Good morning everyone and welcome to the Flutter Entertainment third quarter update call hosted by CEO, Peter Jackson and CFO, Jonathan Hill. There will be a chance to ask questions later. To ask one, please press star one on your device. Thank you. I will now hand you over to Peter. Please go ahead.
Thank you, Ben. Good morning everyone, and thank you for joining our Q3 trading update call. With me this morning is Jonathan Hill, our CFO. Hopefully you'll have had a chance to review our statement this morning, so I'll just touch on some key points. The group delivered a strong third quarter with pro forma revenue and player growth of 11%, driven by continued strong momentum in the U.S. on our consolidate and invest international markets. In the U.S., we delivered another record quarter with revenue of $700 million, up 82% year-on-year. We had an excellent start to the NFL season, with sportsbook revenue up 150% and customer returns remain compelling with a payback period predicted to be less than 18 months for those customers acquired in September.
We continue to innovate our market-leading products with Same Game Parlay Live launched in September, and we're now averaging over 1 million customers each NFL Sunday. This strong performance continues to underpin our confidence in delivering a full year EBITDA profit in the U.S. in 2023. In our overall group ex-U.S. business, we continue to expand our recreational player base with AMP growth of 6%. Pro forma revenue declined 6%, reflecting the anticipated challenging COVID comps we faced in Australia and the concluding stages of the European Football Championship in July 2021. By ex-U.S. division, in the U.K. and Ireland, online player volumes were in line year-on-year on a pro forma basis, while revenue was 4% lower.
If we exclude the closing stages of the European Football Championship last year, sports revenue was flat year-on-year despite the fixture cancellations and a slower start to the football season, given the midsummer start. We eagerly await the kickoff of the World Cup later this month. It's a great opportunity to acquire recreational sports bettors and retain them through the subsequent domestic season. Our gaming business continues to perform well, growing 5% in the quarter, driven by player growth of 9%. In Australia, player volumes of 1.1 million were 1% ahead of the prior year. Revenue was 21% lower, primarily driven by challenging COVID comps, when 60% of the population were in lockdown during Q3 2021.
We also saw significant weather-related disruption to racing, which led to cancellations as well as poorer quality race meetings due to the extreme conditions and smaller field sizes. Despite this, however, we've been pleased with the underlying momentum into Q4, with player volumes at the Melbourne Cup last week and across the entire Spring Carnival period growing versus the prior period. In international, we completed acquisition of Sisal in August. Sisal has continued the strong momentum it's shown across the first half, with revenue 19% higher on a pro forma basis in the quarter. The record SuperEnalotto, which is currently at EUR 200 million, is helping to drive online customer acquisition with a record 550,000 online players in Italy in September.
Our consolidated and invest markets now account for 78% of the division's revenue and grew 15% in the quarter, providing the division with strong momentum into 2023. As we look to the remainder of 2022, we are increasing our revenue guidance in the U.S. by $100 million in the midpoint, reflecting the fantastic performance seen across Q3. The additional revenue will help fund the launch in Maryland later this year, a state we originally expected to launch in 2023. This means U.S. EBITDA losses are in line with previous guidance in local currency, but slightly higher in sterling due to movement in the exchange rate. Group ex-U.S. EBITDA guidance is expected to remain within the previously guided range at interims, despite some fixture cancellations in Q3 and a continuing weaker retail outlook in Ireland. This guidance reflects current consumer trends.
We are yet to see any discernible sign of a slowdown in spend. Before I finish, there are a couple of additional topics I just wanted to touch on. Firstly, although the results are not yet in, but polling indicates that California is very unlikely to pass our initiative to legalize a competitive online sports betting market on this occasion. As we think about the U.S. market longer term, we find it hard to see a scenario where a sports-mad state like California won't have access to what will be legally available in so many other U.S. states. Secondly, we're delighted with last week's ruling in our arbitration with FOX . With FanDuel valued at $20 billion in December 2020, it clearly vindicates the patience we've shown on this matter.
Should FOX wish to go through the onerous licensing process for the 16 online states in which FanDuel is live and exercise the option, it will cost them $4.1 billion as we sit here today. Clearly, this value is reflective of FanDuel's number one market position, and we are really excited about our Capital Markets Day in New York next week, where Amy and the team will share the drivers of that success, just why it is so hard to replicate. With that, we'll be happy to take any questions. As usual, I will kindly ask you to limit yourselves to two questions each to start with, and then if we have time, we'll be happy to take any follow-ups. Ben, back over to you.
Certainly. Thank you. Allow me to kindly remind our audience, if you wish to ask a question, please press star one on your device. Thank you. With that, we will proceed to our first question today coming from Michael Mitchell from Barclays. Michael, please go ahead.
Good morning, Peter. Morning, Jonathan. Two on the U.S., if I could. I'll start with customer economics. The statement refers to improving customer retention rates, and I think your opening message was something similar, Peter. I presume that means that we're looking at a situation where customer lifetime values have been higher than anticipated. If so, I wonder, could you also update us on the other part of the equation, namely CPAs, and whether the ratio between the two actually improved in the period? So customer economics, question number one. Question number two, in terms of your Q3 U.S. margin, obviously up in excess of 200 basis points. Feels like there was some sports results benefit there, but clearly also an improvement in your expected margin.
I guess could you just talk about that improvement in the expected margin and the extent to which we should be thinking about expected margins being, you know, in that range, namely kind of 8% going forward, given what you're seeing in terms of penetration of higher margin products? Thank you.
Morning, Michael. I'll take the first question, Jonathan will pick up on the margin point. Look, you know, your point about the sort of customer economics, and we've talked, you know, regularly about the sort of acquisition cost to lifetime value dynamic that we see and wanting to keep ourselves in that sort of 12 to 18 month payback period. You know, we are continuing to see very strong levels of retention amongst our customers. You know, when we look at the benefits we're seeing in the higher lifetime values, you know, some of that is driven by improvements to retention rates, some of it's driven by higher levels of cross-sell into gaming where relevant.
Of course, there's also the sort of bet frequency margins and other points that, you know, Jonathan will come to. When we look at our CPAs, you know, we remain, you know, very disciplined in our approach and focus to marketing. Look, this is something we'll definitely be talking a lot about at the Capital Markets Day next week. I think, you know, you'll hear from Amy and Mike and other members of the team. You know, and I think, you know, we do a great job in acquiring very large volumes of customers, and with the disciplined approach that we have, that's what helps keep the CPAs under control.
As we, you know, get closer to exiting 2022, you know, it's obviously very important we, you know, build up our large customer base to give us this confidence around getting into profitability next year. you know, that is indeed the case. Jonathan?
I'd just add one point to that. As we think about Q4 and what we're seeing in terms of customer economics, and then I'm sure we'll touch on it later, U.S. guidance. You know, we see the opportunity to continue to invest aggressively in existing states to build the business as we go into 2023 to give us even greater confidence around that EBITDA positive result that we're aiming for in 2023. In terms of the sports book and the margin, Michael, I'd make a couple of points. Obviously, as we said in the release, you know, up in terms of online sports book by 150%.
You saw stickies up 83%, and that's primarily, you know, very similar to the sort of growth in AMPs that we had in the online sportsbook. Really strong result there in terms of underlying AMP growth. The vast majority of the improvement year-on-year is actually structural margin improvements because we actually had positive sports results both this year and last year. They're slightly higher this year than last year, but then we've given a little bit more back in generosity than we did last year as well. Those two things are relatively sort of net each other out. Primarily, this is about underlying expected margin growth from the growth in parlays and the bet mix.
That's great. Thanks for the detail.
Our second question comes from Clark Lampen, from BTIG. Clark, please proceed.
Thanks a lot. Good morning. Jonathan, maybe I can follow up on that sort of latter point you were making. I guess with easing competitive dynamics, I'm curious if that might enable you, as you move forward with new launches, to be a little bit more efficient with upfront spending, if it is you and maybe your next closest competitors that are most, I guess, aggressive in new launch spending. Does it perhaps, I guess, enable you guys to capture the same level of customers with lower spending overall? Or do you expect that situation might be fluid in any way? The second question I have is on profit guidance. You talked about an expectation for profitability next year.
Is that consistent versus prior periods where that excludes costs from new launches, or is that now maybe a pro forma number given the better visibility that we have around, Maryland, Massachusetts, and Ohio? Thank you.
I'm going to deal with the second of your points first, Clark. We've always been consistent about how we've talked about this. It includes state launches and any cost of any state launches. It is EBITDA after share-based payments. It's a proper EBITDA measurement of profitability of the entirety of the P&L. Hopefully that's really clear, and that's the same definition and the same way I think we've explained it. It is for the full year financial results for the twelve-month period, as opposed to a month's quarter or a third Thursday in November. Just to be clear, it is for the full year period.
In terms of your first question, I think, you know, we've said in the release today, 12 to 18 months in terms of paybacks. That gives us a really high level of confidence as we invest, and Peter talked about that to start with. I think that dynamic of that CAC to LTV ratio. I think we've always, you know, been slightly more efficient than other players in the market and we can verify that given we own a very small player in the market and the difficulties of being subscale in this market. So we've got another comparator there. We feel that we're able to lean in and aggressively invest at great paybacks, and we'll continue to do so. Peter, anything you wanna add?
Yeah. I mean, look, I think it's important that, you know, we continue to push hard and acquire as many customers as we can in the, you know, using the disciplines, you know, that we've brought to the market, you know. If you look at Q3, you know, 40% of all customers we acquired in the period were in pre-2021 states. You know, I think it shows that there's good growth in the existing states. Of course, you know, we also really focus hard on when a state launches, because of the opportunity that, you know, we have for the pent-up demand, with the strength of our brand and the product, you know, customers wanna get their hands on.
You know, we've got different playbooks we're deploying in the different places we're live in the U.S. I think, you know, the team will talk a lot more about it, next week.
Thanks a lot. Appreciate the clarification. The following question comes from Ed Young from MS. Ed, please go ahead.
Good morning. Mine are both on the U.S. as well, if that's okay. First of all, there are elements relating to a potential IPO that are still under the arbitrator's decision. I think you said early next year. Can you just clarify exactly what your position is around those issues and exactly what you think the arbitrator is going to be deciding on? The second is the broader relationship with FOX . The judgment says that you in fact invested disproportionate resources beyond any measure of commercial reasonableness when it comes to the investment into FOX Bet. I guess could you cut it from its current level to reduce the losses? I think you said it was 20% in losses in H1.
You know, more broadly with the FOX relationship, are the negotiations still ongoing, or should we think of the arbitrator's decision and then the August 23 deadline for TSG U.S. as the real milestone? Is there really anything active going on, in discussions between you at the moment? Thanks.
Let me pick up on those, Ed. Look, I mean, I think the important point to make, as we think about the verdict is, you know. We're very pleased, and it vindicates our patience. I think it's, you know, it's great that the arbitrator's come down where she has in terms of the valuation. You know, look, we have obviously talked about an IPO. I mean, you know, it's very difficult to see IPOs in the current market context.
You know, I think what you know we tried to clarify you know over the last couple of days that, you know, at no point has FOX been able to block any potential FanDuel IPO. You know, we have asked the arbitrator to help clarify the extent to which FOX will be able to participate in an IPO we'll want to proceed. We'll hear from her early next year. Jonathan, do you wanna talk about sort of FOX Bet? I mean, I think the you know before we talk about the impact and losses, what I would say is, look, you know, we've always you know strived to be good partners.
You know, we're committed to you know making FOX Bet successful, and we've tried as hard as we can, and that's why we're putting a lot of resources in it. You know, there's some questions from FOX as to whether we'd really kept our side of the bargain, and it's great to hear that, you know, we're you know we have been good partners and done what, you know, done in fact more than we should have done to try and make that business successful.
I think the other point to carry on from that is, you know, under the existing TSG U.S. agreements with FOX , we have commitments under those agreements to with FOX around, you know, committed spends into the FOX network. We'll continue obviously to honor those in their entirety as we go forwards. And as you say, we'll see what happens post as we get to August next year. You know, we will honor all the commitments that sit within our commercial agreements going forwards and continue to work with FOX over as we go into 2023.
Thanks very much. Just the only thing you didn't touch on there, if it's possible, is do you continue to talk, or is this really kind of going through external decisions to delineate the future relationship? Or is there potential you could come to some agreement that would be outside those timelines? Just any sort of color you're able to give on that would be useful.
Ed, there's always the potential to reach an agreement. If one is possible and it is to the benefit of our shareholders, then clearly we'll consider it. We'll see where we get to over the next period with the forthcoming narrow arbitration hearing.
Thank you.
Our next question comes from Joe Stauff from Susquehanna. Joe, please proceed.
Thanks very much. Good morning. I wanted to ask, you know, just about, you know, you had some comments about, Jonathan, I think you made in particular about, you know, just the hold rates in the U.S. on the sports side. You know, you had about an 8.5, or an 8.5% hold in the third quarter. Wondering, you know, in terms of like how much of that is a structural improvement in that overall hold rate given, you know, again, what you said on product mix and so forth as we think about whether it be last year or going forward. Just wondering what you can share with us there.
I'm sorry to say this, Joe, but I'm going to leave that question hanging until next week, because the guys are gonna be talking about that in a detailed session as part of the Capital Markets Day next year. I would point out that within that 8.5, there was a significant quantity of positive sports results for us. You know, so that isn't necessarily the underlying hold rate because there's a lot of good sports results within that. You know, I'm going to have to plead the fifth on this one and leave it till next week when the guys talk about it.
Okay. Yep, understood. Maybe just to follow up on the FOX relationship now. Just to clarify, you know, if they were to unwind or exercise the option that they have, wouldn't they be required to repay Flutter at least half of the lifetime expenses that you have spent to build it up at this point?
You're referring, Joe, to the FOX Bet relationship.
Correct.
Yeah. Look, I mean.
Look, I think the point is if there were to be a sort of overall settlement, then that'll be a different commercial construct agreed between the parties and I can't foresee what the specific terms of that would be, nor would I speculate on that. I don't think we're gonna get hypothetical on this one.
Okay. Thank you.
The following question comes from Kiranjot from Bank of America. Please go ahead.
Hey, hey, morning, guys. Thanks for clarifying that point on EBITDA in the U.S. through the new state launches. If we could just build that up, could you confirm which states you're expecting to launch next year within that guide? Secondly, can we touch on the international segment? Even on a pro forma basis, the segment's doing very well. What's behind the positive performance, and can we assume that Poker underperformance has now flatlined? The last question is more on macro. Are there any regions that you've seen a step change in performance? Thank you.
Morning, Kiranjot .
Do you want me to take the first one?
Yeah, you can.
Yeah. I mean, we do have some expectation because we've got some pretty good visibility on the early states next year of I think it's Ohio and Massachusetts. We would expect them to go in Q1. We had expected obviously Maryland to go in Q1 next year, and it's come forward. It's very difficult for us to sort of speculate on what comes in the remainder of the year. Obviously we don't expect California within that, which would have been a massive and material investment, which is why we have that very high level of confidence over being able to deliver a positive EBITDA number next year.
With regards to your question around, you know, international, you know, look, we shared, you know, the archetypes in terms of how we're thinking about the business, but you. Yeah, as I just mentioned in my opening remarks, you know, we're seeing good growth in our sort of international consolidated markets, which is, you know, a huge proportion of our revenues now in international. You know, particularly pleased with, you know, how Sisal is performing, but, you know, Junglee is also continuing to perform well. Look, you know, the business is in a good place, and I think that the changes and investments we've made are working well for us.
I mean, from my perspective, the fact that the consolidated regulated markets now make up 78% of the international division's revenue is fantastic. As Peter said, the Sisal performance is incredibly good. India's great. You know, within these numbers, clearly we still have the headwinds. You know, this pro forma growth still has the headwinds of Netherlands and Russia in there. You know, at a certain point, we do lap those. As we said, you know, that 78% in consolidated regulated is up by 15% on Q3 last year.
You know, there's a lot of really good positives in there, and I think the guys in the international team have done a fabulous job in reshaping this business and getting real clarity on the strategy direction and the areas where we're gonna put our shoulder behind the wheel to grow it.
Kiranjot , you sneaked in a third question. In terms of the macro impact. Look, you know, as I, you know, mentioned in the release, we're not seeing any discernible impact at the moment. I mean, I think, you know, in the U.K., we'll see what happens with the changes around energy bills and stuff. You know, we should remember our customers are very recreationally focused. You know, typically people are spending sort of GBP 10 a week, and we think they get great value from that entertainment. You know, we'll see what happens. You know, we're confident that the business is well placed, and we're not seeing any discernible impact at the moment.
Super. Thank you.
Our next question comes from Jordan Bender from JMP Securities. Jordan, please.
Great. Thanks for taking my question. Good morning. In the U.S., I believe your DFS business saw some cannibalization as sports betting states launched. Now that we haven't seen a state launch in about six months or so, can you talk about what you're seeing from the DFS business, and if maybe we've seen that trend reverse? Second, for U.S. AMPs, last year's third quarter included an unfavorable calendar comparison with the NBA going into July, which we didn't get this year, so AMPs might look lower. Can you give us maybe September or even October AMP growth just to give us a sense of maybe your true user growth during the quarter? Thanks.
Thanks, Jordan. In terms of your question, you know, you're absolutely right, we have seen cannibalization, and it's kind of what we expected. We've been really, you know, pleased with the performance in both DFS and TVG being roughly flat year-on-year in revenue terms, and I think you can work that out kind of from the numbers. You know, while there is downward pressure on those revenue streams, I think the guys have performed really well in those businesses in the quarter.
Yeah, I mean, I think the impact where we're seeing the cannibalization is actually in the AMPs numbers. You know, some of the sort of more recreational types of customers in those products are switching to sports betting where they can. You know, obviously, as you know, Jordan just said, you know, the revenues remain robust year-on-year. Look, in terms of the timing and of the prior year period, you know, it's and the switch around with the NBA from July. Look, I mean, you know, it does slightly complicate the picture. I think, you know, in general, you know, we're very pleased with how, you know, the business performed.
I'm not sure we're prepared to give monthly AMP numbers.
I mean, I think the most important thing is that, you know, our staking was up 82%, and that's roughly in line with our AMP growth in online sports betting. You know, we're seeing it supported. You know, the revenue growth is driven by AMPs growth, and that's the most important thing to us, that we're building a big and recreational business in the U.S.
Great. Appreciate the questions.
The following question comes from David Brohan . David, please go ahead.
Morning, Peter. Morning, Jonathan. It's two questions from me. Firstly, on Tunisia, you know, you announced that Sisal had won the contract there just around the end of Q3. Could you give any comment on the scale of the opportunity there? You know, it seems like a pretty attractive deal for you guys. Just on Australia, could you just touch on the competitive backdrop in Australia, you know, as you enter Q3 and into the Spring Carnival periods? Thanks.
Sure. I'll maybe take that as two-part question, David. I mean, certainly, as you'll be well aware, we've had a you know, material new entrant come into the market in Betr with some very aggressive offers. We've seen you know, Tabcorp step up the quality of their product with their new app. We've seen others you know, being aggressive as well, but so have we been. While we've seen you know, great aggression from others, we feel as if we've performed well through the start of Spring Racing Carnival. Peter referenced it in his opening statement, you know, on Carnival day itself. You know, on the Melbourne Cup day itself, we saw AMPs up you know, 6%.
We really think that the team have leaned in and are you know aggressively competing with other players in the market. I think they've done a really good job so far in the Spring Carnival.
Look, David, thank you for asking the question about Tunisia, because it's great to be able to talk about this. I mean, it's a nice win for the team in FIFA. You know, for those of you not familiar, you know, the 12 million people in Tunisia, we'll be live next year. You know, we're able to offer sports betting, the lottery, and some gaming, so instant wins and virtual scratch cards. We have a monopoly in the market, and there are no marketing restrictions. Look, we're very excited about it. We're not providing details on the economics, but it'll take a bit of time for the market to ramp up.
Perfect. Thanks, guys.
Up next is Joseph McNamara from Citi. Joseph, please proceed.
Morning, Peter. Morning, Jonathan. I'll take mine one at a time, if that's okay. Firstly, do you believe you're taking share in U.S. iGaming? Any particular states to call out of, I guess, New Jersey, Michigan, and Pennsylvania. Then if so, what's working well there, and how are you kind of getting traction?
Yeah, look, I mean, I think, you know, what is important to look at is, you know, we obviously have a couple of brands operating when you think about our business in the U.S.. Look, I mean, I think FanDuel's performed very well. You know, we might have lost a tiny, you know, fraction of share just because of the lightness of the sporting calendar and the focus that our business has around sports cross-sell. Look, I think the team have done a nice job. We started down the path of making some of the improvements we want to make around gaming, and we'll talk to you more about that next week at the CMD.
I think that's the big thing. You know, the guys have got a section to talk you through iGaming, where we are, what we're seeing in terms of positive signs, and hopefully you'll get some more comfort from the team next week.
Excellent. Okay. Very clear. Secondly, could I ask about your Irish retail estate, please? Clearly revenue continues to trail pretty significantly below 2019 levels. I'd be keen to hear, you know, your strategy.
In the near term, and then I guess how should we think about the kind of 250 shops you have in the country over the next couple of years? Thank you.
Just look, you know, it's worth remembering that retail in Ireland is only really sports focused. We don't have the same benefit of, you know, the gaming support that we see in the shops in the U.K. You know, we are seeing relatively, you know, weaker performance in Ireland. In fact, you know, we haven't yet returned to the pre-COVID levels. I think a lot of that is driven, you know, down to sort of changes in working patterns and frankly, where people are actually living in Ireland at the moment. Look, we don't anticipate sort of, you know, those things reverse, you know, reverting back to where they were significantly in terms of working patterns and so.
It is gonna continue to put pressure on revenues in our estate in Ireland.
Okay.
I think, you know, we've got a well-invested, a well-positioned estate. You know, we'll continue to monitor our estate as you expect with any retail business. We'll also continue to monitor how the peers are getting on in this more challenging football market.
All right. Thank you very much, Michaela.
The following question comes from Simon Davies from Deutsche Bank. Simon, please.
Yeah. Morning. Two from me, please. First, can you update us on trading at Tombola? How has that performed during the half? What kind of growth rates are you seeing there? And secondly, I was hoping, Jonathan, you could give us some color around your new COO role. Is that gonna be focused on driving synergies across the group? And any color you can give us in terms of what you might be looking for there.
Yeah. Morning, Simon. Look, for those of you who are fans of I'm a Celebrity, you'll have seen some of our advertising for Tombola. Look, it's. You know, we're very pleased with how the business has performed since we took it over. I mean, we actually launched and ran Britain's biggest ever bingo game, which we're really pleased with the results of last week. Yeah, I think we had 175,000 sort of concurrent customers on the you know, playing that game. So, you know, the business is performing well.
There's good growth in revenue and at a sort of AMP level, which I think, you know, I do look at the sort of Tombola, you know, business and customer base as a sort of canary in the coal mine versus to whether there are any challenges from a macro perspective in the U.K., and we're seeing no evidence of that at the moment.
We get a bit of international exposure as well with Tombola in Italy and in Spain. You know, the Italian business is performing really well as well. That's a positive. In terms of my new role, I think you're exactly right. The thing is that we have a very clear business model which is driven around, you know, making sure that the divisions have the ability to drive profitability and have control over the levers in their business model. We are pretty effective today at trying to get the benefits of our scale by having, you know, the sharing of knowledge across the group between teams that work on the same areas, either customer ops or promotional spend or these type of things.
There are other areas where we can drive greater, you know, benefits, and we focus on those in terms of procurement and in terms of some of the sort of areas where we can do risk and trading ones, distribution of pricing ones, et cetera. I think there's just the ability to you know, Peter's asked me to go and set this up, the COO function, which will be bringing some of the existing functions, but really making sure that we're not missing opportunities and making sure we've got these things moving at the sort of pace that we need. There's also other opportunities around, you know, the future of the you know, where we build out some of our capabilities.
I think there's a lot to look at, but we need to do that within the context of making sure the successful business model that we've got in place today, we don't disrupt that by creating something that holds the teams back from being able to deliver.
Great. Thanks.
Our next question comes from Richard Stuber from Numis. Please go ahead.
Hi. Good morning, Peter. Morning, Jonathan. Two for me, please. The first on the U.K., I think you said that pro forma revenue's down 4%. If you sort of adjust for things like the euros and everything, it's probably gonna be sort of nearer flat. There aren't many sort of RG measures now in place. Do you see sort of flattish revenue in the U.K. going forward into next year? Is that sort of a reasonable assumption? While we're on the U.K., just, I know there's lots of rumors about the Gambling Act 2005. I know we haven't had a single question on it yet. You're a lot closer to what's going on. Have you got any sort of indication whether it will happen this side of Christmas?
Do you think it's sort of slightly changed since the draft was put on number ten's desk last summer? Thank you.
Morning, Richard. Yeah, look, I mean, you know, I think in terms of your question around the U.K. revenues next year, I think flattish is probably a good place to start. Now obviously we need to see what happens to this white paper. You know, I can't comment on timing 'cause I've tried to comment on it for about two years now and keep getting it wrong. So, I don't think anything I can say will have any credibility. But look, I suspect it'll end up coming out after Christmas just 'cause there isn't much time between now and Christmas.
Whether the newer ministers want to put their mark on it or not, we'll see when the paper comes out. I think in the meantime, we've got a very recreational base, and, you know, we're very, you know, I think, you know, that's important to remember, that, you know, we're positioned on a, you know, sort of both relative and absolute basis very well with that and the changes that we've made to the business over the years.
Great. Thank you. Can I ask a second question just on balance sheet? Just sort of assuming folks don't exercise their option, in the near term, can I just ask how you're thinking about your balance sheet and your current deleveraging profile?
Yeah, sure. I mean, I think the great news as we look into 2023 is with the expectation of the U.S . Being, you know, EBITDA positive, I think the cash flows from the business will be, you know, fundamentally changed from the investments we've made over the last couple of years. Our ability, therefore, to deleverage is clearly materially enhanced. As you'll be aware from the disclosure today in terms of the interest costs, assuming that the weighted average cost of debt on today's debt level, there are clearly marginal costs of debt within that debt stack that we would be very keen to reduce.
As we get our you know positive cash flows in through Q4 and into next year, clearly we'll be focusing on getting the leverage down, and basically taking out the most expensive of those pieces of debt that we can within the confines of our financing arrangements and agreements.
That's great. Thank you very much.
Thank you. Thank you, Richard. Look, thank you very much, everybody, for your questions this morning. It's you know, a busy time for us, you know, Flutter with the you know, the arbitration news from FOX, the results today, and of course, we've got a capital markets day next week in New York. I hope to see many of you there. Be a great opportunity for you to hear from Amy and the team about the fantastic business we have in America with FanDuel, which is continuing to win and lead the market. Thank you.
Thank you for joining everyone today. That concludes your conference. You may now disconnect. Please enjoy the rest of your day. Goodbye.