Good afternoon and welcome to the Flutter Q2 Results Call hosted by CEO, Peter Jackson; and CFO, Rob Coldrake. There will be a chance to ask questions later, but I will now hand the call over to Paul Tymms, Group Director of Investor Relations. Please go ahead.

Hi, everyone and welcome to Flutter's Q2 results call. With me this afternoon in New York are Flutter CEO, Peter Jackson; and CFO, Rob Coldrake. To this short intro, Peter will open up with a brief summary of our operational progress during the quarter, and then Rob will run through the Q2 financials and our updated 2024 guidance. We will then open up the lines for Q&A. Some of the information we are providing today, including our 2024 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 the company undertakes no obligation to update any forward-looking statements, 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. And I will now hand you over to Peter.

Thank you, Paul. I'm delighted to be joining you today from New York, the home of our new operational headquarters following our primary listing move back in May. With me is Rob Coldrake, Flutter's CFO. This is obviously Rob's first call since he started as CFO on May 31. He certainly hit the ground running given his experience within the group, and I know he is looking forward to meeting you all in due course. It's also appropriate to acknowledge that in recent weeks, one of the group's founders, David Power, passed away. He was a long-standing support of this business and a great training board for me, a generation of the Flutter leaders. May he rest in peace. I'll now turn to the performance of the business in Q2. It was a very strong quarter for the group and ahead of market expectations. We delivered AMP growth of 17% and revenue growth of 20%, reflecting excellent execution against our strategic priorities and positive sports results. We have outperformed in our major markets, U.S. sports and iGaming, the U.K., Ireland, and Italy, providing great momentum for the second half of the year. In the U.S., FanDuel had an exceptional quarter with nearly 40% share of the entire U.S. sports betting and iGaming market. Our market-leading products, underpinned by the Flutter Edge and continued disciplined customer acquisition investments, are driving our performance in the market. The improvements we delivered in our NBA, WNBA, and MLB products are increasing pilot penetration, driving up our structural hold, and player retention rates, resulting in continued strong returns on player acquisition investment. In the quarter, both AMPs and new players increased by over 30% in sportsbook and iGaming compared to the prior year. This reflects the strong start in North Carolina, where we had 59% of the market and 20% growth in new players from pre-2022 states. These excellent KPIs point to a long runway of growth in these states as the market moves forward. They also indicate a consistent posture we've taken since the market launched by investing behind FanDuel's excellent return on customer acquisition. In iGaming, we completed an important milestone for the migration of FanDuel Casino onto our proprietary technology. In time, this will unlock important benefits through access to in-house content, promotional capabilities, and also greater platform stability. This, combined with the launch of more exclusive titles and promotional features in the quarter, are further evidence of the fantastic roadmap of improvements we still have for iGaming players. Outside of the U.S., the group's scale and diversification contributed to AMPs and revenue growth of 15% and 10%, respectively. The Euros was the marquee event of the quarter with our U.K. and Italian businesses delivering same-game product improvements for players in advance of the tournament. Sisal is the first operator to offer same-game parlay in Italy and benefits from Flutter's Edge when it comes to delivering compelling product advantages for our brands in their local markets. Sisal's same-game parlay accounted for nearly 20% of stakes on Euros and helped deliver a record market share performance for Sisal in the quarter. This encapsulates a strong performance in Sisal since acquisition, where on a pro forma basis over the last two years, AMPs have increased by 60%, and revenue by 37%. In the U.K. and Ireland, all our brands are delivering excellent growth, combining for a tenth straight quarter of market share gains based on gambling commission data. In iGaming, we leveraged the Paddy Power brand and launched Paddy's Mansion Heist, our most successful live casino game launch ever. In Australia, the previously noted and anticipated declines in the racing market were evident in the quarter. However, we saw strong customer engagement around marquee rugby events, where player acquisition doubled year-on-year. Overall, the group had a very strong quarter, strengthening our leadership position in the U.S. and delivering excellent momentum in our diversified ex-U.S. business. And with that, I'll hand you over to Rob.

Thanks, Peter. Good afternoon, everyone. Thanks for joining the call. It's a really exciting time to be settling into the CFO role, and I'm delighted with the current momentum in the business. The group delivered a really strong performance in the quarter with revenue growth of 20% and adjusted EBITDA growth of 17% to $738 million. The group had net income of $297 million on a reported basis, which is after noncash expenses, including the amortization of acquired intangibles of $147 million and a $91 million gain on the fair value of the FOX option. Diluted earnings per share increased 290%, while adjusted earnings per share increased 56% due to the strong financial performance and the positive movement in the FOX option. Free cash flow was $171 million versus a cash outflow of $95 million in the prior year. Our strong deleveraging profile saw our leverage ratio reduced to 2.6x from 3.1x at the end of December 2023. We are almost within our medium-term leverage target range of 2x to 2.5x. We look forward to updating you on our capital allocation framework and the range of capital allocation opportunities we have on our Investor Day on September 25. Turning now to each of the segments. In the U.S., the exceptional quarter noted by Peter translates to excellent financial returns with revenue growth of 39% and adjusted EBITDA growth of 51%. Pleasingly, the strong growth is across all state cohort types with pre-2022 state launch revenue up 33% year-over-year, including pre-2020 launches, which are 27% higher. Sportsbook revenue grew 41% from stakes growth of 35% and a further expansion of our structural sportsbook net revenue margin. iGaming revenue is 47% higher, reflecting the gains we are making in the direct casino segment of the market and the product improvements the team has delivered over the last two years. This revenue performance, combined with operating leverage and sales and marketing, helped deliver adjusted EBITDA of $260 million, well ahead of market expectations. Outside of the U.S., revenue increased 10% due to the strong performances in the U.K. and Ireland, and internationally. In the U.K. and Ireland, the combination of continued iGaming momentum, the European Football Championships, and positive sports results drove revenue and adjusted EBITDA 18% higher. Sports results were very favorable in the quarter, adding 190 basis points to our sportsbook net revenue margin. Positive results were most notable during the Euros, which continued into July. The previously noted softer Australian racing market resulted in associated year-on-year declines in that market, with revenue down 10%. In international, the addition of MaxBet and 12% constant currency revenue growth in our other consolidated and invested markets drove revenue 16% higher on a constant currency basis. Turning now to our updated guidance for 2024. In the U.S., we have increased our midpoint revenue guidance to $6.2 billion and adjusted EBITDA midpoint of $740 million. This equates to year-over-year growth of 41% for revenue and 219% for adjusted EBITDA. This reflects the strong momentum we have in the business, including the excellent performance in Q2 and the sports results benefit, and is after the $40 million net impact of the tax changes introduced in Illinois in July. The gross tax impact in Illinois is $50 million in 2024, and we expect it to mitigate 50% of the tax from 2025 onwards. This is prior to any additional second-order benefits such as market share gains from subscale players, which we typically see when regulatory or tax changes have been implemented in our other markets. On a quarterly basis in the U.S., we expect a small EBITDA loss in Q3 and significant earnings to be generated in Q4. In the group ex-U.S., we now expect both increased revenue of $8 billion and adjusted EBITDA of $1.77 billion at the midpoint of our guidance. This equates to year-over-year growth of 8% for both metrics. As always, our guidance is provided on the basis that sports results are in line with our expectations for the remainder of the year, current foreign exchange rates, no new state openings for the remainder of the year, and a consistent regulatory and tax environment. This guidance demonstrates the strong momentum we have across the group. With that, Peter and I are happy to take your questions. In the interest of time, can we ask that, as usual, we limit to two questions per person? With that, I'll hand you back to Jeremy to manage the call.

Our first question comes from Clark Lempen from BTIG.

Peter, I wanted to see if we could open up by talking about U.S. performance. 2Q results were nicely ahead, full-year guidance was raised out of Illinois. I think Rob said pre-22 state growth was up 33%. Could you give us a little bit more color around, I guess, just what's sort of driving the strong results right now and what also is embedded for back-half guidance? Second question I have is related to the $40 million net headwind that you guys called out from Illinois. As we think about managing potential additional increases in taxes going forward, what are the key levers that you guys have at your disposal to mitigate those headwinds? And is the potential tax surcharge on player winnings maybe part of that calculus?

Thank you for the questions, Clark. It's nice to be talking to you in your time zone for once, and long may this continue. Let me give you some thoughts around the U.S. performance. Then, I think I'll probably ask Rob to give us the major building blocks. As I said in my opening remarks, I'm really pleased to see the strong performance in Q2. I think it's a really good indication of the posture we've adopted in the market of acquiring as much business as we can while we meet our return criteria. To remind you, that's just to make sure that we can see less than a 2-year payback. I think we pushed hard in the first half, and you can definitely see the benefits of that come through in the player numbers, the increase in acquisition that we saw in Q2. I think it stands us in really good stead as we go into the back half of the year. But Rob, maybe you want to just talk about the building blocks.

Yes. I think, first of all, Clark, I'm delighted to be talking about an upgrade to the full-year guidance for revenue and EBITDA in my first earnings call. As Peter said, we had a terrific performance in Q2, and that's partly driven by the positive sports results. What we see as a result of that is extremely strong drop-through in Q2. Without looking forward to the second half, the second half of the year still accounts for 40% of the revenue upgrade, but that won't directly drop through to EBITDA for a couple of reasons. Firstly, we're choosing to invest a fair amount of $20 million behind customer acquisition, given those returns that we continue to see well within our kind of 24-month payback that we've previously stated. That momentum should set us up really well for 2025 as we take a larger business into next year. In addition, we've got an additional $20 million of operating costs, and that's partly due to the higher payment costs which have been driven by the change in player behavior and more frequent deposits and withdrawals, and partly due to some additional costs associated with the Beyond Play acquisition. If you then factor in the net Illinois impact of $40 million, you get to the full-year guidance. Essentially, the full-year upgrade, excluding Illinois, drops per at 35% or it's 15% ex-Illinois. So we're absolutely delighted with that.

Thank you, Rob. And look, I suspect, Clark, you've got a question around the situation in Illinois. I can imagine that a number of other people will have questions around how we're thinking about positioning ourselves in it. So I think it probably makes sense for me just to give a slightly more expansive answer to that question. I don't anticipate us needing to answer the question subsequently for the people. To start with, I think it's important to recognize that there's a happy medium for tax rates that enables operators to maximize market growth, provides the best experience for customers, and over time, maximizes revenue for states. Most states have taken a sensible approach to date. I do think, though, that instituting a graduated tax system that punishes those who have invested the most to grow their businesses is wrong. I think it will drive customers to offshore operators or potentially to onshore operators who are operating unregulated and untaxed sport parlays under the guise of sweepstakes. We have lots of patent recognition of operating internationally in high-tax locations. Our experience is that moderating levels of generosity or indeed reducing local marketing is the best response. As Rob mentioned, we often find that smaller players may also have to increase their prices, which leads to us capturing more share, providing an offset for us. So we think that the moderating levels of generosity and reducing local marketing is the best customer option, and we have no plans to introduce a surcharge for winners.

Our next question comes from Jordan Bender from Citizens JMP.

Maybe just to follow on the CPA questions. In Q2 here, that's been a big theme or topic across most players in the space. So are you seeing acquisition costs fall kind of equally across iGaming and sports betting? And can you maybe point to why this is happening year-to-date? And then the second question off of that, the updated U.S. guidance implies an increase in OpEx for the full year even after accounting for the Illinois impact. Are the declining CPAs kind of that core reason why you're stepping up investment here? Or is there anything else you're seeing into the market or into football season here that allowed you to invest more?

Thanks, Jordan. On a CPA basis, if I look at it, Q2 this year and Q2 last year, we actually see that our costs have come down a little bit, even with the significant increase in customer numbers that we've acquired. It's often difficult to try and be very precise because you do get an impact of new state launches which can often dilute the CPA cost because of our large DFS customer base that we can cross-sell into and other mechanisms that we have to give us advantages. But I think what's important is that we're maintaining the consistent posture that we've had in the market to acquire as much business as we can while we meet our return criteria. We're very confident in offering the best prices to customers in the market and the best products in the market, and we will maintain high levels of customer lifetime value. Together with the significant benefits we get in customer acquisition, it gives us real confidence to continue to acquire as much business as we can.

I think for the second part of your question, Jordan, we are investing behind what we're seeing at some very strong payback. From an operating cost perspective, we've got the Beyond Play costs that I mentioned in the second half of the year. We're also seeing some slightly higher payment costs, and we're very comfortable with the position that we've got for the second half of the year. As I mentioned also earlier, we've got some very good momentum coming into the second half of the year from a revenue perspective. One of the other things that we'll be very focused on for the second half of the year moving forward is actually driving more operating leverage. All the costs are coming into focus. We're really looking to be as efficient and optimal as we can from a cost base perspective. But we do have a couple of additional costs. I think in addition, you've got the costs that we previously outlined in terms of investing behind the Flutter Edge capabilities, and also some regulatory compliance costs in conjunction with our U.S. listing. But we've previously signposted both of those, and they are in line with our expectations.

Our next question comes from Ed Young from Morgan Stanley.

My first question is on the cohort growth that you talked through, Rob, on Slide 6. It presents us very bullish to see obviously, strong growth across all these different cohorts. I perhaps wonder if broadly you could give some color on the relative mix of AMP growth and revenue per AMP growth you're seeing across those different cohorts just giving us an understanding over what's driving some of that across the different areas? And then second of all, perhaps a novelty of a non-U.S. question. In the U.K. and Ireland, obviously, the Euros were known to be a good event, but you've obviously had much stronger iGaming growth than sports betting growth. I just wonder if you could give a bit more color on what's driven that and how you've seen the tournament progressed from where you were pre-tournament?

Ed, I want to share some thoughts about the growth of our cohorts, as I believe this is what you're referring to. We continue to observe increases in areas like our parlay usage among our historical cohorts, which has been highly beneficial for us. When I consider this alongside the improvements we've made in our structural margin, it has significantly contributed to the performance of our historical cohorts. This pattern holds true across all the various time frames we present. Rob, do you have anything to add?

Yes. I think specifically we're very confident in the major cohorts and the growth they're driving; pre-2022 state acquisition. Revenue was up 16%, AMPs are 20% in 2022 and 2023, cohort state revenues are up 45%. So we've got some incredible growth coming through that. With regards to the U.K. performance and the Euros specifically, I mean, we're absolutely delighted. The fact that Harry came and had his shooting boots on helps us with that. We mostly exited Q2 with some great momentum. And that continued into the third quarter with the first half of the month with the Euros. In addition to that, I think what's almost more encouraging for the U.K. is the gaming performance. So we're seeing excellent gaming momentum this year, and actually, all four brands in the U.K. have posted gaming growth of 20% plus year-on-year, which we are particularly happy with. So the U.K. is in very good shape at the moment as we move into H2.

Our next question comes from Ryan Sigdahl from Craig-Hallum Capital Group.

I want to start. There have been a couple of rumors you might sign an agreement with Diamond Sports Group during naming rights for regional sports networks, separately potentially looking at Pen Interactive, the ESPN bet. No need to comment specifically on those rumors or directly, but curious how you think about media tie-ins and what you've learned from other markets? And then secondly, second question, Caesars sold their intellectual property for the World Series of Poker to GGPoker, your main global competitor there. Just curious how you think that may impact the competitive dynamics in your strategy around poker?

Thank you, Ryan. I believe we've consistently leveraged our strong media connections in the U.S. Scale has definitely worked in our favor. Historically, we've successfully showcased our products and pricing through effective integrations, which has always been crucial for us. Of course, having quality products to support this is essential. There's no benefit in having people try our products only for them to be unimpressed. We’re fortunate to offer the best product in the market. From Caesars' perspective, you're correct that they have partnered with GGPoker, which is our global competitor in the poker space, although they operate in many markets where we don't typically compete with other operators. There are some intriguing questions for those involved. The PokerStars business presents us with a significant opportunity in the U.S. market. The ability to achieve shared liquidity across states can provide us with advantages. Globally, the poker landscape is fragmenting into smaller segments from a liquidity standpoint. I believe we hold a strong position in some regulated markets due to the strength of our local hero brands.

Yes. I think just to add to Peter's point, from a poker perspective, we talked about Q1 and the fact that we've started to embark on a transformation for PokerStars. That's progressing really well. We're very pleased with the progress, and actually, by later this year, we'll see our poker platform rolled out in Switzerland, which I think demonstrates our agility and how quickly we can move there. Also, from a performance perspective, a, PokerStars is doing very well. In the U.S., we're seeing some real green shoots, and we're very optimistic about how big that business can become there. I think secondly, when you look at the PokerStars business in the rest of the world, we continue to see the positive impact of some pricing initiatives that we've put in place. We've made some changes to both the loyalty which has resulted in cost savings, and we've also had a number of offset savings across our casino products. So we're really happy with the way that we're trending on poker overall.

Our next question comes from James Rowland Clark from Barclays.

My first question is on Australia. You said there's no change to underlying trends, and the upgraded EBITDA guide is sports results driven. Can you just give us some color on what you're focused on, particularly there that provides some confidence that trends have bottomed out as you previously mentioned? And then secondly, slightly mitigating question on the interest charge which is guided up from $370 million to $405 million due to a delay in previously expected interest income benefit. Is this just raised interest charge in outer years or is this just a timing thing?

Yes. So I can pick up those questions. So firstly, in Australia, I think we're really pleased with the performance that we've seen in the quarter. I think it's demonstrating a very resilient performance in the face of quite a tough regulatory backdrop. As we said, we're seeing really good customer momentum, and underlying trends are in line with the expected market declines that we've previously signposted. We're particularly seeing strong customer engagement on marquee events like the State of Origin games and Rugby, where we've doubled the customer acquisition year-over-year. So some really good momentum in sports, in particular, in Australia outside of racing. And yes, as we said, we've had a benefit from sports results in the quarter as well, so factoring all of that in, that's driving the upgrade in Australia, which we're very pleased with. I think from an interest perspective, some other projects that we had talked about previously to unlock cash efficiency across the wider group have now been delayed until 2025 when we originally envisaged from H2 2024. So that's making up part of the change. In addition, when I've come in and we've had a look at the forecast, it was quite evident that some of our interest rates and cash assumptions in H2 were quite optimistic. So we have tweaked those and revised the forecast accordingly which is always now seeing a slightly higher number. But we're very confident in the number that we've now got, and that's what we think we'll hit for the full year. I think just to add to that as well, we did refinance some very expensive Euros and U.S. debt in May, and we'll see that the benefit of some interest cost savings in that versus the current run rate in H2.

Our next question comes from Dan Politzer from Wells Fargo.

The first one, Peter, maybe you could remind us on some of the parameters through which you evaluate M&A. And how do you think about U.S. opportunities or maybe balancing these relative to opportunities in Brazil or other jurisdictions? Acknowledging here your leverage, I believe, is 2.6x, your target is 2 to 2.5x. Maybe how high would you be willing to go for the right deal? And then secondly, your flow through, I believe you mentioned it was about 35% for the back end of this year, ex-Illinois. Is that kind of the right ballpark to think about your flow-through on a normalized basis from here? And that's it for me.

Thank you, Daniel. I will address the M&A question, and Rob will discuss the flow-through. First, I want to emphasize that we've been quite active in M&A both in the U.S. and internationally. We recently acquired Beyond Play and previously purchased a financial business in 2018. We are open to making acquisitions in this market if we believe they will be beneficial. It's also crucial to note that there are many international markets that are either regulated or on the verge of regulation where we do not yet have a leading position. We have a strong history of acquiring businesses in those markets, leveraging the Flutter Edge, and achieving significant performance improvements, with Sisal as a prime example. Tombola also illustrates our success in this area. Our experiences globally have been valuable, and we are committed to evaluating all opportunities in our sector. If needed, we are willing to exceed our leverage target to pursue the right deal, provided we have confidence in quickly reducing our leverage. This has been reflected recently as we have successfully reduced our leverage following substantial earnings growth in the U.S.

With regards to the flow-through question, a couple of points to mention on this. I mean, we are going to see some difference in flow-through by quarters as we move forward because it can be impacted by a number of factors, including both sports results and seasonality. Also, where we see opportunities to continue investing at the level of paybacks we've talked about, we'll continue to do so because that's what's driving our superior returns. That's what's driving our market share gains and yet our overall kind of virtual firewall as the business. So we're not holding ourselves or anchoring to a specific number. But we are quite confident at this stage that given the momentum we've got, we will continue to see a decent drop-through on the incremental revenues that we're driving.

Our next question comes from Paul Ruddy from Davy.

I have two questions, which are probably related. First, regarding the competitive intensity, specifically in iCasino. With BetMGM increasing their investment in iCasino, do you feel there is a need for you to respond in any way? Secondly, in the sports sector, several operators are launching refreshed products. Can you provide some insight on why you believe your product advantage will carry into the new NFL season?

Paul, I believe the responses are quite clear. From a competitive standpoint, we have consistently taken a strong approach to acquiring as much business as possible, whether in states that focus solely on sports or those that offer both sports and iGaming. We benefit from the cross-selling potential between the two. We are very optimistic about the progress we've made so far this year. As we discuss Q2 today, we aim to continue our strong efforts in the latter half of the year. This involves not only marketing investments but also significant enhancements to our product capabilities. I am particularly pleased with the current performance of parlays and MLB, an area that was not a historical focus for us. We have nearly matched our penetration levels here to those seen in the NFL. Clearly, our product advantages are substantial; we've been heavily involved in live betting and have many exciting enhancements planned for the upcoming football season starting in September. We are confident that we have the best product and pricing in the market and will work diligently to stay well ahead of our competitors.

Our next question comes from Joe Stauff from SIG.

Peter, Rob. I had two questions for you on the U.S. AMP growth in the quarter, 27%. I was wondering if you could disaggregate that for us between OSB and iCasino. And then two, with respect to the effort to insource a lot of the, say, technical and tech stack capabilities of your U.S. iCasino offering, where are you in that process? The reason I ask is I'm trying to anticipate, say, the gross margin pickup you get once that's fully in-house?

Joe, well, it's a great question because I'm delighted to tell you that we've actually brought our iGaming product in-house in the U.S. It's not a cost play, but it's certainly going to improve our ability to deploy our own in-house content into the U.S. market, which is not something we've been able to do in the past. It is also going to help improve things like the stability of the platform as well. So we will definitely drive benefits from it. I think there's a lot of exciting initiatives that we can deploy off the back of it. Then Rob, you want to just talk about the AMP?

Yes. In terms of the AMP, we're 30% both in sportsbook and iGaming. A small decline on DFS, as you'd expect, with a bit of cannibalization. We're really happy with the growth across both sportsbook and iGaming. That's very much continuing into the second half of the year.

Yes. Look, I mean, clearly, a big part of iGaming is working with third-party providers. We'll continue to work extensively with partners in that space. But when I look at all the work that we've done around deploying our own cross-product promotional engine into iGaming, the stuff that you'll see us doing around that, what we've done around, there's also a lot of stability to control. There's a lot of things that we've been able to bring from our experiences around the world and into the U.S. market. We now sit on our own in-house tech stack.

We will continue with Monique Pollard from Citi.

Okay. I'll stick to one then. On the U.S. gross margin. The gross margin was really good in the quarter, 45.1%. Presumably, if I just think about how you've been growing in the different states, there's been some scaling thereof of the non-tax COGS. So I just want to understand what sort of initiatives are being put in place there? And also when we think about the full-year gross profit margin, we've talked about 43.5%, obviously, that was excluding the Illinois tax impact. Is that still the guide ex the Illinois tax impact? Or has that been also increased?

I think one of the points I just made is to remember the impact of the sports results which has quite a profound impact, particularly when not all of our cost of sales are. A 25% impact on handle. So that will have a bearing, but Rob, are there any more details you want to?

I think there are a couple of points to mention, Monique. First, we now expect our cost of sales to be around 56.8% of revenue, which aligns closely with our previous guidance of 56.5%. The composition of our cost of sales, as Peter mentioned, is influenced by sports results. However, there are additional levers we can leverage in this area over time. For instance, we've seen an increase in payment costs due to our deposits and withdrawal system that simplifies the process for customers, which they appreciate. Currently, payment costs represent about 6% of our revenue, a notable expense, but we have successful experience from other markets where we reduced payment costs effectively, and we see potential to do the same in the U.S. Next year, we have a system coming in that we believe will help reduce payment costs. There are also other costs we can manage, and we believe we can address them over time. Overall, we remain in line with our guidance and have various strategies to manage our cost of sales to maintain the longer-term guidance we have previously set.

Our next question comes from Robert Fishman from MoffettNathanson.

Peter, in your recent write-up on the similarities between Flutter Edge and Fergie’s Manu, you discussed the importance of developing and maintaining a distinct competitive advantage. So I'm just kind of curious if you can talk about your confidence of maintaining or even growing your number one position in the U.S. And if you want to speak about the success of North Carolina as an example?

Robert, I'm pleased you read the article. It's important when you look at the business that we've assembled globally and the way that we've been able to do that in a way that empowers each of our local markets. Businesses that try to do things on a substantial scale can often get bogged down with coordinating product roadmaps and stuff like that. We think it's really important to have local teams delivering on what's required in the local market. But what we're doing through the Flutter Edge is we ensure that in a small number of areas, we have really good examples of the team supporting each other. I'd call out what we're seeing here in America with the strength in our casino business. A lot of the team who are leading that have come from around the world and have had great experience and pattern recognition of having run big casino operations elsewhere. We've been able to bring things like our reward mechanics into the market from our U.K. business, and we've been able to bring technology from other markets as well. So I think what we've done here in casino is a great example of the Flutter Edge coming to life. When you look at the same-game parlay, we were the first to bring that to Italy, and I mentioned earlier that 20% of our customers in Italy use that in the Euros. That's another great example of the Flutter Edge in action.

Our next question comes from Jed Kelly from Oppenheimer.

Just going back to the taxes, and I get not implementing the surcharge. But can you talk about just given your experience in other jurisdictions how you Flutter can be proactive in terms of preventing some of the state contagion, especially if some of your wind margins continue to go up?

I think you probably sneaked in, in terms of a slightly different approach to the point I made earlier. We operate in a lot of different markets around the world. When you look at incidents where they push the tax rate up, they’ve actually seen the tax take decline. These are not straightforward decisions for these bodies to take because it may not actually achieve what they're aiming for. We'll be familiar with the Laffer curve; there are optimal points, we believe, for taxation to be set. We try and spend as much time as we can educating and showing our experiences with legislative bodies to ensure that they can achieve the best outcome for themselves and the customers as well.

Our next question comes from Joseph Thomas from HSBC.

All right. Our next question comes from Simon Davies from Deutsche Bank.

Just one from me. Brazil, it looks like it's finally set to launch in the new year. Can you just talk a bit about how well you're positioned in that market? And is it one of those markets where you might need to bring in M&A to scale up?

Simon, yes, look, I can remember talking about Brazil in our earnings call back in 2018. So we're finally getting there when the regulation is going to pass this time. We are excited about it; a tremendous amount of time invested here. They will absolutely see soccer as a primary focus for the market. There’s obviously a lot of betting that happens in the market today. I think we're reasonably well placed with our Betfair brand in that market. Of course, we also operate PokerStars out there as well. We are ambitious, right? We like to have podium positions. I really would like to have gold medal positions. We've been able to do that organically in many markets around the world, but we also often resort to M&A, and we think that when we did that, we were able to apply the fluctuation in supercharging businesses. We will work out what we want to do in Brazil, and when we make a decision, we'll let the market know if there's something to say.

Our next question comes from Andrew Tam from Redburn.

So at the start of the year, you flagged pretty well that it was a tactic towards leaning into customer acquisition. Are you satisfied with your efforts during the first half? Do you think you could have gone harder in that regard? As a follow-on, is there a natural tapering of expectations given the hit to customers on TVs in certainly in the Illinois market, given the change there? And does that mean there's a reallocation of spend out of that market into other states?

We have previously discussed our analysis of historical performance, during which we realized that investing more has been beneficial. This is partly due to the higher lifetime values of our customers, which exceeded our initial expectations. The improvements in customer retention and our success in cross-selling iGaming also contributed to this outcome. Furthermore, we've seen enhancements in our adverse margin and parlay penetration. Looking at Q2 performance, all these factors remain valid. Historically, we always wished we had acquired more business, and in Q2, we made significant efforts while staying within our limits. The team performed exceptionally well. We are continually refining our strategies, and if we identify more opportunities to push forward and achieve favorable returns, we will act on them.

And our final question of the day comes from Robin Farley from UBS.

I wanted to circle back to your not having plans to introduce the surcharge. I'm just kind of curious why you wouldn't see it as an opportunity to recapture a significant part of not only in Illinois but also in New York and Pennsylvania, and maybe even prevent future states that might be following what Illinois did. I mean if you, as a market leader, it seems fairly low risk if the two market leaders both pass along the cost and no one's really at a competitive disadvantage. So just kind of curious why not take that opportunity?

Robin, I addressed that earlier and I don't have anything further to say.

Now we will get a question from James Wheatcroft from Jefferies.

Just a question really around product and development as you go into the next NFL season. I'm particularly thinking about best in play and how that's going to be incremental to the parlay product, how that will shape over the course of this following season and into next year, please?

If we look at Q2, we were very pleased with our investment in live betting. The proportion of customers betting during the NBA playoffs was four times higher than before. Improving the quality of the product definitely helps. For the NFL, we have some exciting initiatives and plans for the same game parlay as the season starts. This product is very important for us.

All right. And that does conclude the Q&A. I will now hand it back over to Peter and the team for closing remarks.

Okay. Thank you, everybody, for joining the call. It's been fantastic to do it from here in our operational headquarters in New York. I hope all of our U.S.-based analysts have appreciated not getting up in the middle of the night in a further season sprint. We're delighted with the performance in Q2 and look forward to catching up with you all soon.

That concludes today's presentation. Have a pleasant day.