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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, everyone, and thank you for joining our 2021 Preliminary Results Presentation. It's great to be with you in person after nearly two years of Zoom meetings. As you can see, Jonathan's with me this morning and he'll take you through our financial performance shortly.
Slide 3 shows the agenda for this morning's presentation. I'm going to start with a brief overview of key developments in 2021. Then I'll take you through our refreshed group strategy and our new positive impact plan, which is designed to make our business more sustainable. Jonathan will then take you through the financials before I provide an operational update. Thereafter, we'll be happy to take any questions you may have.
Starting on slide 4, look, I've been pleased with the progress we've made in 2021 from both an operational and a strategic perspective. We continue to expand our recreational customer base globally in a sustainable way. It positions us well for the long-term. In the US, FanDuel continues to lead. And we achieved an important milestone on the path to profitability with FanDuel's sportsbook and gaming business turning contribution positive during the year.
In the UK and Ireland, we maintained our market share while making significant strides to make our business more sustainable. Jonathan and I will share more details on the progress we're making in this area and take you through the material items that drove our Q4 performance in particular.
In Australia, Sportsbet continued to win share of the online market, reaching an estimated 50% in 2021. And in International, we've stabilized the PokerStars business. Jonathan will provide an overview of the key moving parts within the division over the last two years and I will then share how this equips us well for delivering long-term growth.
In 2018, we laid out a four-pillar strategy for the group, and on slide 5, we have summarized the progress we've achieved. We are the number one operator in the UK, Ireland, Australia, and the US, while also now having a series of podium positions across international markets. We are a diversified global player from both a geographic and product perspective, and I'm sure I don't need to remind you all how important diversification has been over the last two years.
Perhaps most encouragingly, our growth has been recreational player-led. Our customer base now stands at over 7.6 million monthly players, having grown a further 23% in 2021. And we have a business where over 90% of revenues come from regulated markets today, a number that we expect to rise to 95% in the not-too-distant future, with further markets regulating and as our US business expands. The addition of Sisal will also add additional regulated revenue. Globally, we continue to see significant opportunities to grow our presence, both organically and through acquisition, and our refreshed strategy is designed to take advantage of those opportunities.
On slide 6, we summarize our refreshed four-pillar strategy. Pillar one focuses on our core markets where we aim to extend our leadership positions by delivering great products to our recreational player base, while leveraging our economies of scale to drive efficiencies. In the US, we will continue to invest to win as the market expands. Our goal is simple: to maintain our lead in US sports betting while improving our share of the online gaming market.
Pillar three is focused on international market opportunities, where we will combine local and global scale to expand our share in attractive regulated markets. We will find more Adjarabets, Junglees, and Sisals, strong local brands with competitive moats around their businesses.
And finally, we'll nurture an innovative and experimental mindset across the group to take early positions in future spaces. We're already developing some of these ideas with VR or virtual reality poker, generating $10 million in gross revenue during 2021. This group strategy will be enabled by scale, speed, product, data, and our Positive Impact Plan, which I'll cover in more detail on the next slide.
Yesterday, we launched our Positive Impact Plan, a sustainability strategy that puts three key sets of stakeholders at the heart of everything we do; our customers, colleagues, and communities. The slide sets out the global principles of the plan to make a positive change across these three stakeholder groups. Importantly, we have now set clear targets in each of these areas so we can hold ourselves to account. I'll talk more about our customer target on the next slide.
We want to empower colleagues to work better and to ensure that our teams are representative of where we work and live through a comprehensive diversity, equity, and inclusion strategy. We want to work with communities to do more and aim to improve the lives of 10 million people by 2030. We'll do so by using expertise and experience within our business to support our communities with a focus on sport, health, and well-being, and tech for good. You'll find a lot more information on our Positive Impact Plan when our Annual Report is published in the coming weeks.
Our Play Well safer gambling strategy builds on years of progress already made in protecting our customers, such as through the [ph] CAT (00:05:40) model developed originally in PPB. For a group with over 7.6 million monthly customers, we know there is no one-size-fits-all approach, though we believe there are universal principles that we can and should apply to all we can to protect vulnerable customers.
We listen to our customers, industry experts and critics by investing in research, innovation and collaboration. We want to empower players to play positively by providing them with platforms and products that have protective tools in place. And this would include having better conversations with our players to encourage them to pause and reflect on their play and make positive choices. And we will continue to support players who need intervention by providing robust internal infrastructures, external partnerships and fund new initiatives.
To ensure these principles are embedded within our organization, divisional safer gambling goals will be linked to our team's remuneration as part of their annual bonus metrics. This will ensure each division is focused on initiatives that will support and promote local safer gambling strategies in individual markets and contexts. We've also established our first global goal to have 75% of our players using one or more of our Play Well tools by 2030. We believe that the use of such tools empowers customers to appraise their own activity while promoting positive play.
I feel really proud of this new strategy and look forward to seeing the benefits it will bring to our customers, our people and our communities.
And with that, I'll hand you over to Jonathan to take you through our financial results.
Thanks, Peter, and good morning, everybody. Again, it's great to actually see people in 3D. So, welcome all. Plenty to cover, so let's get started.
Okay. So, so starting on slide 10, on a pro forma constant currency basis, we delivered revenue growth of 17% in 2021. This is obviously driven by the increase in the ongoing recreational player base with AMPs up, as Peter said, 23% year-on-year. Our sports revenue increased by 27%, thanks to the continued growth in the US, a strong performance in Australia and a return to a more normal sports calendar in 2021. As we'll cover later, this growth was despite challenging sports margin comparatives from 2020.
Gaming revenue increased by 4% as the US growth helped offset the uplift seen in our International business from the COVID-related boost in poker during 2020. These factors, combined with the larger US loss and the initiatives that we are taking to make the business more sustainable, resulted in a group EBITDA of £1 billion, 18% lower than 2020, and excluding those US investment losses, down by 10%. The group continues to turn profit into cash at a very high rate and we ended the year with net debt of £2.6 billion and a leverage of 2.6 times, or 2.1 times excluding those US investment losses.
Turning to slide 11 on the statutory income statement, clearly, the high year-on-year growth reflected the benefit of a full 12 months contribution from The Stars Group in 2021's numbers versus eight months in 2020. And the statutory loss after tax of £412 million included over £900 million of separately disclosed items, which were primarily noncash items. This included the amortization of acquired intangibles of £543 million, mainly from the TSG merger. It also includes £163 million for the final settlement of the historic PokerStars case with the state of Kentucky.
Slide 12, we show our AMPs by division since H1 2019. Player volumes are a key indicator of the underlying health of our business, as they signal how effectively we are delivering against our customer acquisition and retention strategies. In 2021, we grew the total AMPs by 23% to £7.6 million. I'm not going to go through every number in detail, but a few things really stand out as I consider what we're delivering in terms of player growth. When compared to 2019, we have emerged with a much larger player base than we had pre-COVID, mostly driven by growth in recreational players, and that's very encouraging.
In the UK&I, player numbers were 25% higher year-on-year in 2021 at 3.2 million. Player retention in Australia remained strong with two-year compound AMP growth of 28%. And in International, AMPs have grown by 10% since 2019 with that growth coming from more sustainable markets. And in the US, we had nearly 2 million AMPs in Q4, making it now our second largest division in terms of player numbers.
On slide 13, you can see how player growth translated into revenue growth. Last year, we delivered revenue growth of 17%, with the majority of that driven by the US. I'll talk about the UK and Ireland in more detail on the next slide, but I do want to touch in the forms of the other divisions.
We grew revenues in Australia by 20% last year, undoubtedly helped by COVID-related restrictions. And that growth of 20% was driven by AMP growth of 27%. We have enjoyed favorable sports results in both 2020 and 2021 in Australia, but there was no material difference in margin year-on-year. In International, as we previously guided, revenue declined due to the uplift in poker activity in the prior year, along with the effect of regulatory changes and compliance initiatives.
In the US, our revenue more than doubled, up 113%. The biggest drivers of this were a full-year contribution from four sportsbook states launched in 2020 and a partial year benefit from our four new states launched in 2021. We also benefited from structural growth in our sportsbook margin, which Peter is going to cover later. We launched in three new gaming states, bringing our total footprint to five, and our US gaming business is already half the size of our entire UK&I gaming business. TVG and DFS continue to contribute with combined revenue growth of 11% in 2021.
Okay, on slide 14, I want to take you through the year-on-year performance of our online business in UK&I. To keep this analysis straightforward, we have not tried to normalize the impact of COVID, though clearly 2020 was an unusual year with online benefiting from retail closures. Additionally, we have not tried to separate out the estimated recycling impacts, albeit we have seen less recycling in 2021 than historically has been the case, and Peter will talk a little bit more about that later.
Starting from the left, firstly, we had some good underlying gaming and exchange revenue growth, with gaming AMPs up 22% despite lapping some challenging COVID comparatives. This is before we account for the impact of safer gambling measures. Staking grew by 25%, driving £266 million in revenue growth, benefiting from the return of a more normal sports calendar. We continued to benefit from improvements in structural margin, which added in the further £46 million. The year-on-year swing in sports results impacted our revenues by £232 million, a large proportion of which impacted in Q4.
We rolled out various new safer gambling measures during the year, which we estimate cost us approximately £93 million during 2021. And Peter will share progress that we've made in this area later. Reported revenue growth of 3% translated into EBITDA of £626 million, flat year-on-year, with some higher cost of sales in the areas of streaming costs and taxes.
Moving on to slide 15, given the significant one-off COVID impacts from PokerStars in 2020, we thought it might be helpful to provide a two-year EBITDA bridge for the International division. Firstly, we have to adjust for foreign exchange movements, which can be material in our International division. Being the translation of the P&L from US dollars to sterling, firstly; and secondly, exposure to local currencies which players exchange to play in US dollars. Over two years, the EBITDA impact has been £61 million.
Next, we have the impact of initiatives that we have taken to improve the sustainability of the division. First, you will recall that we made the decision at the end of 2019 to switch off a number of Betfair Exchange partners whose compliance standards were not aligned to ours. The net cost of these switch-offs was £8 million. Secondly, we guided to a £65 million investment to bring the compliance processes and standards of TSG up to Flutter's standards post-merger. And thirdly, we have improved the quality of the geographic, regulated and product mix within the division. And as a result, our cost of sales as a percentage of revenues increased by around 8 percentage points.
We've had the negative regulatory developments in both Germany and Netherlands, which have cost the business £85 million since 2019, with a further £55 million incremental costs to come in 2022. Rebasing 2019 EBITDA for these items resulted in EBITDA of £304 million.
You can then see the underlying investment made in the business and the growth this has driven to-date. Of the £333 million of investment, £52 million was in capabilities. Some of this was in building required resource, for example, in our regulatory and compliance teams; and some was invested in commercial skills and capabilities to enable us to effectively spend the marketing investment and invest in product improvements. Peter will touch on where we have focused this investment.
We have – sorry, just go back. Thanks. We have delivered growth of £121 million, of which we estimate 2021 benefited by around £38 million from COVID impacts. By rebuilding the foundations of the PokerStars business and investing in our casino and marketing capabilities, we have stabilized our poker share, driven significant growth in direct casino, and delivered good underlying growth in our key markets, which Peter will talk about shortly.
Slide 16 provides an EBITDA and an EBITDA margin summary for 2019, 2020, and 2021. Standing back from these results, we have materially rebalanced the group over this period. In UK&I Online, the recreational growth has delivered strong customer and profit growth over two years, at a time when retail has been challenged.
Australia has delivered phenomenal profit growth from increasing AMPs, synergies, and operating leverage. As covered in the previous slide, we have materially reshaped and de-risked the International division. And in Corporate, we have delivered synergies from the merger.
In the US, while losses have grown over the last two years, we have invested to build the embedded value of the business and now have a clear path to profitability in 2023. As a reminder, our revenues from 2019 to 2021 grew from £400 million to £1.4 billion. Overall, we feel the group is really well-positioned financially going forwards.
On slide 17, you will see we generated adjusted free cash flow of £625 million. This was lower than the prior year due to our EBITDA reduction, higher CapEx spend and a reduced working capital benefit compared to 2020. Cash generation was still very strong. Comparing operating profit to pre-tax adjusted free cash flow, we converted profits into cash at 102%. I'm sure you'll be glad to hear that I won't go through every line item on this slide and we'll just talk about some of the more material ones.
We paid higher corporate tax given the changing geographic mix of our earnings. Interest paid was £37 million lower year-on-year, thanks to lower borrowing costs. We paid £234 million to fully settle the historic case with Kentucky, including associated legal fees. And our Employee Benefit Trust acquired £181 million worth of shares relating to FanDuel incentive schemes put in place at the time of the original acquisition.
M&A activity during the period resulted in a net inflow of £73 million from the sale of Oddschecker, partially offset by the acquisitions of Junglee Games and Singular. And as a result, we finished the year with net debt of £2.6 billion and a leverage of 2.6 times, and this is before the acquisitions of Tombola, which completed in January, and Sisal, which is expected to complete in Q2 of this year.
So, as I said, the leverage at the end of 2021 was 2.6 times, or 2.1 times excluding the US losses. To consider the impact of Tombola and Sisal in the group's debt and leverage level, we have modeled the year-end 2021 position as though we owned both assets at that point. On this basis, our leverage ratio would have been 3.7 times, or 3.1 times excluding US losses.
Given the highly cash generative nature of our business and our expectation that we'll be EBITDA positive in the US in 2023, we are comfortable running with a temporary elevated leverage ratio. As you will see on the slide, since these announcements, all of our credit ratings have a stable outlook. And we remain committed to our medium-term target of 1 to 2 times leverage. And the board will review the group's dividend policy once leverage is within the targeted range.
Slide 19 provides a trading update and additionally some memo items for those wishing to update trading models. Current trading for the seven weeks to – the first seven weeks in 2022 have been in line with our expectations and 2% higher year-on-year. The prior year included some very positive sports results in the UK&I.
Given the evolving situation in Russia and Ukraine, we wanted to provide a summary of our exposure to both markets. Since completion of our merger with TSG, we have materially reduced our exposure to the Russian online market. And in 2021, Russia accounted for £41 million in contribution. In addition, Ukraine represented contribution of £19 million. We are monitoring the situation closely with our working assumption being that revenues from both jurisdictions will fall to zero in the not too distant future.
As we consider the shape of 2022 revenues compared to 2021, we benefited from favorable sports results in the first half of last year, with gross win margins 120 basis points above expected levels, whereas they were in line overall in H2. We, therefore, expect that the phasing of our growth this year will see us grow more in the second half, assuming a normal run of sports results.
And with that, I'll hand back to Peter.
Thanks, Jonathan. I'll now provide an update on key developments across the group, starting with the US on slide 21. Back in August, when we provided a deep dive in our US business, I described how the flywheel effect is fueling FanDuel's growth. And over the last 12 months, Amy and the team have done a great job in continuing to scale our US business.
The chart on the right demonstrates how quickly the business is growing. Our monthly sportsbook customers grew by 180% in 2021, with our gaming customer base more than doubling also. Our best-in-class sports betting product is continuing to deliver improvements to our structural win margins. We're continuing to invest heavily in product, brand and generosity, but believe the efficiency of our spend stands out in the US sector today.
Critically, our revenue growth is continuing to exceed our operating cost growth, bringing ongoing improvements on our path to profitability. We believe strongly that the long term-winners in this sector are determined by the quality of their product.
On slide 22, the migration of FanDuel into the group's betting platform was completed in July and provided significant improvements in speed and reliability across the NFL season. Our proprietary Same Game Parlay product, which is seamlessly integrated into the user experience, continues to be a key differentiator for us and we'll continue to expand our product offering in this area. Over 76% of our NFL customers placed a Same Game Parlay bet during the NFL season. And as we have highlighted before, this brings big benefits to us in the form of structurally higher win margins.
In Q4 of this year, we generated 50% more gross revenue from our handle than the average of the rest of the market. We also continue to leverage our scale to invest in the FanDuel brand. In the second half, we signed multiyear extensions with key partners such as the NFL, the NBA, Pat McAfee, The Ringer, and the PGA.
Given the attractive customer economics we're seeing, our US business spent over $1 billion on customer promotions and marketing in 2021. This allowed us to have the highest TV media share of voice in the market throughout the second half, 25% higher than our nearest competitor. The levels of required investment to be a winner in this market are high, which we ultimately feel may act as a helpful barrier to entry in the industry.
On slide 23, you'll see the results these advantages are delivering. We're continuing to lead with a 40% share of the online sports betting market in Q4. I'll share the overall online sports and gaming market was 31% in Q4 when combined with our 20% gaming share. Our market share remains remarkably resilient as we've added gold medals in new 2021 states such as Arizona, Michigan and Virginia to our ongoing leads in earlier states such as New Jersey and Pennsylvania. When states launch, our early share can be depressed by both our own investments in promotional activity and the early giveaways from competitors. But once markets settle down, we're encouraged to see that customers are migrating to where the product is best.
In Q1 of 2022, we've invested significantly doing launches in New York, Louisiana, and in another generous Super Bowl offer. We expect these investments to deliver strong market shares as the year progresses. Our New York launch has been particularly successful, with over 400,000 new sportsbook customers acquired to-date. In addition, we're already seeing signs that competitors are pulling back from their initial customer offers.
There's an important point to note in terms of long-term profitability in New York and tax take for the state. We hope policymakers in New York recognize that while the state benefited from an initial period of heavy investment amongst operators, such investment is not sustainable beyond a few weeks. Absent different treatments of bonusing and/or lower tax rate, the period of aggressive initial spending is almost over.
On the right-hand chart, you'll see that we're delivering our leading share while operating more efficiently than our largest online competitors. We generated 47% more revenue than our nearest competitor in 2021 and we achieved this whilst accruing $400 million less in losses on a comparable reporting basis. One key factor in this efficiency is that on a like-for-like basis, we estimate that in 2021 we spent $0.25 less on sales and marketing for each dollar of revenue generated than our nearest competitor.
On slide 24, I want to update you on our latest thinking around state-by-state profitability. At our 2019 US Investor Day, we estimated that our New Jersey sportsbook would be structurally contribution positive within 18 to 30 months of launch. I'm pleased to report that we're now seeing an acceleration in that time line to just 12 to 24 months.
What's driving this? Firstly, we are acquiring customers far faster when a state launches than used to be the case. Arizona is a good example of this, has a population that is three-quarter the size of New Jersey. It took us about five months to acquire our first 100,000 sportsbook customers in New Jersey. In Arizona, it took us less than a month. These faster sign-up rates better reflect the awareness of the sports betting generally, but also the changes we've made to our own state-launched playbook where our integrated account and wallet means we are converting DFS customers to sports betting faster than before.
Once acquired, the quality of our products are driving better retention rates and generating the structurally higher sports margins I spoke about. The chart shows what this means for investment and returns. Because we are acquiring more customers initially, the initial investment losses are deeper in the first months post-launch. But we end up with a much bigger base of customers in a shorter timeframe, leading to a higher level of contribution in the subsequent months.
On slide 25, we show what this means for our path to profitability. In 2021, our combined sportsbook and gaming businesses generated a positive contribution of $14 million. As you can see, the early cohorts of customers generated a positive contribution that we then used to invest in the next wave of new customers. Just 38% of our 2021 total customer base were with us before January last year, yet they generated enough contribution to offset the material net investment made to acquire the remaining 62% of our customer base.
Going forward, as our existing customer base expands, their contribution will far outstrip our ongoing customer acquisition investment. We can see this being played out at an individual state level where large early states like New Jersey, Pennsylvania, Illinois and Indiana were already contribution positive in 2021.
FanDuel's cost base, excluding marketing, was £458 million in 2021, which is a significant level investment for those choosing to compete with us. Even with ongoing investment and the potential for ongoing losses in FOX Bet, we expect that by 2023 we'll be EBITDA positive in the US. This does assume, though, that the timing of new state regulation matches our expectations and that a big state like California doesn't go live next year. And should California go live, reaching EBITDA positive would likely be delayed, but that would be a nice problem to have.
Now, let me talk about our UK and Irish businesses. In our UK&I division, 2021 was something of a tale of two halves. Jonathan has already talked you through how our performance compared with 2020, but I'd like to spend a couple of minutes sharing some insights around the fourth quarter and the moving parts that influenced the outcome.
First, we saw a very material swing in sports results year-on-year. The swing from good luck to bad in the fourth quarters of 2020 and 2021 resulted in a revenue swing of almost £150 million. There's nothing structurally going on with margin. It is simply down to results and the fact that we generally over-index in Betbuilder products. Secondly, you can see how the cost of the safer gambling changes we have made impacted revenues across the year, with costs totaling £93 million by the end of Q4. Setting these two factors aside, though, it's fair to say that underlying demand in Q4 was below our expectations.
The normal relationship between staking and margin was weaker in Q4 when compared with historic norms, and we think there are a couple of reasons for this. Firstly, we think that the COVID unwind has led to reduced levels of customer engagement with gambling products generally, and the Gambling Commission data published last week would back that up. It showed that online sports betting GGR was down 43% in the UK in Q4. Secondly, we feel that some of our products lacked a sharpness towards the end of last year, and we're making changes to address that.
In contrast, our gaming business outperformed the market. Flutter brands maintained good customer volumes, driven by leading daily price mechanics such as the Sky Vegas Prize Machine and Paddy's Wonder Wheel. It's [ph] nice although (00:31:37) that the market generally experienced the fewest number of Q4 online casino downloads for three years. And rest assured, we are responding to what we're seeing in the market and we're very focused on improving our product proposition, and we're also examining the cost base of the business. While we don't know what specific recommendations will be made in the white paper, we know that customer economics in the UK are going to continue to evolve. And so we're doing work now to make sure our structures and cost base optimize the future shape of the sector.
On slide 27, now let's talk about the progress we've made in improving the sustainability of our business in the UK and Ireland. As you can see in the chart on the left, since H2 2019, our AMP growth has exceeded our revenue growth, with reductions in revenue from higher value tiers being largely offset by growth in lower spending cohorts.
While this effectively means that we've reduced the proportion of revenue coming from our top value tier by over 55% since 2019, we have grown our overall AMP base by 27% at the same time. ARPUs across all our customer cohorts have reduced, and we believe we have increased our share within the recreational space in that time.
Businesses such as ours will always have a concentration of revenues coming from higher income customers. Having examined this, we see that our revenue concentration coming from higher value tier customers aligns closely with overall wealth distribution in the UK. Now, just 6.7% of our revenue comes from the highest value tier, and this is considerably lower for both our recreational brands and Tombola. The safer gambling framework we already put in place and our new Play Well strategy gives us confidence in the protections we have for our higher spending customers.
On slide 28, we set out how we protect our customers throughout all stages of their journey from registration to continued play. I'm not going to go through all of the detail here, but I want to share it as I think it's really important that people understand just how much we're doing in this area at the moment. From robust checks and monitoring for our newest customers to always-on protections, we want to ensure that all our customers are equally empowered and protected where needed.
I recognize that the changes we are making are having a financial impact on our business, but I passionately believe that what we're doing is right for our customers and right for our business in the long run. I would encourage our peers to be proactive in this area too. And ultimately, this means that the UK sector experiences a year or two of low growth, then it'll be a price worth paying in the interest of all stakeholders.
Turning to Australia on slide 29. Back in September, Barni and the team brought you through why we're winning the market by delivering on product, marketing and value. We now have a 50% share of the Australian online market, 7 percentage points higher than in 2019. But we aren't resting on our laurels. In the second half, the team combined the best of our product in Same Game Multis with our leading value proposition by offering personalized bet return tokens to Same Game Multi bettors.
By combining our top line growth with the operational efficiency scale can deliver and the synergy benefit from the TSG merger, our EBITDA margin has expanded by 10 percentage points in just two years. This is an EBITDA growth compound rate of 64% over that time. Sportsbet provides the perfect template of what we're trying to achieve in other international markets and showcases their financial benefits and market leadership.
Now moving on to International. We're really pleased to see those key areas of investment that Jonathan talked you through are starting to pay off. On the left, you can see how we successfully stabilized our market share in poker with a steady decline from the beginning of 2019 flattening as we began to invest in the poker proposition and in particular since Q4, since we launched our new reward scheme which has really resonated with customers. Stabilizing this player base is crucial to our casino and sports cross-sell business.
We've also improved the sustainability of our business, with 78% of revenues now coming from regulated or regulating markets, a number that will continue to rise. We are very pleased with the growth we're seeing in our casino business through both cross-sell and direct casino. We saw an all-time record from casino-first customers during Q4.
Having improved the sustainability of the business, we're now very focused on the opportunities ahead for this division. On slide 31, we've selected a number of markets where we see excellent potential for further growth. These markets are at varying degrees of regulation, with Italy and Georgia regulated, and Canada and Brazil regulating. The projected TAM of these markets is approximately £26 billion by 2026, with a projected online compound annual growth rate of 10% over the next five years.
The real growth for Flutter in these markets there will hopefully come from growing our market share. Today we have an 8% online market share in these markets, which, given our extensive capabilities, feels low to me. We have a big opportunity to grow this share. And our International team are focused on replicating the success we have in other markets where we achieved local scale.
Finally, slide 32 just provides an updated view on what the shape of the division will look like once we complete the Sisal acquisition. In addition, the Sisal will help us to further diversify the business and provide us with access to the attractive Italian market where our share will then exceed over 20% and also bring an omni-channel advantage that we hope will unlock further benefits across our other brands. And we look forward to welcoming Francesco and his team to the division.
In conclusion, I'm happy with the progress we've made across the group in 2021. We're very focused on the future. With a refreshed strategy [ph] that's put sustainability is heart, (00:37:36) I believe we are very well positioned to continue to grow our presence globally. We must be relentless in making sure that our product remains industry-leading and that we drive efficiencies within the group as we do so.
And with it now, we'll now open it up to any questions you may have. We'll take questions from the room first and then, if we have time, we'll go to the phone lines. For those of you who are on the phone, please press star one if you'd like to ask a question. As I said, we'll take them from the room first. And can I ask, as usual, that you limit yourselves to two questions and not too many subparts in the first instance, so we can give everybody a chance. [ph] Michael? (00:38:20)
Great. Good morning, Peter. Good morning, Jonathan. Thanks for taking the questions. Two, if I can. The first on the US and quite a few references to superior cost economics through the presentation. And if I picked up the statistic correctly, I think you said your spend was about 25% lower than key competitors. I just wonder what that efficiency is when you look at it kind of on a customer acquisition and/or customer retention basis. So, just interested in some further color in terms of where you think you're outperforming.
And then secondly, on the UK market, if I can, and again an interesting detail in terms of the concentration of your revenue base in terms of higher value customers. When you think about that 7% from that higher value cohort, how do you think about that number going forward, particularly given the changes we could get or we will get, should I say, from the Gambling Act in the coming months? Thanks.
Thank you, [ph] Michael (00:39:13). Look, taking the question around the US, I think there are two very important factors that are going on around efficiency. And I always go back to looking at the sort of CAC to LTV dynamics that we're seeing in the market, which is, for us, the most important dynamic. And I think from a sort of acquisition cost perspective, we undoubtedly have always had a benefit in the market in terms of our ability to cross-sell customers from DFS into sports. And that's something that we've made sure we really benefit from.
But the team have also been very disciplined when it comes to our marketing spend. It's very easy to get sucked into signing deals and partnerships and you can spend a lot of money very needlessly. And there are some quotes and opportunities that we've passed on, which proved to be the right decision. So I think the team have done a great job for us in being very diligent around our marketing investment. And whilst we have – we do spend more money than other people, we think we also spend it very wisely when we do. And when we look and track our acquisition costs, we can see that and it gives us real confidence in the team's performance.
I think at the back side of that sort of equation, looking at the LTVs, we obviously have a structural margin advantage because of the Same Game Parlay, right? And we've seen very substantial use of that product amongst our customers, which gives us a margin advantage. But, ultimately, the fact that our retention levels are so high also helps with the lifetime values. And the reason that we're getting such good use of the Parlay product, the reason we get such good retention is because we have the best product in the market.
And the great thing about the US is you can look at this – a lot of market data comes out in a state-by-state and, often, almost as a weekly basis. And New York, for me, is a great example. I mean, you can look at – people have got big market shares of handle because they're handing out free dollars. But you now look at where the market shares have gone when people are actually reverting back to using the best products. And FanDuel is kind of born in that market.
I think it's worth looking back at the last six months. I mean, we've had, undoubtedly, the most aggressive start to NFL that we've ever had. And we'll probably [ph] sell (00:41:29) again next year, by the way. Well, hopefully, we won't, but maybe we will. And we've seen some people coming in with very, very aggressive offers. And we have seen our economics through that period hold up and we maintained discipline at times when people were buying handle share. And it was – there were some crazy offers out there.
But, actually, what we've seen is we've seen announcements from competitors around their levels of spend ongoing and pullbacks. We have seen our returns looking fantastic and we're leaning in, not leaning out at this point because of the returns that we're seeing from investment at this point and have seen through the whole of the season because we've maintained our discipline, but now we're seeing some really attractive investment opportunities in terms of CAC to LTVs in that market and we feel very positive about where we are today.
Yeah. I think that's an important point. We're seeing competitors pull back. We're actually leaning in because we're seeing the CAC to LTV dynamics are improving for us.
In terms of the UK, when we look at the shape of the market, and I've talked about it a little bit and we compare that with wealth distribution or income tax distribution in the UK. We think our business is more favorably skewed, right? So we think we're in a very good starting point.
We've got a very – we've got the best recreational base of customers and brands in the market. And so we think that – look, there are going to be changes that occur. We have made some significant investments and we talked about it in terms of our Positive Impact Plan. Yes, I've shown you the revenue that we've taken out of the business over the course of last year. But we think it's the right thing to do to get ahead of these changes.
And we believe that the Gambling Act will introduce a sort of more level playing field. So it could be that competitors can claim the delivery market great but I'm not sure how sustainable that will be in the long run. We think we've got the right shape and distribution of business today. And we think we've got the right focus on the recreational base for whatever the changes are that the Gambling Act review introduces. And I'm relatively buoyed by the fact that they seem to be taking quite an evidence-led approach to it. And we think we've got some good data and insights to share with them with the things that we've been doing.
Thank you.
Hi. Morning. Richard Stuber from Numis. A couple of questions, actually. Just the first one, just following on for the last question about the highest value tier. Could you say how you define that? Is that how much the spend per month from those customers? Because clearly, if the cap goes, say, from £500 maximum deposit to £300, that can make a huge difference. And the definition of that 7% could be a lot higher. So, any sort of numbers around what you define that? And then the second question on the US. Obviously, incredibly good market share. But do you have any sense of how the black market is going on in the US? Whether you're taking – whether you're – a lot of these of black market operators, you're taking share from them as well?
So, look, in terms of the UK market, we have taken a lot of steps to address what we think is some of the challenges in the sector, whether it's looking at customers when they come and they join us, the monitoring that we have and then the sort of the backstop we have in terms of looking at people's expenditure. And we now started just to distinguish that with difference of age categories as well.
So, ultimately, we think that our business is very well set up for whatever changes that come. And we've heard lots of noise around how affordability checks can be introduced. We think that the approach that we're taking, whether there's granular set of different approaches in different segments is the right answer rather than some sort of simplified figure for the whole market. But we'll wait and see whether the review of the Gambling Act ends up in a similar position.
But I think if I go back to the point that I made before, you're right, you can sort of define the high-value tiers in all sorts of different ways. But ultimately, if we look at things like the income tax distribution and you'll be well aware that the top 1% of income taxpayers generate 30% of the income tax base, our business is nowhere near skewed like that, right? So, yeah, it gives us real reassurance that our business is very well set up for the market distribution dynamics that we see.
In terms of the US, I'm afraid we are – we've never been focused on sort of market share targets, right? We always talk about the fact we've been focused on our sort of CAC to LTV dynamics. As Jonathan mentioned earlier, we're actually seeing them really favorably at the moment. We're delighted with how the business is performing. We're pushing really hard to take advantage of the fact that we've got the best product in the market. We just had a fantastic Super Bowl. We're delighted with the market share that we've taken. We're winning in so many key states and the business has got terrific momentum in it.
And of course, we're seeing that we also have operating leverage come through into the business. So we're taking advantage and pushing as hard as we can. I have no doubt we're taking business from some of the black market operators, but they'll still be doing very well in states like California, Florida, and Texas, which have yet to regulate.
Jonathan, if there's anything to add?
Morning. Simon Davies from Deutsche Bank. Two from me, please. You talked about £93 million of safer gambling costs last year. Can you give us a feel for where those were incurred and, in particular, what the cost was of the introduction of max stakes and deposit limits? And secondly, can you give some guidance in terms of revenues coming from Eastern Europe? And are you seeing any impact given the recent invasion of Ukraine on some of the neighboring markets, in particular Georgia?
Look...
I'll take the first.
Yeah, Jonathan will take the first one.
Yeah. So, I mean, look, there's a whole range of things that add up to the £93 million and obviously we've been putting in lower thresholds as we gone through the year. We've undertaken daily deposit limits for all customers. Actually, the [ph] temp on (00:48:02) staking limit on slots has been a very, very small proportion of that, so well less than 10%. So, that's not been a big driver of it. It's been the general multitude of actions that we've undertaken across a whole range of areas. So I wouldn't put it on certainly to that [ph] temp on (00:48:21) slot limit or so.
In terms of the impact across sort of the broader region of Eastern Europe first in terms of the changes we're seeing, we haven't – we've obviously seen impacts in the countries which have been directly impacted. And of course, the most important thing from our perspective is from our colleagues who are based in and around the region. We have a large number of contractors, nearly 80 contractors or subcontractors based in Ukraine, and we're doing everything we can to support them and their families, including relocation for their families, if that's appropriate, to some of the country's neighboring where we may have locations. And we have two direct employees in Russia. As it relates to the performance of the business in Georgia and Armenia, we haven't seen any significant impact as a result of the conflict.
Morning, guys. David Brohan, Goodbody's. Just two questions from me. So, firstly, as part of the sustainability plans that you announced yesterday, you talked about the 50% and 75% targets in 2026 and 2030. Can you give any color in terms of where that currently sits? And then just also on retail, so in terms of the Irish retail business versus the UK, there's quite a divergence in terms of the recovery versus 2019. So, how should we kind of be thinking about Irish retail going forward versus 2019 levels? Thanks.
Okay. Yeah. Look, in terms of the Play Well metrics, we're currently at around 35% against that metric. There are different – we're at different stages in different parts of the globe. And I think if I look at a market like the US, we're taking – we're trying to take a relative leadership position around that. So we'll be doing some safer gambling advertising in Q2. We've been the first operator to sign up to offer Gamban software to customers. There's a variety of things we're doing. We're building our own AI models for the US market, recognizing the differences in the US market compared with what we're seeing overseas.
And as an example, we'll be tracking to 400 metrics across our consumers in the UK to try and identify any examples of people who are exhibiting behaviors that we're uncomfortable with. So there's a lot we're going to be doing in the US in recognizing our leadership position we have in that market and a very substantial growth in the business. I think it's also important that we show leadership in that area, too.
Jonathan, I don't know whether you want to reference where we are on Irish retail.
Look, I think what we're seeing behaviorally in Ireland is just is different than what we've seen in the UK. I think the UK has gone sort of post-COVID at a much earlier stage, with people feeling much more confident about going into retail outlets, etcetera, etcetera. And obviously we've been more fully open for a longer period in the UK than we have had.
Look, we'll see how behaviors change over the next three to six months. We're still confident that Irish retail is a very key place in the market. We know we get benefits from having that iconic brand on the high street and that will continue. But we have no doubt that the Irish retail will bounce back in time. It's just a case of how long that's going to take.
Thanks, guys.
Hi.
Hi.
This is Kiranjot Grewal from Bank of America. Just two questions from me. Firstly, on stickiness, your product seems to be better and bigger in terms of range and that seems to be driving a lot of the demand. But is there a risk there could be catch-up from competitors? Or is there some kind of element within the product that would drive loyalty?
And then the second one is on US IPO. We spoke in detail about it, I think, six or seven months ago. And there were, I think, three reasons you outlined why you wanted to do it. Given where the share prices have headed or the market is headed in the last six months, is that still on the cards for, say, this year or could that be delayed? Thank you.
And I presume your reference to stickiness of product is in the US. I mean, because I could talk about any one of our products, right?
Sorry, yes.
They're great in all the markets we operate. Look, I mean there's a hundred things you have to do. Yeah, well, many more actually and the product team would kick me for saying any hundred. There's many things you have to do to get the product right for customers. The speed and ease of use is a really important aspect. If you think about the way in which the variety of markets that we have available to better surface the markets that people want to find quickly and enable them to get on – get their bets on in a way that works them really efficiently is important. Actually the Same Game Parlay product and the integration of that and the ability to evolve that, as we have done, and I mentioned what we've done in Australia in terms of building tokenization and generosity into it and there's other ways in which we will, those things are really important.
So we're not standing still. We've got the benefits of operating a global platform. So the platform that sits behind our team in America is the same one that sits behind our Paddy Power and Betfair businesses. And we can actually share and take ideas and concepts from one business to another. So, we have a very big development team to support our American business, but they also have the benefits to be able to steal ideas and products and services that they see from other divisions as well. So the way I think about it is they've got thousands of cheerleaders who are – they're helping build products in America, and we're certainly not standing still.
And I think if you look at the Super Bowl this year, there were no issues from a customer service perspective or stability perspective. A lot of – I mean, there have been challenges in the past, but the massive volumes we're putting through that platform, the business and the platform, all stood up really well. And I think that shouldn't be underestimated. So I think when we look at the retention levels in the business, it's very much driven by the quality of the products. And there's lots of aspects to that. And you can look at [indiscernible] (00:54:45) for example, undertake a review and assess the quality of our product and have us ranked number one. And our customers are voting with their feet. They may take other people's free money, but they come and continue to use FanDuel.
But at the end of the day, we have to be paranoid because everybody else is going to be trying to catch up. So we've got to stay ahead and keep investing, and that's why you can see our cost base growing. We're putting in more tech folk in both the sports betting side. We've also got a big opportunity on the gaming side that we haven't monetized properly yet, and that's why we put another 100 heads into that business. We've just moved one of our most experienced casino guys across the US, and he'll be going over there very shortly to help really try and get some growth – more growth into that side of the business and really make sure that our product does everything it needs to do on the gaming side as well as the sports side.
Yeah. And look, as it relates to the IPO of a small stake in FanDuel, the reasons that we talked about it in the past were the fact that you get this with the marketing benefits of having a listed vehicle in the US. And we know that DraftKings get a lot of publicity off the back of their listing with their customers buying So it's something that we would like to get the benefits of. We often talk about the levels of the partnerships that we have, whether that's with marketing channels or personalities or different media businesses. And to be able to pay for some of those in equity as well as cash is important, although I suspect that some of the people who took equity a while ago are wishing they had now taken cash.
Yeah. And then finally, there's also the ability to be able to remunerate your colleagues with local equity, which is important. So those factors are all important for us. It's not something that we need to do. And clearly, we're monitoring the markets at the moment and it's something which the board will keep under evaluation. James?
Morning. James Wheatcroft from Jefferies. Path to profitability has been a sort of key discussion topic, I think, with the market over the last few months. Historically, you've talked about having a 25% EBITDA margin in the mature US states. I was wondering whether you could give us a feel for how maybe New Jersey is developing along that path and how long before it might be we see other states in that sort of same category, please?
Jonathan?
It obviously – what we've outlined this morning is this 12 to 24 months of getting into that profitable state on a state-by-state basis. We obviously only have a short period of history for the states that came after New Jersey. In New Jersey, we are very comfortable with the level of contribution percentage that we're seeing from that state, and a gaming state and a sports betting state where we have a very strong market share and a good tax rate. And we're very happy with where we are in the state.
We haven't got enough track record to start talking about the state-by-state contribution percentages for those states that came in 2019. But I think, over time, we will look at how we try and bring to life in more for you guys where those 2019 states and hopefully the trajectory of those 2020 states and we can start building those J-curves for you. At the minute, we're a little bit early in those 2019 states to really start seeing where they're getting to in terms of that contribution percentage. But I can assure you, we feel very confident in the direction of travel on these dates and even more so after the last six months we've seen.
Thank you. Ed Young from Morgan Stanley. My first question was on the UK. The regulatory impacts you outlined started at £7 million in Q1 with £37 million by Q4. You're expecting incrementally more measures to be introduced because that would suggest a run rate of £150 million, £160 million or so, and obviously £37 million in Q4, £7 million Q1. It seems like a £50 million or £60 million headwind to revenue potentially, if it stays at the current level or maybe higher than that, if it goes through.
So, could you maybe talk about what we expect going into next year? The short question there is, should US – should UK online profitability grow and next year what should we expect? That's really where I'm driving at.
And the second question is on international. You gave the very helpful pitch there. I think the H2 run rate was just – that's run rating about £240 million. I think you called out, Jonathan, another £55 million for Germany and the Netherlands. You obviously mentioned the Ukraine and Russia as well. Is there any sense, do you think, that there's a case to be made to pull back on some of the investment you've made by choice there to stabilize profitability, or do you see that as essential to drive the revenue to get back to growth? Is there any kind of cost action you're considering in that division, given how much it's come down in EBITDA terms from 2019 and 2020 levels? Thanks.
On the UK&I, I think there's three moving parts to consider as we look at 2021 into 2022. There's, first, I think the recreational market will still remain a bit of the market that will be a better part of the market to be in, and I still think on that recreation element, there'll probably still be growth. But the overall market, as we said in Q3, we think will probably be flat. So, if we want to be in one part of the market, I think we're in the right place.
I think what we're effectively doing is bringing into our business what we expect to have to bring into the business anyway. So, in my view, we're just building sustainability now rather than building it a little bit later, and I think it's the right thing to do for the business.
As we see the customer economics evolve, so on the cost side, there's two things that will affect the business and the customer on the cost side. One is just the general customer economics. If we see lower values, therefore, what does that mean for promotional and marketing spend as go forwards and what can we actually afford to invest in that CAC to TV equation to ensure that we're driving the right value.
And the second thing will be on the cost base and the integration. The UK&I integration was always more – the Australia and the corporate stuff was very short-term because in Australia we were obviously bringing two businesses together and it was two people for one job and two car spaces into one. So it was very quick and it was done incredibly effectively by the team. The same in group, it was cost to contract, etcetera.
In UK&I, it was always going to be more complex. It's about major changes in the tech, which, as you know, in our sector don't happen overnight. It's complex. So it's a multiyear process. And there'll be some structural change that'll happen in that business over time. So you've got three sort of moving parts in terms of the market, the [ph] SGE (01:01:58) stuff coming in, plus the cost base. We feel that we should see profitability going forwards in that business from the mix of those three things year-on-year from 2021 into 2022 in terms of the UK&I online profitability.
And then regarding your question around International and the investment we put into the business, I mean, I think you need to look at it in different buckets. I mean, half of the money we put into investment was stuff that we absolutely had to do. And I would describe it as sort of rebuilding the foundations, keeping the lights on type of stuff for the business, which there's no choice around.
In terms of the growth-orientated levels of investment, around half of that went into the casino business. And we're seeing a really good performance in our directly acquired casino business now. The revenue is four times than it was pre-merger and now that we've built the capabilities, we're just being able to sort of replicate that into a number of its incremental markets. And we're really pleased with how that's doing, the returns it's generating.
We have put some money behind the PokerStars brand. It is important for us in markets like Brazil and Canada, which we just referenced as being two important components, when you look at how big that TAM could get. But there's also places we're investing, things like into the Betfair brand in LatAm, Junglee. So it is important to remember that when we talk about International, it isn't just PokerStars, and there's some really important businesses there that we're investing and getting good growth from.
I mean, one of the benefits of having the portfolio is we – just because the International profitability is pulled back, if we still see great paybacks in markets, we don't have to say, well, we can't do that because we've got to keep that bit of the business growing at a certain rate or taking profit today rather than growing the business. We've got to do the right thing across the portfolio. And to Peter's point, I mean, half of our year-on-year sales and marketing uplift in International is actually because we've got Junglee in for the full – for the 2021 year. And actually the paybacks we're seeing in that market, for instance, are fantastic.
So we're going to do the right thing for the medium term of the business and not do something just to try and shore up short-term profitability because that would be – that would not be driving shareholder value in this case.
Are there any more questions? Maybe should we go to the – were there any questions coming on the phone? Don't quite know how we managed the – I've forgotten how we do these hybrid events.
So the first question is coming from Joe Stauff from Susquehanna. Please go ahead. Your line is open now.
Thank you. Good morning, everyone. Peter, I was wondering if you can give us maybe an updated view on the timing you'd expect for the arbitration process with FOX. And then, I wanted to ask about how do you think about the casino strategy in the US? So do you have – are you thinking of consolidating brands or going with one particular brand? If you can comment on that, please.
Okay. Look, Joe, you'll have noticed from our release this morning that we mentioned that there's been a delay to the timing of the arbitration FOX because we've been in dialogue with them. But we now have a date set for June, and that's what we'll be working towards. And look, we're very comfortable going into arbitration. We think we've got a very robust position. And ultimately that's the new timeframe. It was the right thing to do to have a dialogue with FOX, push back the original dates. Ultimately, we'll run to that arbitration timetable.
And look, I mean, you all know this, but we recognize absolutely the value of the FanDuel asset and therefore any deal that might be done with FOX, we'll have to recognize that. And if we can't get the deal is right for our shareholders, we're very comfortable going to arbitration.
Yeah, absolutely right. And then, look, in terms of what we do in the US from a casino perspective, we know that there's more for us to do. But fortunately, we know what we need to do because we're very good at growing direct casino businesses really all around the world. So, as Jonathan mentioned earlier, we're bringing over one of our top casino managers into the US to help support our business. And there's a heap of things that we've got planned to do for that business over the course of this year.
I don't necessarily tell our competitors all of our plans, but you can rest assured that we're very good at growing direct casino businesses and we intend to continue to do that in the US. But, of course, we have the best set of customers to cross-sell into, which is the sportsbook we have in the US market where we're the leaders. And, of course, it's also worth remembering that sportsbook is where the action is really at at the moment in America, it's where the next few states will come on stream, and that's our strong hand. So we'll continue to make sure we really exploit that. But there is more work to do in casino. We've actually held our market share, which I think is quite remarkable. When we look at the sort of the quality of our products, there's lots we know we're going to do to improve it and we will do so.
And the next question is coming from James Rowland Clark from Barclays. Please go ahead. Your line is open now.
Hi. Good morning, everyone. A couple of questions, please, on the US and on the UK. Just on the US, are you able to provide a revenue target and EBITDA loss guidance for 2022? Just wondering whether you can hit £1 billion worth of revenue this year. And then on the UK, I just had to clear, the review ends up producing legislation that's a little bit better than you've planned with your safer gambling measures. Are you in a position where you can switch the business back on to higher value customers or reacquire or retain these customers? Thank you.
Shall I take the first one?
Yes, please.
Okay. So we won't be providing revenue guidance at this point on the US. And it will definitely, I would expect, be higher than the £1.4 billion, $1.9 billion we did in 2021. But I'm not giving a number for that.
In terms of EBITDA and the loss, I think we are not giving specific guidance at this point, but as a starting point, considering our losses in 2021 at a comparable sort of level for 2022 is a very good starting point. We're not here to discuss a significant increase in EBITDA loss at all. Unlike some of our competitors, we would think a reasonable starting point is where we got to in 2021 with a clear route to where we're going in 2023, which I think we've flagged pretty clearly, hopefully.
Thank you, Jonathan. Look, in terms of the potentials of outcome in the UK environment, look, we think it's very important to build a business that's sustainable. I think what the regulators are certainly going to do is introduce a level-playing field. You could say that we have moved ahead of the regulators in trying to do the right thing for the business. And if that is the case, I think it'll be good when the regulators can introduce a level-playing field. People who are posting big growth numbers, you've got to ask how they're doing that and how sustainable it is. I think we're all desperate for some clarity and we'll get that with the introduction of the Gambling Act review, and we'll make sure that we shape our business appropriately once we know how the UK government wants to introduce that legislation.
And the next question is coming from Monique Pollard from Citi. Please go ahead. Your line is open.
Hi. Good morning, everyone. A couple of questions from me, if I can; one on Australia, one on the US. So, just on Australia, obviously, you've seen huge scale benefits coming through with marketing cost – sales and marketing cost just 9% of revenues in 2021. I just wondered if there was potential for that marketing cost as a percent of revenue on an absolute basis to continue to scale into 2022 or if we sort of maxed at that level here.
And then secondly, on the US, obviously, fantastic win margin of [ph] 25% (01:11:00) in the fourth quarter. I should say in a slightly different [indiscernible] (01:11:05) Same Game Parlay. Obviously, you mentioned 76% of total customers were using the Same Game Parlay during the season. But I just wondered if you could give any color on how that proportion of [indiscernible] (01:11:21) could increase to reach 2022 [indiscernible] (01:11:25) on the improvement in the win margin this year in the US.
Monique, thanks for the question. A couple of comments on Australia. The first is that we actually saw the net win margin above where we would have expected it by about 70 basis points and roughly the same year-on-year. So, therefore, what you're sort of seeing is a slightly artificially low, marginally lower level of marketing spend than we probably would have thought.
I think the second and more important thing in Australia is, as we put more and more of the value that we give to customers directly to them through bespoke promotional benefits to individuals through pricing and promotions or whatever that is directly on a customer-by-customer basis, that's going through our kind of promotion line. And the more of that we can make the direct to the individuals, the less we put through the sales and marketing line.
So, actually, what you'll see is as we get more and more adept at making sure we can be rifle shot rather than scatter gun, we will put more value to the individual customer and you will see sales and marketing coming down. Where that ends up, we need to see. I think we're at a very efficient point at this stage and I don't necessarily see that scaling further. And we'll have to just make sure we've got the right balance between the above the line and below the line sort of offers, because they obviously go through different lines which makes it slightly confusing, to make sure that we've got enough brand visibility, brand presence, being seen to have a high value proposition in the market, as well as individual customers getting that through personalized bespoke generosity.
Yeah. And look, as it relates to sort of win margins in the US, I think one thing I'd just remind you of is the sort of the impact of some of our promotional activity on win margins across the course of the year. So, things like our very successful Super Bowl campaign where we make offers like 56 to 1 available to customers can artificially depress win margins in the period, but ultimately those things bounce back.
And I think the performance of the Same Game Parlay product for football is important, but it's also really important for things like the NBA as well. So we're comfortable with the levels of margin we see in the US. And I think we have some also structural advantages. I think we'll turn that to Jonathan.
And look, the more the market moves into the fast followers and then into a more recreational base, we see that naturally, as we've seen in other markets, driving the sort of the multi-stroke parlay mix higher over time. So we're hoping that over time we could see that penetration of parlays grow further as the mix of the customer base changes. And therefore, we're hoping that we'll end up with increasing structural margins over time.
Okay. I don't think there are any more questions on the phone. So, thank you very much, everybody, for coming. It's nice to see you all in 3D. Thank you for your ongoing support.
Thanks very much.