 and beyond. During Q2, U.S. revenue was six percent lower year-over-year, reflecting a six percentage point growth impact from customer-friendly sports results as the Knicks' legendary win in June put some cash back in our customers' wallets in time for the World Cup. Customer engagement was excellent throughout the NBA finals and the FIFA World Cup. And even when you adjust for these marquee events, underlying sportsbook trends were in line with our expectations as our sportsbook improvement plan continues to deliver. We continue to see a limited cannibalization impact from prediction markets on our existing customer base in regulated sportsbook states. And we believe FanDuel's operational execution and outperformance, both in recent state launches and during key marquee events, confirms the strong demand for traditional sports betting products when sports content is compelling. We expanded our loyalty program to seventy percent of customers this quarter, which has helped with engagement metrics with eighty-two percent of customers surveyed saying the Rewards Club improved their experience and more than half saying it increases their betting activity. We also introduced BetProtect+, our best-in-market injury protection feature, and enhanced our soccer offering for the World Cup, leveraging the Flutter Edge to offer unique features such as SuperSub. And while FanDuel trends have been encouraging, the market continues to be subdued, and we estimate that the market grew by around five percent in H1. Although we continue to closely monitor the implications of the growth in prediction markets on the broader online sports betting market, we believe the market is yet to rebound from the disappointing NFL performance experienced in Q4 2025. We firmly believe market growth will ultimately return to higher levels with more compelling content driving stronger customer engagement. Though our forecasts prudently assume market growth rates in H2 will be broadly consistent with those seen in the first half. The U.S. leadership changes we recently implemented are working, and we are well positioned to deliver improved performance through a more competitive customer-led proposition. In fact, the encouraging underlying signs we're seeing give us the confidence to increase generosity to customers and improve our value proposition. And while this proactive action will result in a reduction in near-term profitability, investing behind customer momentum is an approach that has consistently served us well. This momentum and the current market dynamics mean now is the right time to move from a focus on margin growth to prioritizing AMPs and growing ARPU. This will position us well to extend our leadership in the U.S. market and capture further share in 2027. Turning now to prediction markets. We view prediction markets as an attractive opportunity. And while we are closely monitoring their impact on the broader online sports betting market, we continue to see prediction markets as incremental to sports betting and iGaming, growing the overall market by capturing new demand. Our own prediction market offering, FanDuel Predicts, allows us to acquire customers ahead of sports betting regulation in new states while delivering incremental economics in the meantime. And while operational progress in H1 was slower than planned, we are gaining traction and have a clear road map for improvement. The integration of the Crypto.com exchange to expand our sports offering ahead of the FIFA World Cup has significantly enhanced our product proposition. And in coordination with CME, we have agreed that all FanDuel Predicts sports and novelty contracts will now be moved to Crypto.com while continuing to provide our customers access to CME's extensive financial markets. This new exchange arrangement will ensure we can deliver new products at pace ahead of the NFL season start. Our One App offering is also enabling us to leverage FanDuel's nationwide brand equity, driving both accelerated penetration and marketing efficiencies. We believe we're also uniquely positioned to provide liquidity for combination markets across different prediction market platforms with a market-making offering that can scale rapidly and at low incremental investment. It is very early days, but we would expect to generate approximately $50 million of revenue from Market Making this year, demonstrating both the good progress made so far and the potential opportunity. Turning now to international. We've made good progress in the quarter. We strengthened our market-leading position in Italy and leveraged the power of the Flutter Edge to drive record engagement during the World Cup. As a result, revenue grew ten percent, including the benefit of our Snai and Betnacional acquisitions. AMP growth in the quarter was impacted by the closure of our India business last year. Italy continues to deliver exceptional levels of growth across both sportsbook and iGaming, and our revenue performance continues to outpace the market as we extend our market leadership. This was despite the short-term impact from the Snai migration, which we successfully completed back in April. As expected, the migration resulted in a brief period of share loss, but performance recovered strongly in June as customers embraced a significantly expanded product offering with AMPs increasing thirty percent in June and strong parlay penetration during the World Cup. SEA iGaming revenues were up thirty-four percent, driven by new and exclusive content in Italy and an expanded product offer in Turkey. The post-migration recovery in Snai and the strength of our first half performance in both Italy and Turkey give us confidence in sustaining this strong growth in the second half. In the UK and Ireland, SkyBet customers are adapting well to the new highly rated user interface, driving a sequential improvement in SkyBet performance, while overall iGaming growth in the UK and Ireland remains robust at seven percent. The increase in U.K. iGaming tax became effective in April. As a leading operator in the market, we are confident in the delivery of our first order cost savings and in our ability to gain share as other operators begin to react to this increase. In Brazil, good operational progress, including the integration of Flutter's product and pricing capabilities into our local platform, was offset by more challenging market conditions driven by government socioeconomic measures. This resulted in Flutter Brazil organic revenue declining year-over-year, in line with the market. We will continue to enhance our sportsbook product offering with further product rollouts enabled by the integration and improve iGaming generosity mechanics in the second half of the year. Brazil remains an attractive long-term opportunity, and we are focused on building a market-leading platform that scales our customer base and delivers strong returns. Our performance in APAC was broadly in line with expectations, with positive performance in key sports offsetting continued softness in racing. And while excellent execution in CEE saw us gain market share in all of our main markets. And finally, we've also announced today that we've initiated the next phase of Flutter's cost transformation, reshaping our cost base to fund our next stage of growth. Rob will cover this in more detail shortly. To close, I'm encouraged by the progress we've made in Q2. In the U.S., we're delivering continued sequential improvement in key sportsbook metrics alongside sustained iGaming growth. The new U.S. leadership team is driving a renewed customer-first approach, and our proactive investments will help place us in the best possible position for growth in 2027. Within International, we are executing at pace and Flutter Edge-enabled product improvements are driving our momentum in the second half. I'm confident that the choices we're making today—from investing in the U.S. to expanding our TAM with FanDuel Predicts and Market Making, strengthening our international businesses and advancing the next phase of cost transformation—will deliver sustainable long-term value for our shareholders. And with that, I'll hand over to Rob.
Thanks, Peter, and good morning, everyone. Q2 performance was ahead of expectations with revenue growth of three percent, reflecting the benefit of M&A and excellent engagement during the FIFA World Cup across the U.S. and international. This was partly offset by an adverse swing in U.S. sports results year-over-year. The increase in U.K. gaming taxes and planned investments in both prediction markets and World Cup marketing resulted in adjusted EBITDA declining forty-five percent. A net loss of $296 million for the quarter versus a net income of $37 million in Q2 2025 was primarily driven by the reduction in segment profitability and one-off historical tax costs of $95 million. These were partially offset by an improvement of $81 million and $171 million in other income, expense and taxation, respectively. Loss per share and adjusted loss per share declined to $1.57 and $0.49, respectively, reflecting these profitability factors and a noncontrolling interest benefit. Net cash provided by operating activities increased by $4 million with the increased net loss in the quarter, offset by the benefit of an increase in other current liabilities, including the impact of U.K. gaming tax increase, historical tax cost provisions and a positive swing in player deposit liabilities. As a result, free cash flow, including financing CapEx and excluding player funds, reduced by fifty-six percent year-over-year. We ended Q2 with a leverage ratio of 4.3x. We expect our second half cash generation will drive a reduction in leverage by the end of 2026. We continue to prioritize organic investment in our core business and strategic initiatives, including emerging opportunities such as prediction markets, while also maintaining a clear focus on deleveraging the balance sheet. We expect to return to our target leverage range of 2 to 2.5x in the medium term, consistent with our stated policy with exact timing dependent on the cadence of our strategic investments. Moving now to our group-wide cost transformation program. Phase 1 of our program is delivering ahead of expectations. We are on track to deliver in excess of the previously guided $300 million of savings by 2027 and $200 million of additional cost savings that were announced as part of our U.K. gaming tax mitigation plans also expected to be delivered in 2027. Building on this significant progress, we have initiated the next phase of Flutter's cost transformation. Phase 2 reflects a broader program to reshape our cost base, build a more efficient, resilient cost structure for the long term and protect profitability. Through removing duplication, delivering technology efficiencies and leveraging AI, this cost action will reflect an evolution in how Flutter operates, leveraging our global scale while still maintaining a fundamental local focus on the customer. We expect Phase 2 to deliver an additional $500 million of gross savings by 2029, providing the headroom to absorb inflationary pressures and known tax headwinds whilst freeing up capacity to invest in revenue-generating initiatives. In the U.S., we believe that this will ensure the business is well positioned for its next stage of growth. In International, we expect that the benefits will underpin our five to ten percent revenue growth algorithm by both protecting adjusted EBITDA margins in more mature markets and enabling investment in growth areas. These actions are also expected to drive a meaningful improvement in cash generation. Our plans are progressing well, and we will be in a position to share more details of our Q3 results in November. Moving now to our 2026 outlook. Early Q3 trading was ahead of expectations, reflecting good engagement in the knockout stages of the FIFA World Cup and slightly favorable sports results. Full year guidance is therefore updated to reflect positive impact of Q2 trading in U.S. and international, expected market-making revenue and adjusted EBITDA benefit of $50 million, additional operating cost savings of $45 million delivered through our efficiency program in the U.S. The impact of a confirmed one-week delay to the 2026/2027 NFL season start, not previously captured in guidance of $75 million revenue and $50 million adjusted EBITDA, investment to strengthen our proposition and accelerate FanDuel sportsbook momentum, as Peter outlined earlier, and forward FX rates in international. These movements result in a reduction to our full year group revenue guidance of $395 million to $17.91 billion at the midpoint and a reduction of our adjusted EBITDA guidance of $210 million to $2.655 billion at the midpoint. We've also improved our capital expenditure guidance to $815 million to reflect incremental project efficiencies, also resulting in a reduction in depreciation and amortization guidance to $730 million. Additionally, group transaction, restructuring and integration costs will be approximately $500 million, reflecting an increase of approximately $200 million from our previous expectations, primarily due to the initial cost to implement our 2026 cost efficiency programs and tax provisions of $95 million relating to historical India and U.S. sales and use tax exposures. Additional detail on our guidance is available in today's release. Before I close, I'd like to acknowledge and thank Peter. His leadership over the past nine years has been instrumental in building Flutter into the global leader it is today. On a personal note, I've greatly valued his support and advice since becoming CFO, and I'm incredibly grateful for his partnership. Having worked closely with Dan over the past six years, I'm equally confident that we have the right leader for the next phase of Flutter's journey. He knows our business exceptionally well, has played a central role in shaping our strategy, is ideally placed to lead the company as we continue to execute our strategy and deliver sustainable long-term shareholder value. In closing, I'm really encouraged by the momentum we have built through H1 and in particular, during the FIFA World Cup, which give me confidence in delivering our second half guidance. Peter and I are now happy to take your questions.
分析師問答
All right. It looks like our first question today comes from the line of Ed Young with Morgan Stanley.
My first question is on the additional $270 million of EBITDA investment you're putting into the U.S. business. Can you give us some color on how we should think about the components on that? Because obviously, on promotions, you've launched a new loyalty scheme. There were some events noise in Q2, but you're already at 540 basis points of promo spend. So some thoughts on that. And then on marketing, similarly, how we should think about the CAC to LTV that you're putting on the incremental marketing dollars you intend to put to work in the current competitive environment? And then my second question, Peter, in your written remarks, you mentioned—I think you reiterated in your verbal remarks as well—about long-term thinking in the business. In your letter, you noted you're convinced Dan shares a similar mentality. I guess given your expectations for a mid-single-digit growing market in the U.S., at least for now, how do you weigh up the argument that some of your international markets might be as or more deserving of incremental investment than the U.S.?
Thanks, Ed. No, I think what we have to focus on is the sportsbook improvement plan and the great progress we're seeing on that at the moment in FanDuel. If I think about the growth we saw in handle around the NBA finals, they were up around forty percent year-over-year per game. Actives up twenty-five percent year-over-year, 2.3 million customers engaged in the World Cup, one third of which have been reactivated. And in recent trading, I think we've seen record weeks from an MLB perspective. So I feel like we've got good momentum in FanDuel. The sportsbook improvement plan is working. The changes we've made to loyalty, the generosity posture from a product perspective, things like BetProtect and of course, we bought SuperSub here in FanDuel around the world. So there's good momentum in the business. And I think what we've always found before is that when we've got great content, great products, we've invested behind it, and it's helped build a bigger business for the future. And that's what we're intending to do. So we want to invest behind the momentum we're seeing at the moment. Rob, I don't know whether you want to pick up on the specifics.
Yes, a couple of points to add. I mean this is an investment in generosity spend, Ed. So it's a deliberate investment decision. As Peter said, we've made really good progress with the sportsbook improvement plan. In the last quarter, we're really encouraged by the customer response that we're seeing. We're also seeing really good returns on our marketing spend, both on sports and in casino, and that's been boosted by the World Cup, but the paybacks that we're seeing at the moment are excellent. This is a proactive decision that we're making around the longer-term U.S. opportunity. We're really seeing an opportunity to lean in at the moment. It's working well, and we intend to continue that in H2 and exit 2026 with the strongest business possible.
And our next question comes from the line of Barry Jonas with Truist Securities.
I wanted to get some maybe additional thoughts on what do you think is driving the softer market-wide trends in the U.S. You comment on prediction market cannibalization, but curious with the increasing popularity of combos, if maybe those risks have increased from an OSB cannibalization perspective?
Barry, if we look at the success of the NBA Finals and the World Cup, when there is exciting content, we've seen really good engagement from a customer perspective. I mentioned the 2.3 million customers, one third of those were reactivated going into the World Cup, seeing active numbers up twenty-six percent year-over-year on our NBA finals games. We're seeing very good content—these are big marquee events—and I think that's helping drive engagement. Clearly, parlays are very popular for us, and we've made a bunch of changes to enable us to drive some improvements from a parlay penetration perspective through things like the World Cup and the NBA, which we delivered on. I think from the question around cannibalization, we have seen, as we stated before, low single-digit impacts on the business. I look at this as incremental TAM. There are opportunities for us to acquire customers in advance of sportsbook regulation passing in parts of the U.S. where we can't currently operate. And then there's the opportunity for us to leverage our pricing and risk management capabilities through market making on a national basis. Both of those things are incremental TAM for us. We are going to deliver a step change in our prediction market product as we go into the football season. The launch of the One App, which is going to enable customers nationally to access the user experience that we have currently available in our regulated states, is going to be important. But we're going to see a really big step change in the catalog that's available to customers through the integration and movement of all of our sports contracts to Crypto.com.
I think I'd just add as well that if you look at the recent World Cup tournament and when you get really good content, it reaffirms the demand that there is out there for traditional online sports betting products. So in June and July, in the U.S., we had our highest respective active months ever, and we're carrying that momentum through now, albeit it's a slightly lower point in the sporting calendar from a phasing perspective, but we're seeing really strong volumes through into the MLB season, which is really encouraging. Of course, still early days in Q3. And while that momentum is really encouraging, ultimately, performance in the quarter and the second half will be determined by the football season as we know.
Got it. And then just for a follow-up. North Carolina just recently passed a tax increase for online sports betting, taking you to twenty-two percent, while they also effectively added a six percent tax for prediction markets. How does that weigh into your thinking strategically about prediction markets given the state effectively is signing off on it here? Just curious if it makes you want to lean in more or less strategically between the two offerings.
There's a lot of questions and work to be done from a regulatory perspective around prediction markets. Some of these things, the extent to which they can be rolled out will be resolved by the Supreme Court. From a state-by-state tax perspective, there's also a lot going on at the moment. We've been pleased with our focus on trying to get new states to open. I think that's an important component that we need to recognize as well. And I think we're excited to see some of the progress we're going to be able to make around both iGaming and sports betting as well.
And our next question comes from the line of Brandt Montour with Barclays.
So I wanted to start off with the market making and get your sense on how that market feels for you guys going into the second half. I think following the prediction markets, it's been out there that these markets are getting efficient pretty quickly. I know you guys did $6 million in 2Q and you've got $50 million for the year. So what are you baking in for the second half? What platforms do you think you'll be most active in? And what can you tell us about the mix between where you're trading in single leg versus combos as a percentage of mix?
Let me pick up on that one. We're really excited about the opportunity in market making. Peter and I were with the team in Jersey City last week, and we're definitely seeing volumes continue to increase across the ecosystem, and that gives us an increased level of confidence in the long-term potential of that market. Our ambition here is to establish a leading position in this space by leveraging the pricing and risk management and the trading capabilities that we've developed over the years with our sportsbook. We feel that we've got a real advantage in pricing complex and correlated markets. As the combo volume increases, we're better placed to take advantage of that. We see that as a really attractive and high-margin segment for us. Of course, it's still early days. The volumes that we're achieving into the second half of the year are encouraging, and we think this has the potential to become a meaningful revenue stream for us. But we will see how we trade through the second half of the year, and then we'll update forecasts into 2027.
Okay. Great. And then a follow-up on the NFL. Could you just flesh out a little bit more details about the delayed start? This is a market that you commonly want to invest ahead of the start, the time when there's the best customer acquisition opportunity. So what's the playbook with a delayed start? How will you approach that differently?
The delayed start is really just a technicality around the timing of the season and where Labor Day falls; this can move from one year to the next. We're not actually changing our investment posture at all here. The start of the NFL season is something that we'll lean into. It's really important for us in terms of reengaging customers. During the World Cup, we actually reactivated a bunch more customers than we were anticipating, which was really encouraging for us. We're actually starting in a stronger position. We're also clearly focused on college football and the start of that, which is a key opportunity for us to get behind some customer initiatives as we start the NFL. From a posture perspective, we're not going to be changing our approach massively. Having the Rewards Club live for all customers this year is also going to be really important. We've already rolled it out to seventy percent of customers; by the start of the NFL, that's going to be available for all of our customers and we're seeing really good traction behind that. With the college football start in the week before, that's a great opportunity to prime customer wallets, and we hope to see a running start to the NFL season.
Okay. So the NFL schedule delay was not previously in guidance and is today, but this is an NFL schedule, not a Flutter schedule?
Correct. This is NFL scheduling, which was previously in guidance, and we've updated our guidance for it.
And our next question comes from the line of Jordan Bender with Citizens.
So direct casino AMP growth actually looked pretty strong in the quarter. And keeping in mind, you can't grow iGaming revenue forty percent forever. Can you just talk about what the sports betting to iGaming cross-sell looks like now? And should we expect the investment into sports in the NFL season to actually help iCasino growth in the back half of the year? And then, Peter, a second question: handle was up thirty-one percent in July, which was better than your June performance. Just trying to piece together some of your comments around market growth not picking up in the back half of the year, but you did say MLB is starting to pick up a little bit. What does that imply for your actual underlying business outside of the World Cup in July?
Thank you, Jordan. On the gaming side, we clearly harnessed the World Cup opportunity to increase soccer-relevant content during the World Cup, which helped drive reactivations and cross-activation in the tournament. But our main focus and push for iGaming is around acquiring direct-to-casino customers. The Love Island: Unlocked launch we had in June, our new brand ambassador Ariana Madix, and the MONOPOLY Live exclusive launch—we've seen good success from those. There's been a lot of strong content supporting iGaming. The smaller sports betting base we had coming into the year did impact cross-sell, but as Rob mentioned, we've got a bigger base now. We're feeling good about the prospects for the iGaming business. Regarding market growth, we've seen strong performance through Q2 and the NBA finals. We're pleased with engagement around the World Cup and how we started Q3. The football season was tough last year, and we think a bunch of that was down to less engaging content and some execution issues around generosity. We're planning strong campaigns this year and hoping for compelling matches and content. Our forecast assumes prudent views around market growth in the second half. We hope the market outperforms that, but we thought it was right to take the growth we saw in the first half into the second half guide.
On iGaming, the success of our casino business has been built on direct acquisition, which remains very strong. The cross-sell piece performed well during the World Cup—cross-sell actives were actually slightly ahead of our expectations. If you compare Q4 this year versus Q4 last year, the cross-sell was slightly lower than we'd anticipated last year because of some of the execution issues Peter mentioned in Q4, which means we're optimistic about cross-sell performance as we move into Q4 this year as well.
And our next question comes from the line of Trey Bowers with Wells Fargo.
On a pure modeling sense for the U.S. business, could we get a sense of the breakdown of EBITDA for the balance of the year, for Q3 and Q4, and how potentially Q4 loaded the outlook is from here?
For Q3, we are assuming a roughly breakeven EBITDA, with around $500 million of EBITDA in Q4, which is down from circa $700 million in our previous guidance. If you roll through the factors, you have the generosity phasing from the increased investment that we're making, the NFL schedule effects (which are in Q3 only), and some state launch costs—continued Arkansas investment this year versus Missouri launching last year which was previously in the guidance. We also have operating cost savings coming through as part of the overall plan in the U.S.; we've got about $45 million of operating cost savings in the second half. Those are the key moving parts for Q3 and Q4.
And our next question comes from the line of Jed Kelly with Oppenheimer.
Just going back to the investment in generosity. Should we just think of the U.S. sportsbook, given all the sports and the engaging nature, that this is just a lower net win margin market versus some of your other international markets that just might not have the same sports depth that we have in the U.S.?
Jed, we've seen some improvements as we moved into Q2 around our structural margin. We would expect to continue to see growth in structural margin. We're seeing strong momentum in the business. We're confident the sportsbook improvement plan is working. We'll have the loyalty scheme rolled out to the entire customer base when we go into the football season. We're making better customer-focused decisions. As we've done in the past, it's time to invest behind that to ensure that as we move into 2027, we have a bigger business and a better trajectory. A bigger business means we can invest in better products for customers and grow ARPU as well as AMPs, which is important as we look to expand the business.
Medium to long term, we see a clear path to that margin expansion. We've consistently demonstrated across our international businesses an ability to grow parlay penetration and improve product mix over time, and we think there's meaningful opportunity to do that in the U.S.
And our next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.
Curious with the transition to Crypto.com for sports from CME, how your joint arrangements will work from a contract volume standpoint through non-CME exchanges. Specifically, I believe it was a 50-50 economic split with CME. How does that work now with other exchanges?
We're excited about extending the sports and novelties catalog available to our customers as a result of switching to this new venue for those products, and we will keep our existing financial markets with CME. So the economics for the financial markets with CME stay broadly as they were. There's likely a modest economic benefit for us in moving towards Crypto.com. But the really important thing is the step change we're going to see in the catalog for customers. Together with the enhanced sportsbook proposition and the One App, we think we're going to have a very compelling proposition available for consumers nationwide.
And our next question comes from the line of William Lampen with BTIG.
Peter, thanks and best of luck. My question is on the U.S. iGaming business. In prior quarters, you had a soft target for high teens growth. I'm curious if that was adjusted as part of the U.S. outlook. And as a second component, when thinking about revenue margins and cost reduction opportunities for the U.S. business, how would you think about slots versus table games mix opportunities for improving revenue margins and first-party content moving forward?
We've always said in our guidance we expect the iGaming business to grow at high teens for the year. We expected it to be slightly lower in H1 than H2 given the base of sportsbook numbers coming into the year. We're pleased with the momentum in iGaming during the World Cup and the cross-sell actives were higher than anticipated. From a content perspective, we have exclusive content launches every month from now until the end of the year, including some popular franchise titles that worked well in the past. We're pleased with where iGaming is and we've reiterated our guidance for the second half of the year. On cross-sell, we anticipate slightly better cross-sell performance in Q4 versus last year.
We can see a clear distinction between table games and slots. Direct casino—slots—are growing very strongly. As we noted, coming into the year the smaller sports base impacted table games. But after the World Cup and NBA finals, and with our plans for the football season, we're excited about what we can do in the second half.
And our next question comes from the line of Joseph Stauff with Susquehanna.
I wanted to clarify a few things on your prediction market strategy. Do you expect to own your own exchange at some point? Can you give any 2Q volume or user metrics? And will the new One App that you're launching before the sports season include a traveling wallet?
This is a very fast-moving space. There have been recent developments around complexities of market making if you own some exchange components, so we need to be thoughtful about how we position ourselves. We're happy with the strategy we have. The One App is going to deliver a real step change in customer performance. Regarding the traveling wallet, if you opened a contract while in one state and you're in another state, you will be able to close that contract down; that functionality will be available.
Volumes are significantly up but from a small base. We're making good progress. Predicts numbers are consolidated within reported financial results, but we're not separately disclosing volumes at this point. The catalyst for higher volumes we anticipate will be the One App launch. The product looks very slick and will be relatively seamless if you're traveling from New York to California. Wallets are separate but easy to switch between. The product experience will be significantly enhanced and the key is that we'll have much more liquidity and a fuller catalog going into the football and basketball seasons.
And our next question comes from the line of Daniel Politzer with JPMorgan.
Just a clarification on prediction markets and how you think about the guidance. I think your guidance now reflects $50 million of incremental EBITDA from market making. If I recall, your previous guidance for the year was $200 million to $300 million of expected investment. Given this incremental piece, where does that put you in terms of the total investment you expect here for this year?
You're right on the market making—we're quite excited and that's increased from where we were previously. Regarding the Predicts investment, we've integrated Predicts with the sportsbook proposition; we no longer break out the investments separately. Our earlier focus this year was on ensuring we had the right product experience, which we feel we are achieving with the One App and Crypto.com integration. From a cost perspective, this integration gives us a synergistic benefit across sportsbook and Predicts, allowing national scale and better leverage of marketing spend. We'll see how the new product lands in H2 and the traction from the One App before determining the investment profile into next year. The synergistic benefits from a broader sportsbook proposition will stand us in good stead.
And our next question comes from the line of Monique Pollard with Citi.
Coming back to the investment you're putting in to accelerate FanDuel sportsbook momentum in H2: is that entirely centered around generosity? If I understood correctly, Rob, that's an additional roughly 1.4 percent of last year's H2 handle. Promos last year in H2 were already 5.6 percent of handle. So are we going to around 7 percent of handle in H2? What kind of customer paybacks are you expecting? Is this a one-off in H2 or might it continue into H1 2027?
We won't be at 7 percent of annual promotional generosity in the second half. We are increasing our overall position and it will be closer to six percent. That's an increase on where we were last year. We previously anticipated the profile would be slightly lower as we got traction around the Rewards Club, but this is a deliberate investment decision based on sportsbook momentum. We could have delivered higher EBITDA by investing less, but we don't think that's the right thing to maximize long-term shareholder value. We're seeing great opportunity to invest behind the customer proposition, and that's coming through in current momentum. Recent MLB trading included record weeks. We have a large number of reactivated customers and we're happy with our apps as we head into NFL. The investment is proactive, puts us slightly ahead of last year in terms of generosity as a percentage of handle, and we will review spending as we always do. We're constantly looking at paybacks and ROI. The returns we're getting now look attractive, and we'll continue to lean in.
We accept we didn't execute our generosity strategy as well as we could have last year. We're in a much better place now with this investment, better execution, and the loyalty plan. We're seeing improvements in average player days which translates into ARPU and customers' perception of our generosity. We're investing to take advantage of the momentum and to have a bigger business with a better trajectory into 2027.
And our next question comes from the line of Charlie Muir-Sands with BNP Paribas.
With respect to the incremental cost savings program, you've updated the restructuring cost charges you anticipate to incur in 2026. Is it fair to assume that there will be ongoing cash restructuring charges through 2027 and perhaps 2028 to deliver that 2029 saving? And more broadly, has the Board given Mr. Taylor a wider remit to review the corporate structure and strategy of the business? Or should we see this as an evolution of the strategy from here and no likely further major changes to come soon?
Let me start on cost and then Peter can pick up the governance question. From the initial cost transformation we launched in 2024, we're tracking ahead; we've delivered key components and migrations. The incremental $500 million we announced builds on that progress and reflects the next phase: simplifying the organization, leveraging global scale, accelerating use of technology and AI, and removing duplication. In our SDI guidance for this year we've badged $100 million of cost against this, including the U.S. start. There will be some additional one-off costs into '27 and '28. Typically, you might see roughly a dollar of cost to deliver a dollar of run-rate savings, but we think it will be lower here due to the tech and AI nature of the savings, so the cash will be lower. But yes, some incremental costs into '27 and '28 will be expected.
On Dan's remit, Dan has been involved in all the strategy work over the years and in executing the plans. He is very supportive of what we're announcing today, so you should expect a continuation of the strategy and execution as he assumes the role from October first.
And our next question comes from the line of Ian Moore with Bernstein.
Given the incremental investment you're putting into generosity in H2 and the missteps last NFL season, as you look into this NFL season, what would success look like twelve months out as you're reengaging customers going into the next NFL season? What specifically is different about the setup into this NFL season versus last year?
Ian, the missteps last year were around applying the generosity strategy inconsistently in a high-margin environment. We're addressing that with the loyalty program, and traction from that is encouraging. We're seeing improvements in engagement and ARPU. The test will be whether, by 2027, we have a bigger business with a better trajectory. We're planning for that: better momentum, higher revenues, and the ability to invest more in product experiences for customers and leverage the loyalty program and other offerings.
And our next question comes from the line of Chad Beynon with Macquarie Group.
Just with respect to U.S. iGaming and sports betting regulation: how are you looking at prospects for iGaming or sports betting legalization in 2027? I know you hoped to have one new iGaming state by the end of 2027—how confident are you and which states are likeliest?
When we talked at Capital Markets Day we said we hoped to have one new iGaming state by the end of 2027. Virginia has progressed furthest of our target states, and there are interesting opportunities around D.C. There are other states where we hope to build traction—Ohio among them. We're optimistic that regulation progress will continue and there's pent-up demand for our products and services in those states.
And our next question comes from the line of Paul Ruddy with Davy.
Quick question on international. First on the UK and Ireland: how has the market progressed since the iGaming tax increase? Have you seen competitor behavior change and your thoughts on mitigation? And second, on Brazil: it still seems bumpy. Thoughts on continuing to invest there and when that market might start to improve for you?
On the UK and Ireland, we're seeing sequential improvement in SkyBet post-migration and customers have adapted to the new interface. We had a very strong World Cup across our brands. We've guided to first-order mitigants and are taking more focus on headcount savings rather than marketing—we want to maintain our posture. We expect competitors to begin pulling back which we anticipated, and second-order mitigants will be significant, positioning us well to capitalize. In Brazil, we're excited about the potential. We implemented product and pricing improvements including BetBuilder and uptake has been strong. We've improved the iGaming proposition and generosity mechanics into H2. Regulatory dynamics in Brazil are affecting market growth, but within that context we're happy with our product setup into 2027 and remain encouraged about the medium-to-long-term opportunity.
To add briefly on Brazil, the market conditions are challenging due to regulatory and socioeconomic actions, but our integration of product and pricing has improved our competitive position. We're focused on building a platform that scales and delivers returns over time.
And our next question comes from the line of John DeCree with CBRE.
When you look at exchanges like the Betfair Exchange in the U.K. and markets where predictions and sports coexist under clearer regulation, do you see anything in U.S. consumer behavior where prediction markets could become a much bigger piece of the overall sports pool than in the U.K.?
If you look at the U.K. and other markets where an exchange coexists with sportsbooks, the exchange tends to have a small market share. That's primarily because it's difficult to offer generosity through an exchange platform—the market maker that provides generosity cannot be confident they'll get the next bet from a customer. I wouldn't expect the structure to be significantly different in the U.S. Regulated sportsbooks should continue to take the vast majority of the business while prediction platforms will be a niche where some volumes migrate, but not at scale relative to the regulated sportsbooks.
And ladies and gentlemen, we are running long. So we will conclude the Q&A session today. I would now like to turn the call back over to Peter Jackson for closing comments. Peter?
Okay. Thank you very much, Greg. I'm sorry we've overrun. You'd have thought that having done this thirty-five times, we would have got the hang of it by now. With apologies to those of you who we didn't get to, the IR team are around and here to take any of your questions. Thank you very much, everybody, and I appreciate your support over the years.
Thanks, Peter. And ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Have a great day, everyone.