The French betting company La Française des Jeux (FDJ) recently announced its financial results for the third quarter of 2024 and year-to-date.
In the first half of 2024, FDJ's gross gaming revenue (GGR) was 3.66 billion euros, an increase of 11.1%.
After deducting public taxes, the net gaming revenue (NGR) increased by 11.3% to 1.356 billion euros.
After including income from other activities of 72 million euros, the group's net income for the first half of the year reached 1.428 billion euros, an increase of 10.8%, with a year-on-year growth of 4.7% on the same basis.
In the first half of 2024, FDJ's recurring operating profit was 285 million euros, and the recurring EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was 370 million euros, with a recurring EBITDA margin (ratio of recurring EBITDA to group net income) of 25.9%.
The cost of sales reached 736 million euros, including 517 million euros of commissions for physical retailers, an increase of 4.9%, due to physical betting.
The performance of French FDJ is very impressive, with a half-year GGR of 3.66 billion euros, which is quite rare in the global gambling industry.
As PASA, which holds first-hand information on the online gambling industry, today we will take a professional look at how this traditional French lottery company has achieved a savage occupation of the European online gambling market through mergers and acquisitions.
Of course, FDJ's performance is enough to clarify one point: the future of the gambling industry lies in the digital expansion online.
1. The gambling monopoly position of the traditional lottery company French FDJ
La Française des Jeux (FDJ) is one of the largest gambling companies in France, covering lotteries, sports betting, and other areas.
Founded in 1976, FDJ initially operated France's lottery and sports betting business through state authorization, mainly through physical retail channels.
Currently, France's most famous lottery products, Loto and Euromillions, are FDJ's products, among which Euromillions is a multinational lottery launched by several European countries.
In addition, FDJ's sports betting brand ParionsSport offers betting services covering various sports events, including football, basketball, tennis, and rugby.
All these services were initially provided through offline betting stations, and the company developed the largest offline sales network in France (about 30,000 retail points).
However, as the gambling industry entered the digital age, FDJ also realized that the transformation of the industry was very necessary, so in recent years it has increased its investment in online gambling and mobile applications, attracting a large number of digital users.
Through its official mobile application, players can buy lottery tickets online, participate in instant lotteries, and bet on sports events.
In addition to expanding online channels, FDJ continues to innovate on traditional lotteries, launching instant tickets, multinational lotteries, and innovative digital lottery game products.
Through big data analysis and artificial intelligence, FDJ has optimized the lottery's jackpot rate, forming a technology innovation business that integrates personalized recommendations, real-time event betting, and digital payment methods.
Until now, FDJ's revenue mainly comes from lottery sales and sports betting business, with lotteries still occupying the main share.
Those who have read PASA's past articles or are familiar with the gambling business should understand that lotteries with only a 50% payout rate are the most profitable type of gambling in the gambling industry.
Combining FDJ's half-year financial report and the third-quarter report, the lottery business accounts for one-third of FDJ's business. In the first 9 months of 2024, the revenue reached 1.5 billion euros, a year-on-year increase of 6.6%;
In the third quarter alone, lottery revenue was 495 million euros, a year-on-year increase of 10%.
As for lottery games, the revenue from instant lottery games during the nine months of this year increased by 7.8%.
In addition, sports betting and online game revenue were 407 million euros, a year-on-year increase of 13.3%, a year-on-year increase of 5%. Mainly affected by the acquisition of online horse racing betting provider Zeturf in October 2023.
According to FDJ's financial report, sports betting and lotteries account for nearly two-thirds of the company's revenue.
But it is worth noting that the remaining one-third of the business is growing at an astonishing rate.
That is the online gaming business, which has grown by 28.4% year-on-year, which is exceptionally significant.
Thanks to this, FDJ's profits in the past two quarters have quickly climbed back to new highs during the pandemic phase, and the annual performance is also expected to break new highs in 2024.
It is clear that the growth of online games is undoubtedly the most important part of FDJ's current company development. As mentioned earlier, FDJ also realizes this, so it also pays great attention to investing in online gambling and mobile applications.
So this year, FDJ implemented a comprehensive acquisition of Kindred to accelerate the expansion of the company's online gaming business.
And what kind of company is Kindred, which can help FDJ's online gaming business achieve greater growth?
2. Seizing the merger trend and introducing Kindred to accelerate online expansion
In early October, it was reported that FDJ had acquired 90.7% of Kindred's shares, and by the time the operator released its third-quarter report, this proportion had risen to 91.8%.
After completing the acquisition of more than 90% of Kindred's shares, FDJ now plans to increase its shareholding to 100% after extending the tender period.
Regarding performance, FDJ Chairman and CEO Stéphane Pallez said: "FDJ continues to achieve robust financial and non-financial performance, which allows us to confirm the growth and profitability trend for the full year.
This performance is driven by lotteries, sports betting, and open competition online games, as well as all our distribution channels, including the continuously developing sales point network and the strong development momentum of digital games.
With the completion of the Kindred acquisition in early October, the group has also reached an important milestone in implementing its strategy, creating a diversified and balanced European champion enterprise for the benefit of all stakeholders."
Kindred Group stock price
Kindred Group plc is one of the world's leading online gambling companies, mainly offering a variety of entertainment and gambling products, covering sports betting, online casinos, poker, and bingo, among other areas.
The company was founded in 1997 and is headquartered in Malta. The company's main brands include: Unibet, 32Red, Maria Casino, Bingo.com, Stan James, iGame, and Roxy Palace, among others.
Kindred Group offers online gambling services through multiple brands in major markets such as Europe, Australia, and North America, covering sports betting, online casinos, poker, bingo, and various game forms.
It is clear that Kindred is a gambling game merchant with strong innovation capabilities, and its brand matrix can be said to encompass all gambling game players.
·Unibet: One of the most representative brands, offering global sports betting, casino, and poker services, focusing on the European market.
·32Red: Focused on high-end online casino services, known for high-quality user experiences and diverse game selections.
·Maria Casino: An online casino brand focused on the female market, providing a relaxed and casual gaming experience.
·Bingo.com: Mainly aimed at users who like bingo games, providing interactive and highly entertaining game experiences.
For FDJ, which is eager to develop its online gaming business, this is undoubtedly the best merger partner.
In addition, Kindred Group's Unibet is a globally renowned sports betting brand, offering betting options for thousands of sports events, including football, basketball, tennis, horse racing, etc. This business can form a strong alliance with FDJ, sharing users to expand a broader sports betting market.
With the rapid development of the online gambling industry, Kindred Group has shown strong growth momentum in recent years, but Kindred's revenue does not come solely from the European market, but from a diversified market.
With the opening of the North American market, Kindred is actively expanding its business territory through licenses and partnerships, which is also very consistent with its parent company FDJ's development philosophy.
3. Don't put all your eggs in one basket, continuously develop multiple national markets
Although FDJ is a French gambling company, its business has already covered about 15 regulated markets in Europe, including seven of the top ten European markets, such as the Netherlands, the United Kingdom, France, Sweden, and Belgium.
Online gambling companies operating in multiple national markets have many significant benefits, especially in the case of FDJ's highly diversified business, the company's products are sufficient to meet the needs of many gambling game players.
By entering multiple national markets, gambling companies can reduce their dependence on a single market, effectively reducing both regulatory risk and market change risk.
If a market experiences a decline in revenue due to policy or economic fluctuations, other national markets can balance the risk, ensuring overall financial stability for the company.
Multiple national markets also mean access to a broader user base. The gambling culture and betting preferences of different countries vary, and the more diversified custom products are available, the more users can be attracted to join, increasing user activity.
Brand globalization can also establish a brand image, further enhancing brand influence. This also lays the foundation for future entry into other emerging markets, improving brand recognition and user trust.
Based on this, Global intelligence predicts that FDJ's revenue will break the post-pandemic downturn and return to new growth highs.
Conclusion
In summary, FDJ is precisely adapting to the digital transformation of the gambling industry through its precise online transformation strategy.
By continuously investing in technological innovation and the expansion of online platforms, especially through the acquisition of leading online gambling companies like Kindred Group, FDJ has accelerated its expansion in the global market.
A diversified business layout, the development of transnational markets, and a strong merger strategy ensure that FDJ not only continues to maintain a leading position in the French market but also opens up new growth paths globally.
For us in the industry, FDJ's development experience can provide us with strategic guidance, which PASA also calls the three-step strategy: investing in online digital technology, developing diversified games through diverse cooperation, and expanding overseas markets.
These three steps are crucial for gambling companies that want to maintain a leading position in global competition.
We look forward to discussing more unique insights into various gambling companies with our readers and sincerely invite you to follow the global iGaming leader's outbound information platform PASA to get more first-hand industry information.
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