Higher stakes drive revenue up 8% at FDJ

7 October 2019

La Française des Jeux (FDJ) has reported a 7% year-on-year increase in revenue for the first nine months of 2019, with the French gaming operator experiencing a rise in stakes across all of its business units.

Revenue for the nine months to 30 September amounted to €1.42bn (£1.27bn/$1.56bn), up from €1.33bn in the corresponding period last year. This builds on a 5.5% increase in revenue during the first half of the year.

Gross gaming revenue, comprising stakes minus prizes, climbed 7% from €3.74bn to €4.02bn, while net gaming revenue – gross gaming revenue minus contribution to public finances – was also up 6% from €1.31bn to €1.39bn.

FDJ noted an 8% increase in overall stakes, with customers spending a total of €12.54bn across its verticals, up from €11.64bn in the opening nine months of 2018.

Lottery remains the primary source of income for FDJ, with stakes up 6% from $9.39bn to $9.98bn. Instant games stake climbed 8% to €6.02bn, boosted by the launch and re-launch of 10 games since the start of the year, while draw-based games stakes were up 5% to €3.97bn.

FDJ also saw significant growth within its sports betting division, with stakes up by 14% from €2.25bn to €2.56bn, driven by higher wagering activity around football, tennis and basketball

Stakes placed offline, via land-based facilities, was up 6% to €11.8bn, but FDJ did note a big increase in online stakes, with this total rising 38% from €1.74bn to €2.41bn for the nine-month period.

Based on year-on-year growth in the nine months, FDJ said it expects total stakes to amount to €16.9bn for the full year, which would be up 7% on €15.8bn last year.

Revenue is also expected to climb from €1.8bn to €1.9bn, with lottery revenue set to increase from €1.48bn to €1.55bn and sports betting revenue from €297m to €370m. Revenue from other activities, including the integration of Sporting Group, is also expected to jump from €23m to approximately €50m.

Group earnings before interest, tax, depreciation and amortisation is on course to increase from €319m to €325m, despite a rise in distributor’s commission rates introduced at the beginning of the year.

“The positive momentum recorded by FDJ since the start of the year has continued in the third quarter,” FDJ chairwoman and chief executive, Stéphane Pallez, said. "A continuous increase in revenue and stakes across all segments confirms the favourable outlook and that the group is on track to meet its objectives for 2019.

“FDJ benefits from a new, stable regulatory framework, granting 25-year exclusive rights over lottery, and sports betting at points of sale. Combined with the strength of our business model, this gives us confidence that this momentum is set to continue in 2020 and up to 2025.”

Looking ahead to 2020, FDJ is seeking to increase total player stakes by between 4% and 5%, with this set to be boosted by betting around the Uefa European Championships national team football tournament.

Revenue is forecast to grow by approximately 5%, with 5% growth in lottery and 6% for the sports betting division.

The French state's majority stake in FDJ is set to be sold off before the end of 2019, with a consortium of banking groups appointed by the country's privatisation body Agence des Participations de l’Etat (APE) to handle the sale of the majority of its 72% stake in an initial public offering. Following the IPO to private and institutional investors, France will hold a stake of no more than 30% of FDJ shares. 

This will have a knock-on effect on the rest of the market, with L’autorité nationale des jeux (ANJ) to become the country's new national regulatory body for online and land-based gambling. This has raised hopes that taxation models for online operators will shift from a turnover- to a revenue-based model, and that new verticals such as online casino will be legalised.