Paddy Power owner Flutter Entertainment has warned over profits as payouts surged due to a long winning streak by punters.
The group – which also owns Betfair, Sky Bet and FanDuel in the US – slashed its full year underlying earnings outlook in results out in America late on Wednesday to £2.9 billion, down from £3.3 billion previously.
It said this was due largely to a run of customer-friendly sport results in the third quarter, which has picked up pace in its current quarter, with the group alerting over a hit of around 170 million US dollars (£129.4 million) to underlying earnings from higher-than-expected payouts since the start of October.
Profits are also being weighed on by investment costs, with the firm expanding its FanDuel business across the US and announcing the launch with partner CME Group of FanDuel Predicts app next month.
The app will target the rapidly-growing event contracts market, which allows investors to bet on the likelihood of specific events occurring, such as those in sport and entertainment through to politics and the economy.
Flutter – which switched its primary listing from London to New York last year – saw shares in London fall as much as 4% in morning trading on Thursday, before later settling around 2% lower.
Peter Jackson, chief executive of Flutter, said: “We are the clear number one operator in the US, and we will continue to build on that position to drive future profitability.
“Our strategic investments, including the launch of FanDuel Predicts and recent international acquisitions, position us exceptionally well to capture new opportunities and deliver sustainable, profitable growth.”
In a letter to shareholders, Mr Jackson reiterated warnings over jobs and investment in the UK if the sector is hit with tax hikes in the upcoming Budget.
He said: “Significant increases to the tax rates would threaten jobs and investment across the UK market, as well as driving more customers to unregulated operators on the black market – where there are no player protections and regulatory oversight.
“We continue to engage with policymakers and await the outcome in the Budget later this month, however should taxes increase, Flutter’s growing scale and market leading position will help to mitigate the impact.”
Flutter last month said Paddy Power would shut 57 betting shops across the UK and Ireland, putting almost 250 workers at risk.
It blamed the closures on “increasing cost pressures and challenging market conditions”.
In the third quarter to the end of September, Flutter reported a 6% rise in underlying earnings to 478 million US dollars (£363 million) as revenues jumped 17%.
