FDJ United Faces Online Betting Challenges Amidst Regulatory Pressures
In its latest quarterly report released on April 15, FDJ United showcased a strong increase in total gaming revenue (GGR), reaching €925 million (approximately $1 billion or £792 million), a notable 30% rise compared to the previous year. However, the company’s online betting segment, primarily through its Kindred division, experienced a decline, recording a 10% drop to €231 million during the first three months of the year, despite a 10% increase in active players.
The financial performance has been heavily influenced by regulatory changes, particularly in the United Kingdom and the Netherlands. Despite the overall growth, FDJ United’s earnings took a hit from heightened tax obligations and stricter gambling regulations. Notably, when isolating revenue from these two markets, the online gaming revenue actually rose nearly 8% compared to the previous year.
In the Netherlands, revenue plummeted 41% in Q1 due to a significant tax increase of nearly 4%, pushing the rate to 34.2% of GGR. Additional regulatory measures, such as deposit limits imposed on players, have further curtailed revenue streams. FDJ United’s CFO, Pascal Chaffard, highlighted these challenges during an earnings call, noting that the introduction of a monthly net deposit cap was particularly detrimental.
Chaffard explained, “The revenue drop for licensed operators was substantial, and the channelisation rate declined sharply as unlicensed operators began to capture a larger market share in 2024, exceeding 50% within the Netherlands.”
Despite these setbacks, FDJ United remains optimistic about its prospects in the Dutch market, citing a 15% growth in active players during the first quarter. The company is actively seeking to adapt to these changing regulations by enhancing customer engagement, particularly in streamlining the process for players to request increased deposit limits. Customers may see their monthly deposit cap lifted if they provide sufficient financial documentation, and the operator plans to make this experience more user-friendly, anticipating a recovery in revenue in future quarters.
The regulatory landscape is also shifting, with the number of licensed operators in the Netherlands decreasing from 27 to 25 due to stricter guidelines, which Chaffard believes will continue to consolidate the market. He conveyed confidence in the company’s ability to maintain its leading position and attract more customers despite external pressures.
Turning to other segments, FDJ United reported a 3.6% rise in lottery and retail sports betting revenues, totaling €640 million. The online lottery sector in France thrived, with a 14% increase to €79 million attributed to a broader player base. Meanwhile, retail sports betting saw a slight decline of 1% to €112 million, primarily influenced by unfavorable outcomes in certain football matches, although overall betting stakes rose by 5%.
Looking ahead, FDJ United is gearing up for the anticipated liberalization of the Finnish gambling market slated for 2027. With the regulatory bill already progressing through Parliament, FDJ United aims to capitalize on this emerging opportunity, having already established a presence in Finland prior to the changes.
On a strategic note, the operator has decided against re-entering the U.S. market, following its exit last year, citing profitability concerns within that jurisdiction. Chaffard reiterated, “Our assessment indicates that achieving profitability in that market remains unattainable.”
In summary, while FDJ United celebrates growth in various areas, the challenges posed by regulatory shifts in key markets emphasize the dynamic landscape of online gambling and the need for continuous adaptation and strategic foresight.