Good morning, and welcome to the Flutter Entertainment plc Preliminary Results for 2021. There will be a chance to ask questions later. Please press star one if you wish to ask a question. There will be a silence on the call before the event starts from the London Stock Exchange.
Good morning, everyone, and thank you for joining our 2021 Preliminary Results Presentation. It's great to be with you in person after nearly 2 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 gonna 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 to the financials before I provide an operational update. Thereafter, we'll be happy to take any questions you may have. Starting on slide four. Look, I've been pleased with the progress we've made in 2021 from both an operational and a strategic perspective.
We've continued to expand our recreational customer base globally in a sustainable way that positions us well for the long term. In the U.S., 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 U.K. 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. 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. On slide 5, we've summarized the progress we've achieved. We are the number one operator in the U.K., Ireland, Australia, and the U.S. We're 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.
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 U.S. 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 U.S., we will continue to invest to win as the market expands.
Our goal is simple, to maintain our lead in U.S. 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'll find more Adjarabet, Junglee Games, and Sisal, strong local brands with competitive moats around their businesses. 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've 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 have improved the lives of 10 million people by 2030.
We'll do so by using the expertise and experience within our business to support our communities with a focus on sport, health, and wellbeing, 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 CAT 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. That we believe there are universal principles that we can and should apply to all we can to protect vulnerable customers. We will listen to our customers, industry experts and critics by investing in research, innovation and collaboration.
We want to empower our players to play positively by providing them with platforms and products that have protective tools in place. This will include having better conversations with our players to encourage them to pause and reflect on their play and make positive choices. We'll 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'll bring to our customers, our people, and our communities. 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. Starting at 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 U.S., 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 U.S. growth helped offset the uplift seen in our international business from the COVID-related boost in poker during 2020.
These factors, combined with a larger U.S. loss and the initiatives that we are taking to make the business more sustainable, resulted in the group EBITDA of GBP 1 billion, 18% lower than 2020 and excluding those U.S. investment losses down by 10%. The group continues to turn profit into cash at a very high rate. We ended the year with net debt of GBP 2.6 billion and a leverage of 2.6x or 2.1x excluding those U.S. investment losses. Now turning to slide 11 and the statutory income statement. Clearly, the high year-on-year growth reflected the benefit of a full twelve months contribution from The Stars Group in 2021's numbers versus eight months in 2020. The statutory loss after tax of GBP 412 million included over GBP 900 million of separately disclosed items which were primarily non-cash items.
This included the amortization of acquired intangibles of GBP 543 million, mainly from the TSG merger. It also includes GBP 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 to by 23% to 7.6 million. I'm not gonna 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 and Ireland, player numbers were 25% higher year-on-year in 2021 at 3.2 million. Player retention in Australia remains strong with 2-year compound AMP growth of 28%. In international, AMPs have grown by 10% since 2019, with that growth coming from more sustainable markets. In the U.S., 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 U.S.
I'll talk about the U.K. and Ireland in more detail on the next slide, but I do wanna touch here on 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 U.S., our revenue more than doubled, up 113%.
The biggest drivers of this were a full-year contribution from 4 sportsbook states launched in 2020 and a partial year benefit from our 4 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 3 new gaming states, bringing our total footprint to 5, and our U.S. gaming business is already half the size of our entire U.K. and Ireland gaming business. TVG and DFS continue to contribute, with combined revenue growth of 11% in 2021. Okay, on slide 14, I wanna take you through the year-on-year performance of our online business in UK and Ireland. 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 GBP 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 a further GBP 46 million. The year-on-year swing in sports results impacted our revenues by GBP 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 GBP 93 million during 2021. Peter will share progress that we've made in this area later. Reported revenue growth of 3% translated into EBITDA of GBP 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 on 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 U.S. dollars.
Over two years, the EBITDA impact has been GBP 61 million. Next, we have the impact of initiatives that we have taken to improve the sustainability of the division. Firstly, 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 GBP 8 million. Secondly, we guided to a GBP 65 million investment to bring the compliance processes and standards of TSG up to Flutter's standards post-merger. Thirdly, we 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 revenue has increased by around 8 percentage points.
We have had the negative regulatory developments in both Germany and Netherlands, which have cost the business GBP 85 million since 2019, with a further GBP 55 million incremental costs to come in 2022. Rebasing 2019 EBITDA for these items resulted in EBITDA of GBP 304 million. You can then see the underlying investment made in the business and the growth this has driven to date. Of the 133 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 delivered growth of GBP 121 million, of which we estimate 2021 benefited by around GBP 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 EBITDA margin summary for 2019, 2020, and 2021. Standing back from these results, we have materially rebalanced the group over this period. In UK and Ireland 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 at corporate, we have delivered synergies from the merger. In the U.S., 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 GBP 400 million to GBP 1.4 billion. Overall, we feel the group is really well-positioned financially going forward. On slide 17, you will see we generated adjusted free cash flow of GBP 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 GBP 37 million lower year-over-year, thanks to lower borrowing costs. We paid GBP 234 million to fully settle the historic case with Kentucky, including associated legal fees. Our employee benefit trust acquired GBP 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 GBP 73 million from the sale of Oddschecker, partially offset by the acquisitions of Junglee Games and Singular. As a result, we finished the year with net debt of GBP 2.6 billion and a leverage of 2.6x, and this is before the acquisitions of Tombola, which completed in January, and Sisal, which is expected to complete in Q2 of this year. As I said, the leverage at the end of 2021 was 2.6x or 2.1x excluding U.S. losses. To consider the impact of Tombola and Sisal and 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 U.S. losses. Given the highly cash generative nature of our business and our expectation that we'll be EBITDA positive in the U.S. 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 1-2 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 7 weeks to the first 7 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 U.K. and Ireland. 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 GBP 41 million in contribution. In addition, Ukraine represented contribution of GBP 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. 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 U.S. on slide 21. Back in August, when we provided a deep dive in our U.S. business, I described how the flywheel effect is fueling FanDuel's growth. Over the last 12 months, Amy and the team have done a great job in continuing to scale our U.S. business. The chart on the right demonstrates how quickly the business is growing. Our monthly sports book 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 U.S. 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 onto 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've continued to expand our product offering in this area. Over 76% of our NFL customers place the Same Game Parlay bet during the NFL season. 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 multi-year 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 U.S. business spent over $1 billion on customer promotions and marketing in 2021. This allowed us to have the highest TV media share 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 continue to lead with a 40% share of the online sports betting market in Q4. Our share of 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 investment in promotional activity and the early giveaways from competitors. Once the market 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 during 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 sports book 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 a 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 while 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 $1 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 U.S. Investor Day, we estimated that our New Jersey sportsbook would be structurally contribution positive within 18-30 months of launch. I'm pleased to report that we're now seeing an acceleration in that timeline to just 12-24 months. What's driving this? First, we are acquiring customers far faster when a state launches than used to be the case.
Arizona is a good example of this. It has a population that's three-quarters the size of New Jersey. It took us about 5 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 launch 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're acquiring more customers initially, the initial investment losses are deeper in the first month post-launch.
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 sports book and gaming businesses generated a positive contribution of $14 million. As you can see, the early cohorts of customers generated the positive contribution that we then use 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 of 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 U.S. 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. 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 U.K. and Irish businesses.
In our UK and Ireland division, 2021 was something of a tale of two halves. Jonathan's 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 GBP 150 million. There's nothing structurally going on with margins. It's simply down to results and the fact that we generally over-index in bet builder products. Secondly, you can see how the cost of the safer gambling changes we've made impacted revenues across the year, with costs totaling GBP 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 U.K. 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 maintain good customer volumes driven by our leading daily prize mechanics, such as the Sky Vegas prize machine and Paddy's Wonder Wheel.
It's notable, though, that the market generally experienced the fewest number of Q4 online casino downloads for 3 years. Rest assured, we are responding to what we're seeing in the market, and we are 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 U.K. are going to continue to evolve, and so we're doing work now to make sure our structures and cost base are optimized for the future shape of the sector. On slide 27, I want to talk about the progress we've made in improving the sustainability of our business in the U.K. 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. What this effectively means is 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. ARPU 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 U.K.
Now, just 6.7% of our revenue comes from that 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're 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. Ultimately, if this means that the U.K. sector experiences a year or two of lower growth, then it'll be a price worth paying in the interest of all stakeholders. Turning to Australia on slide 29. Back in September, Barn 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 at 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 has seen EBITDA grow at a 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 the financial benefits from 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 a 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 GBP 26 billion by 2026, with a projected online compound annual growth rate of 10% over the next 5 years. The real growth for Flutter in these markets, though, 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've 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. The addition of 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%. It'll also bring an omni-channel advantage that we hope will unlock further benefits across our other brands. 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, but very focused on the future. With a refreshed strategy that's put sustainability at its heart, 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. Within that, 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. Can I ask as usual that you limit yourselves to two questions and not too many sub-parts in the first instance, so we can give everybody a chance. Michael?
Great. Good morning, Peter. Morning, Jonathan. Thanks for taking the questions. Two, if I can. First on the U.S. and quite a few references to superior customer economics through the presentation. 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. Just interested in some further color in terms of where you think you're outperforming. Then secondly, on the U.K. market, if I can, 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 review over the coming months? Thanks.
Thank you, Michael. Look, taking the question around the U.S. Yeah, I think there are two very important factors that are going on around efficiency. 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. 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 our customers from DFS into sports. You know, that's something that we've made sure we really benefit from. The team have also been very disciplined when it comes to our marketing spend.
You know, it's very easy to sort of, you know, get sucked into signing deals and partnerships and, you know, you can spend a lot of money very needlessly. There are some codes and opportunities that we pass on, which, you know, prove to be the right decision. I think, you know, the team have done a, you know, a great job for us in being very diligent around, you know, our marketing investment. Whilst we have, you know, we do spend more money than other people, we think we also spend it very wisely when we do. 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 end of that sort of equation, looking at the LTVs, we obviously have a structural margin advantage because of the Same Game Parlay, right? We've seen very substantial, you know, use of that product amongst our customers, which gives us a margin advantage. Ultimately, the fact that our retention levels are so high also helps with the lifetime values. You know, the reason that we're getting such good use of the Same Game Parlay product, the reason we get such good retention is 'cause we have the best products in the market.
You know, the great thing about the U.S. is you can look at this, you know, a lot of market data comes out, you know, state by state and often, you know, almost on a sort of weekly basis. You know, New York for me is a great example, right? You can look at, you know, people got, you know, big market shares of handle 'cause they're, you know, handing out free dollars. You know, you now look at where the, you know, the market shares have gone when people are actually reverting back to using the best products, and, you know, FanDuel is, you know, is now number one 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. We'll probably say that again next year, by the way. Well, hopefully we won't, but maybe we will. We've seen for some people coming in with very, very aggressive offers, and we have seen our economics through that period hold up, and we maintain discipline at times when people were buying handle share, and there were some crazy offers out there. Actually what we've seen is we've seen announcements from competitors around their levels of spend ongoing and pullbacks.
We have seen, you know, 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. 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, you know, the CAC to LTV dynamics are improving for us.
Yeah.
In terms of the U.K., you know, when we look at the shape of the market, and I, you know, as I talked about a little bit, and we compare that with sort of wealth distribution or income tax distribution in the U.K., you know, we think our business is more favorably skewed, right? We think we're in a very good starting point. We've got the best recreational base of customers and brands in the market. We think that, you know, look, there are going to be changes that occur. We have, you know, made some significant investments, you know, we talked about it in terms of our Positive Impact Plan yesterday, and I've shown you the revenue that we've taken out of the business, you know, over the course of last year.
We think it's the right thing to do to get ahead of these changes. We, you know, we believe that the Gambling Act will introduce a sort of more level playing field. You know, it could be that competitors can claim that they're delivering market growth, 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. You know, you know, we think we've got the right, you know, focus on the recreational base for whatever the changes are that the Gambling Act review introduces.
I'm, you know, 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 the last question about the highest value tier. Could you say how you define that? Is that how much sort of spend per month from those customers? 'Cause clearly if the cap goes from GBP 500 maximum deposit to GBP 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 the second question on the US, obviously doing incredibly good market share, do you have any sense of how the black market is going on in the US?
Whether you're taking a lot of these sort of black market operators, you're taking share from them as well.
Look, in terms of the U.K. market, we have taken you know a lot of steps to you know address what we think is you know some of the challenges in the sector. Whether it's looking at customers when they come, you know, and they join us, the monitoring that we have, and then the sort of backstop we have in terms of looking at people's expenditure. We're now starting to distinguish that with different sort of age categories as well. Ultimately, we think that you know our business is very well set up for whatever changes that come. I know we you know we've heard you know lots of you know noise around you know how affordability checks can be introduced.
We think that the approach that we're taking with a very sort of granular set of different approaches in different segments is the right answer, rather than some sort of simplified figure for the whole market. We'll wait and see whether the review of the Gambling Act ends up in a similar position. I think if I go back to the point I certainly made before, you know, you're right, you can sort of define sort of high value tiers in all sorts of different ways.
You know, ultimately, if we look at things like you know, the income tax distribution and you know, you'll be well aware that you know, the top 1% of income taxpayers you know, generate 30% of the income tax base. You know, our business is nowhere near you know, skewed like that, right? You know, it gives us real reassurance that our business is very well set up for you know, the market distribution dynamics that we see. In terms of the U.S., I'm afraid, like you know, we've never been focused on sort of market share targets, right? You know, we always talk about the fact we've been focused on our sort of capture 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. You know, we're winning in so many key states, and the business has got terrific momentum in it. Of course, we're seeing that real sort of operating leverage come through into the business. We're taking advantage of that 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 are yet to regulate. Jonathan, I don't know if there's anything you want to add.
Morning, Simon Davies from Deutsche Bank. Two from me, please. You talked about GBP 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? Secondly, can you give some guidance in terms of revenues coming from Eastern Europe? Are you seeing any impact, given the recent invasion of Ukraine on some of the neighboring markets, in particular Georgia?
Um, look-
Do you want to take it first?
Yeah. Do you want me to take it first?
Yeah, sure. I mean, look, there's a whole range of things that add up to the 93, and obviously we've been putting in, you know, lower thresholds as we've gone through the year. We've undertaken, you know, daily deposit limits for all customers. Actually, the GBP 10 staking limit on slots has been a very, very small proportion of that, so well less than 10%. 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. I wouldn't put it down certainly to that GBP 10 slot limit at all.
In terms of the impact across the broader region of Eastern Europe, first in terms of the changes we're seeing. You know, we haven't obviously seen impacts in the countries which have been directly impacted and of course, you know, the most important thing from our perspective is for our colleagues who are based in and around the region. You know, we have a large number of contractors, you know, in excess of 80 contractors and subcontractors based in Ukraine, and we're doing everything we can to support them and their families, including relocation for the families if that's appropriate to some of the countries neighboring where we may have locations.
We have two direct employees in Russia. As it relates to, you know, the performance of the business in, you know, Georgia and Armenia, we haven't seen any significant impact as a result of the conflict.
Morning, guys. David Brown, Goodbody. Just two questions from me. Firstly, as part of the sustainability plans that you announced yesterday, you talk 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. In terms of the Irish retail business versus the U.K., there's quite a divergence in terms of, you know, the recovery versus 2019. 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. You know, there are different stages in different parts of the globe. You know, I think if I look at a market like the U.S., we're trying to take a real sort of leadership position around that. We'll be doing some safer gambling advertising in Q2. You know, we've been the first operator to sign up to offer Gamban software to customers. You know, there's a variety of things we're doing.
We've got you know, we're building our own AI models for the U.S. market, recognizing the, you know, the differences in the U.S. market compared with, you know, what we're seeing overseas. Yeah, and as an example, you know, we'll be tracking some 400 metrics across our consumers in the U.K. to try and identify any examples of people who are exhibiting behaviors that we're uncomfortable with. So, you know, there's a lot we're gonna be doing in the U.S. and, you know, recognizing our leadership position we have in that market and the very substantial growth in the business. I think it's also important that we show leadership in that, in that area too. Jonathan, I don't know whether you wanna sort of reference where we are on Irish retail.
Look, I think what we're seeing behaviorally in Ireland is just different than what we're seeing in the U.K. I think the U.K.'s gone sort of post-COVID at a much earlier stage with people feeling much more confident about going into retail outlets, et cetera, et cetera. Obviously, we've been more fully open for a longer period in the U.K. than we have in Ireland. Look, we'll see how behaviors change over the next three to six months. We're still, you know, confident that, you know, 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, you know, that will continue.
We have no doubt that the Irish retail will bounce back in time. It's just a case of how long that's gonna take.
Thanks, guys.
Hi.
Hi.
It's Kiranjot Garcha 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. 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? The second one is on U.S. 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 and the market headed in the last six months, is that still on the cards for, say, this year, or could that be delayed? Thank you.
I presume your reference to stickiness of product is in the U.S. I mean, 'cause I could talk about any one of our products.
Yeah
I think they're great in all the markets we operate. Look, I mean, you know, there's 100 things that you have to do, you know, or many more actually, and the product team would kick me for saying only 100. You know, there's many things you have to do to get the product right for customers. You know, the speed and ease of use is a really important aspect. You know, if you think about the way in which, you know, 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 for them really, you know, efficiently is important.
You know, actually the Same Game Parlay product and the integration of that and the ability to, you know, to evolve that, you know, as we have done, you know, and I mentioned, you know, what we've done in Australia in terms of, you know, building tokenization and generosity into it. There's, you know, other ways in which we can evolve. Those things are really important. You know, we're not standing still. You know, we've got the benefits of operating a, you know, a global platform. Our platform that sits behind our team in America is the same one that sits behind our, you know, Paddy Power and Betfair businesses. We can actually share and take ideas and concepts from one business to another.
You know, we have a very big development team to support our American business, but they also have the benefits of being able to steal ideas and products and services that they see from other divisions as well. You know, the way I think about it is they've got thousands of cheerleaders who are, you know, helping, you know, build products in America, and we're certainly not standing still. I think if you look at the Super Bowl this year, you know, there were no issues from a customer service perspective or stability perspective. You know, there have been challenges in the past, but the massive volumes we're putting through that platform, the business, you know, and the platform all stood up really well. I think, you know, that shouldn't be underestimated.
I think, you know, when we look at the retention levels in the business, you know, it's very much driven by the quality of the products and there's lots of aspects to that. You know, and you can look at Eilers & Krejcik , for example, undertake a review and assess the quality of our product and, you know, and have us ranked number one. And our customers are voting with us, you know, voting with their feet. You know, they may take other people's free money, but they might, you know, come and continue to use FanDuel.
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. You know, we've also got a big opportunity on the gaming side that we haven't, you know, 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 U.S., and he'll be going over there very shortly to help really try and get some you know 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.
Look, as it relates to the IPO of a small stake in FanDuel, you know, the reasons that we talked about in the past were the fact that you get the sort of marketing benefits of having a listed vehicle in the U.S. We know that DraftKings had a lot of sort of publicity off the back of their listing with their customers buying stakes. It's something that we would like to get the benefits of. We often talk about the levels of sort of partnerships that we have, you know, and whether that's with sort of marketing channels or personalities or different media businesses.
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'd now taken cash. Then finally, there's also the ability to remunerate your colleagues with local equity, which is important. You know, those factors are all important for us. It's not something that we need to do. You know, we need to do. Clearly we're monitoring the markets at the moment, and it's something which the board will keep under evaluation. Anything to add here? 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 a mature U.S. state. 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.
What we've outlined this morning is this 12-24 months of getting to, you know, 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. New Jersey, we're very comfortable with the level of contribution percentage that we're seeing from that state and, you know, a gaming state and a sports betting state where we have a very strong market share and a good tax rate and, you know, we're very happy with where we are in those states. We haven't got enough track record to start talking about the state-by-state contribution percentages for those states that came in 2019.
I think over time, we will look at how we try and bring to life in, you know, more for you guys, where those 2019 states and hopefully the trajectory of those 2020 states and we can start building those J curves up 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. I can assure you, we feel very confident in the direction of travel on these states, and even more so after the last six months we've seen.
I think Ed had his hand up.
Ed Young from Morgan Stanley. My first question was on the U.K. The regulatory impacts you outlined started at GBP 7 million in Q1 and were GBP 37 million by Q4. You're expecting incrementally more measures to be introduced because that would suggest a run rate of GBP 150-GBP 160 or so, and obviously GBP 37 million in Q4, GBP 7 million in Q1. It seems like a GBP 50 or GBP 60 million headwind to revenue potentially if it stays at the current level or maybe higher than that, if it goes through. Could you maybe talk about what we expect going into next year? The short question there is should U.K. online profitability grow on it next year, or should we expect further headwinds? That's really what I'm driving at.
The second question's on international. You've gave the very helpful bridge there. I think the H2 run rate would suggest that's run rating about GBP 240. I think you called out, Jonathan, another GBP 55 for Germany and the Netherlands. You obviously mentioned Ukraine and Russia as well. Is there any sense that 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 U.K. and I think there's three moving parts to consider as we look at 2021 into 2022. There's first, I think, you know, I think the recreational market will still remain the bit of the market that will be a better part of the market to be in. I still think on that recreational element, there'll probably still be growth. The overall market, as we said in Q3, we think will probably be flat. If we want to be in one part of the market, I think we're in the right place. You know, I think what we're effectively doing is bringing into our business what we expect to have to bring into the business anyway.
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, on the cost side, there's two things that will affect the business on 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 we go forward and what can we actually afford to invest in that CAC to LTV equation to ensure that we're driving the right value? The second thing will be on the cost base and the integration. The U.K. and Ireland integration was always more, you know...
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 cost bases into one. It was very quick, and it was done incredibly effectively by the team. The same in group. It was, you know, cost to contract, et cetera. In U.K., that was always going to be more complex. It's about major changes in the tech, which as you know, in this business in our sector don't happen overnight 'cause it's complex, so it's a multi-year process, and there'll be some structural, you know, changes that'll happen in that business over time.
You've got three sort of moving parts there in terms of the type, the market, the SG stuff coming in, plus the cost base. We feel that we should see profitability going forward in that business from the mix of those three things year-over-year from 2021 into 2022 in terms of the UK and our online profitability.
Ed, you know, regarding your question around sort of, you know, international and the investment we put into the business. Yeah, 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. I describe it as sort of, you know, rebuilding the foundations, you know, keeping the lights on type of stuff for the business, which there was no choice around. In terms of the sort of the growth-orientated levels of investment, you know, around half of that went into the casino business. You know, we're seeing a really good performance in our directly acquired casino business now.
The revenue's four times higher than it was pre-merger, and we've, you know, now that we've built the capabilities, we've just been able to sort of, you know, replicate that into a number of sort of incremental markets. You know, we're really pleased with how that's doing, the returns it's generating. We have put some money behind the, you know, the PokerStars brand that is important for us in markets like, you know, Brazil and Canada, which, you know, we just referenced as being, you know, two important components when you look at how big that TAM could get.
You know, there's also places we're investing in things like, you know, into the Betfair brand in LatAm, Junglee, and so, you know, it is important to remember that when we talk about international, it isn't just, you know, PokerStars, and there's some, you know, 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, you know, the international profitability has pulled back, if we still see great paybacks in markets, we don't have to say, "Well, we can't do that 'cause we've gotta keep that bit of the business, you know, growing at a certain rate or taking profit today rather than growing the business." We've gotta do the right thing across the portfolio. You know, to Peter's point, I mean, half of our year-on-year sales and marketing uplift in international is actually because we got Junglee in for the full 2021 year. Actually, the paybacks we're seeing in that market, for instance, are fantastic.
We're gonna do the right thing for the medium term of the business and not do something just to try and shore up short-term profitability, 'cause that would not be driving shareholder value in this case.
Are there any more questions in the room, or should we go to the phone? Don't know whether there are any questions coming on the phone. Don't quite know how we manage the phone. I've forgotten how we do these, you know, hybrid events.
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. I wanted to ask about, you know, how do you think about the iCasino strategy in the U.S. that 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 with Fox because we've been in dialogue with them. You know, we now have a date set for June. That's what we'll be working towards. Look, we're very comfortable going to arbitration. We think we've got a very robust position, and you know, ultimately, that's the new timeframe. It was the right thing to do, to have a dialogue with Fox, push back the original dates. You know, ultimately, we'll run to that arbitration timetable.
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 will have to recognize that. If we can't get the deal that's right for our shareholders, we're very comfortable going to arbitration.
Yeah. Absolutely right. Look, in terms of what we do in the U.S. from a casino perspective, you know, we know that there's more for us to do. Fortunately, we know what we need to do 'cause we're very good at, you know, growing direct casino businesses 'cause we do it all around the world. You know, as Jonathan mentioned earlier, you know, we're bringing over one of our top casino, you know, managers into the U.S. to help support that business. There's a heap of things that we've got planned to do for that business over the course of, you know, this year.
You know, I don't want to necessarily tell our competitors all of our plans, but you know, you can rest assured that, you know, we're very good at growing direct casino businesses, and we'll, you know, we intend to continue to do that in the U.S. Of course, we have the best set of customers to cross-sell into, which is our, you know, the sportsbook we have in the U.S. market where we're the leaders. Of course, it's also worth remembering that, you know, sportsbook is where the action's really at at the moment in America. It's where the next few states will come on stream, and that's our strong hand. We'll continue to make sure we really exploit that.
You know, there is more work to do in casino. We've actually held our market share, which I think is quite remarkable, and we look at the quality of our products. There's lots we know we're going to do to improve it, and we will do so.
Next question is coming from James Rowland Clark from Barclays. Please go ahead. Your line is open now.
Hi there. Good morning, everyone. Couple of questions please on the U.S. and on the U.K. Just on the U.S., are you able to provide a revenue target and either loss guidance for 2022, just wondering whether you can hit GBP 1 billion worth of revenue this year. On the U.K., just hypothetically, if the review ends up producing legislation that's a little bit better than you've planned with your safer gaming measures. Are you in a position where you can switch the business back on to higher value customers or reacquire or retain those customers? Thank you.
Shall I take the first one?
Yes, please.
Okay. We won't be providing revenue guidance at this point on the U.S. and it will definitely, I would expect, be higher than the GBP 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, you know, we are not giving specific guidance at this point, but, you know, 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, you know, the potential outcome, you know, in the U.K. environment. Look, you know, we think it's very important to build a business that's sustainable. You know, I think what, you know, the regulators are certainly going to do is introduce a level playing field. You know, you could say that we have, you know, moved ahead of the regulators and are trying to do the right thing for the business, and, you know, that is the case. I think it'll be good when the regulators can introduce a level playing field. You know, people who are posting big red 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, you know, the Gambling Act review, and we'll make sure that we shape our business, you know, appropriately once we know how the U.K. government wants to introduce their legislation.
I think there's one more please.
The next question is coming from Monique Pollard from Citi. Please go ahead. Your line is open.
Oh, hi. Good morning, everyone. A couple of questions from me, if I can. One on Australia, one on the U.S. Just on Australia, obviously you've seen huge scale benefits coming through with marketing costs as a percentage of just 9% of revenues in 2021. I just wondered if there was potential for that marketing cost as a percent of revenue, if not on an absolute basis, to continue to scale into 2022, or if we sort of maxed out that level here. Secondly, on the U.S., obviously a fantastic win margin of 0.5% in the fourth quarter. As you say, you know, partly driven by the proportion of staking on Same Game Parlays. Obviously, you mentioned that 76% of football customers were using this and in parlays during the season.
I just wondered if you could give any color on how that proportion of using in parlays could increase through 2022 and whether it was reasonable to expect further improvements in the win margin this year in the U.S.
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, roughly the same year-on-year. 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.
The more of that we can make the direct to the individuals, the less we put through the sales and marketing line. Actually what you'll see is as we get more and more adept at making sure we can be, you know, rifle shot rather than scattergun, you know, we'll put more value to the individual customer and you will see sales and marketing coming down. You know, 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.
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, 'cause 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.
Look, as it relates to win margins in the U.S., you know, I think one thing I'd just you know remind you of is the sort of the impact of some of our promotional activity on win margins, you know, across the course of the year. You know, things like our you know very successful Super Bowl campaign where we you know make you know offers like 56-to-1 available to customers can you know artificially depress win margins in the period, but ultimately, you know, those things bounce back. Yeah, and I think you know the performance of you know the Same Game Parlay product for football is important, but it's also really important for things like the NBA as well.
you know, we're comfortable with the levels of margin we see in the U.S., and you know, we have some of those structural advantages. Maybe you wanna comment, Jonathan.
The more the market moves into the, you know, the fast followers and then into a more recreational base, you know, we see that naturally, as we've seen in other markets, driving the sort of multi parlay mix higher over time. 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, you know, increasing structural margins over time.
Yeah. Okay. I don't think there are any more questions on the phone. Thank you very much, everybody for coming. It's nice to see you all in 3D and, you know, thank you for your ongoing support.
Thanks very much.