Hello. Delighted to be joined by Peter Jackson and Rob Coldrake from Flutter. Thanks very much for joining us again at the conference.
Yeah, thank you very much for having us.
You reported results last week. Revenue was up 17%, EBITDA was up 21%. Obviously an awful lot of drivers within the business. Perhaps for ease, we'll start with the U.S., as you probably expect me to say. I guess as a sort of short overview at the start, you know, what did you make of the U.S. performance in 2025?
Yeah. Well, thank you, Adam. Hopefully we'll get to speak about international at some stage.
We will, yep.
You know, as that is an important part of the business. From a, from a U.S. perspective, you know, I think that look, let's start with the, you know, the most successful part of our business, which is the iGaming business. You know, we exited Q4 with 28% of GGR. I think our strategy of, you know, building exclusive content, having access to the loyalty program...
Mm.
Has been working really effectively for us. You know, we're excited with the way that the business exited last year and the prospects for it through the course of this year. You know, if I take our sports business, you know, I have no doubt we'll talk about, you know, Q4 at some stage. You know, actually the progress we're making in terms of getting towards our structural margin, you know, making, you know, really strong progress, we remain the number one operator, you know, here in the U.S. I think that there are a couple of areas where we, you know, we lost a bit of share, you know, through the course of 2025, but we know what happened. We know what we need to do to fix it.
Mm-hmm.
Principally amongst that, some changes we're making to our product and our loyalty program. We were delighted that we were able to also launch our prediction markets product. You know, who'd have thought that being sat here in California, you know, we actually have a product we could make available to customers from a sports perspective. You know, we thought that would take us, you know, much longer before we could do that.
Yeah. Well, let's address one of the big topics straight off the bat, which is handle. Obviously, it doesn't, you know, doesn't just affect Flutter, it's affected the whole market and it's affected sentiment. We've seen obviously a deceleration of handle through Q4 and into the start of this year. Perhaps the most open way of asking it is, you know, what do you think are the drivers behind that? What are you seeing from your side?
When I look at the business, you know, look, handle is an important component, but we also look at our gross win margin as well. You know, as, you know, and the combination of them is what gives us our GGR. If I look at this football season, you know, in its entirety, you know, we would have made, you know, more than a 19% margin on football, so ahead of expectations.
Mm.
Which is a big contrast to the preceding two years where, you know, margins were, you know, below expectations. I think people were worried about whether we could ever get there. Actually we, you know, we hit our sort of long-term margin aspirations, you know, at the back end of the year. I think, you know, what we have to accept, you know, for us, if I take December, margins doubled year-over-year. Right? We shouldn't be surprised that handle come under pressure. I mean, if losses were consistent, handle should have halved. Obviously our handle didn't half, but handle is gonna come under pressure. We see it in other markets.
Mm.
when you see such big swings occurring in margins. You know, actually, you know, through the course of, you know, Q4, margins are getting stronger and stronger. That was something that, you know, everybody benefited from in the, you know, across the sector. It does have a corresponding impact on handle.
I guess first of all, why do you think FanDuel was more affected than others? Because the relative handle performance was sort of worse within that. Is that related to the margin point or are there other kind of product or channel or, you know, sport types that were part of that, do you think?
Look, I think there are two things which are, you know, very clear from our perspective. One, we have a structural margin advantage.
Mm-hmm.
We have much higher margins than other people. You can see that through, you know, through into Q4, where our margins would've been 50% higher than other people, you know, in the sector. Of course, we're gonna see a corresponding impact on our handle relative to other players in the market. You know, you'd expect that. And that's another function of the high parlay mix that we get, which is because consumers are more interested in picking the parlays. You know, one of the other factors that we saw, and look, this was an issue on us, was we didn't execute our generosity strategy as well as we should have done through Q4, particularly in the face of seeing, you know, 11 weeks of unbelievably strong margin.
Mm.
At the same time as the quality of content in football was sort of deteriorating. You know, we saw more handle on one of the Lions players than we saw on the Pats in the, you know, in the tournament, for example.
Yeah.
That was a challenge. I think, you know, we didn't execute our generosity playbook as effectively as we should have done in Q4. I think that sort of compounded it for us.
Okay. if we think about the, I guess from an investor point of view, I think it's very reasonable to see concern around handle because, yes, there's a reflexive relationship between handle and margin, but equally at some point margin will get to a level at which it is structurally mature or plateaued or whatever. Then underlying growth essentially is handle growth. The guidance for this year, which we can come back to a little bit more later, but it also you've talked about some level of conservatism within the guidance, and clearly, it was lower than, you know, people expected. What you're sort of suggesting is that margin went up, so that affects handle, but the guide appears to have some conservatism around handle. How have you embedded that kind of-
handle growth perspective into guidance. On a more normalized basis, what does handle growth look like in the way you think about projecting the business going forward?
Let me tell you about the two things we're doing to sort of face into the challenges that we saw in Q4, and then Rob can talk to you about how we're seeing-
Mm-hmm
... you know, the guide for the year, if that's okay. Look, I think the first thing we, you know, I acknowledged, you know, our generosity, you know, strategy wasn't as effective as it could have been. We have a lot of experience of running, you know, personalized bespokes of generosity strategies. It's even more important in the U.S. market when you're thinking about football. There's 100 games that matter. As you go through the course of the season, the frequency of them drops, so volatility really gets amplified.
Mm-hmm
Particularly for us with our parlay mix. We have to do a better job of making sure that we react to that on an individual customer basis. You know, you have to de-average this. You know, this is complex, right? It's not straightforward, but we know how to do this, and we've done it in other markets. We're also going to launch our loyalty program in the next quarter. It's been a really important component of what's seen us win in casino, building out, you know, wallet share amongst consumers, principally because we do a much better job of being consistent with generosity for people.
Mm.
Also making sure that, you know, without spending any more money, we get a lot more bang for our buck from consumers understanding why we're giving them generosity. The saliency and sort of recognition that we offer value stepped up very significantly when we launched that loyalty program for casino. We'd expect it to do the same thing for us when we launch it in sports shortly.
Building on what Peter said from a guidance perspective. Some of the softness in volume that we saw towards the back end of the year with the extended run of bookmaker friendly margin that we had towards the end of the year, that continued into the start of January. It was quite a noisy NFL season overall. I think post our guidance that we gave in Q3 for the full year 2025, we then went on a sustained run of 11 weeks where margin was ahead of where we expected it to be in the NFL. That culminated with the last week of the year, where we had a 35% margin, which is quite...
At the same time, as Peter said, we'd kind of dialed back our generosity a little bit, and we found that some customers came out of the ecosystem, you know, probably had enough of betting on the NFL for the season. What we've seen post NFL, post Super Bowl is some sequential improvement in volume, in revenue, particularly in NBA, that gives us some confidence that the 2026 guide that we've got, where we see some graduated improvement through the year, comes to bear. The other thing that gives us confidence around the guide for the year from a sportsbook perspective is some of the initiatives that we're putting into play. We've talked a lot to people about our loyalty scheme sportsbook that we intend to put into play in Q2.
We've talked about other product initiatives that will be landing throughout the course of the year, some of our insurance products around the sportsbook, et cetera. From an iGaming perspective, we're forecasting that will be a high -teen revenue improvement year-on-year. Last year, we were in the high thirties. We always anticipated that would moderate slightly over time, but we're still seeing really good growth, still retain the market leadership. I think the word you used was prudent. We're using a sensible measured, but we're feeling quietly confident about the 2026 guidance.
Let's turn to product. There were a few comments within the release in your remarks during results last week about competitors having stepped up.
Where do you see your relative position versus competition, and what are the carriers of focus to stabilize relative position or to regrow your relative position on product?
Yeah. We, you know, talking purely about sports, 'cause obviously it's, you know, I think, you know.
Mm-hmm
... there's questions we could ask or answer around casino. You know, talking about sports, you know, we maintain our leadership position in parlays, right. Now I think we've got a strong position there. We can see when we benchmark our performance against others, we have a, you know, consistent advantage, and you can see that in the structural margin that we have. We're not standing still, so we'll continue to enhance and improve our parlay offering through the course of the season. We're also doing, you know, some of the, what I would describe as the block and tackling, the basic e-commerce, you know, building blocks of the business. You know, in Q2, we'll halve the load time of the app, right from the home page.
You know, 'cause, you know, you gotta just go after these things every now and then. There's, you know, there's a bunch of grit in the system.
Mm
... which we need to, you know, eliminate and, you know, we will do that. We found social products have been successful for us. You know, we had a great promotion around Thanksgiving, our Pass The Leg offer, right, where you know, you could start with a parlay, you know, effectively pass it to me. I'd add the next leg and then turn to Rob. T hat sort of social product is really important.
Mm.
We found that to be successful for us in Australia. We see great success with that in Italy. You'll see us do more around social in the market. You know, look, the loyalty program is also gonna be really important. It's a great mechanism for us to, you know, introduce, make sure that our consumers understand, you know, that, you know, what they need to do to get us to do things for them and why we're doing, you know, certain things for them. You know, we'll make sure that there's much more sort of transparency. I think if, you know, if people feel like they've got more agency, I think they feel more engaged.
Okay. It sounds a little bit on the user experience around, you know, loyalty, social.
You're not really suggesting there's any major change in terms of, you know, a greater focus on in-play or a greater focus on X, Y, and Z. Is that a fair read of it, that you're in an okay place there, or are there other bits behind the scenes?
Look, you know, I don't think there's anything that we'd point out and think that we've got behind in a certain area. You know, live is a really important area for us, but, you know, it's important for us because of the quality of our parlay products, right?
Mm-hmm.
You know, parlay is really important in live. You know, we're making improvements to sort of cash out availability and uptime. There's stuff that we're tweaking all the time to improve. You know, look, I think, you know, we are behind the sector to some extent in not having a loyalty program for our, you know, sports product. We have one in casino. We know how effective it is.
Yep.
You know, this is something, I guess, you know, that will be one area where we're catching up.
The World Cup, perhaps briefly, obviously, you've got a huge global business. Is that an area of, you know, competitive advantage for the U.S. this year? Do you think you can put ahead in that area?
I mean, we're super excited about the World Cup. You know, I think about our business in Brazil, you know, where, you know, that is probably a sport that will stop the nation.
Mm-hmm.
You know, all around the world, all of our different markets will participate. You know, soccer is actually, I think, the 4th biggest sport we have here in the U.S., you know, it's clearly something which is really resonating with consumers in the market. The benefits we'll have is, you know, be able to bring our global product and expertise into the U.S. market. The way that we typically think about something like the World Cup is it's fantastic for customer acquisition, right? It's a great way of introducing our product, putting it in front of people.
Mm-hmm.
Of course, the brilliant thing this year is that even in states like California, where we haven't got regulated OSB, we're gonna make, you know, it's all incremental for us through FanDuel Predicts.
Let's talk promotions. You mentioned it a little bit, so you talked about sort of loyalty side going forward. I think probably most of us have seen generosity. It's something you've talked a lot about over the years, Peter. You know, generosity and being able to tokenize it, apply it properly, has been a big source of competitive advantage, and obviously FanDuel's scale, that plays into it as well. You said very clearly, you know, it didn't go how you want it to, how you expect it to in Q4. Could you briefly touch on what went wrong and then what is fixing? Part of it is the loyalty scheme, but, you know, it's quite surprising, I think, to a lot of investors what happened in Q4. Could you give a bit of color on what lay behind it?
Yeah. Look, I think there, it was a sort of confluence of factors, right? You know, we were not anticipating that we would see such a strong set of week after week outperformance from a margin perspective.
Mm-hmm.
I think, you know, for our customers who, you know, last year and the year before, football was a very comfortable thing to be betting on. They were getting good returns on it. This year, the reverse was true. It was consistent. There was literally week after week. I mean, there were a bunch of Sundays where, you know, were it not for, you know, the last game on the Sunday, you know, the favorites winning, we could have had 50% margins, right? You know, we were having days at 35% margin. You know, the elastic get, you know, sometimes it snaps, right, if you know, go too far. Look, I think there's some stuff that we've got to factor into our, into our sort of run book around generosity.
I think we were, you know, I think we were a bit inconsistent with the offerings for customers. I think, you know, we needed to step in and respond after a very considerable period of, you know, losses.
Mm-hmm.
you know, the factor that you know, sort of compounded to some extent was that the quality of content that was available for you to bet on was also deteriorating, as we didn't see the big teams come through.
Okay. Let's move on to prediction markets. First of all, I guess the timeline. We're all keen to be able to judge where FanDuel Predicts gets to on a like-for-like basis versus competition. Late last year, you were saying you'd have a market-leading product by Q2. Now it sounds a bit more like you'll have the product ready before NFL. It feels like there's been a bit of slippage there. When is the product gonna be at a point where we can see either through product comparison or through you putting marketing behind it and in-app downloads, that kind of thing, when you're really competing in that, in that arena?
Yeah. I think what we have to think about with, you know, the FanDuel Predicts products is there's two aspects to it. There's the whole sort of user experience, right, the user journey, which, you know, we're in the market now, we're learning how customers wanna use the product, there's a bunch of enhancements we're gonna, you know, fast follow through with, you know, now that the product's in the market. Separately, it is separate, when we think about what the product catalog looks like in terms of, you know, the breadth and depth of content that we make available to our customers, we're working hard on both of those things. To some extent, you know, the really important missing piece is landing parlays, right? You know, combos in Predicts speak.
We are building our own market-making capability, which will allow us to light that piece up.
Mm-hmm.
Look, you know, we are, you know, we're excited to make sure that we, you know, build and evolve the product. You know, we are prepared to invest money when we've got a product that we, you know, that we can, you know, stand behind from a marketing perspective. You know, look, there's the FIFA World Cup, obviously, the biggest opportunity for customer acquisition from a, you know, sports-focused perspective, which is what we're gonna be in Predicts.
Mm-hmm
is gonna be around the launch of the football season, right? That's something we have to be absolutely focused for. Look, you know, Q2 is a really important time for us to do the evolution of the product, you know, experience, the catalog, and also thinking about what we do from a market-making perspective, which will allow us to stand up the parlay solutions.
Perhaps two for you connected to that, Rob. First of all, when it comes to the market making side, you've talked, I think, broadly to the margins on the overall exchange as it is at the moment, but how should we think about the incremental opportunity there? How should we understand you sort of moving slightly, you know, upweighting to the top end of your investment range to $200 million-$300 million losses, you've gone to the top end of that already in the journey. What are you seeing or what's changed that you wanna put more capital behind it?
First of all, from the market making perspective, that's where the majority of the margin lies, and that's also where our expertise lies. It's an obvious place for us to lean into. In terms of the overall economics of prediction markets, we haven't factored in any margin from market making at this point in time. We're still working through a solution, but we're pretty confident that we get something into market this year. We said last week that we anticipate being towards the upper end of the $200 million-$300 million envelope. Clearly, you know, we've demonstrated in the past that we're very sophisticated in terms of how we think about CAPEX to LTVs.
It's early days at the moment, we're a bit in the test and learn phase, we don't want to spend too much until we're confident that we've got the product. More of that's coming in Q2 when we'll have the combos and other product improvements that come. We'll start ramping up the spending at that point in time. I think the World Cup's a good opportunity for us to be able to get behind prediction markets. The thing that we're really excited about is the new NFL season, 'cause at that point in time, as we said, we should have, you know, a much more improved product offering. That's where the big acquisition volumes are, which we're keen to get behind.
You spoke last year, I remember the virtual fireside we did in back in November, maybe you were talking a bit more about the payback period. Essentially, you sort of felt like, you know, 2026, if you like, is the year of investment, and you'd actually have most of that sort of starting to pay back on a GP basis in 2027. If we're sort of looking at it a little bit later, are you probably looking at some of those losses carrying further into 2027? Is that how we should be thinking about the phasing of losses?
Potentially. I mean, ultimately, there are some parallels for sports, but this is the big different year, we think, in terms of investment. Actually, with prediction markets, given some of the regulatory landscape and the fact that this could all go to the Supreme Court in a couple of years and, you know, we don't know what will happen thereafter, it's a shorter investment timeframe. There's a big difference this year in terms of the $200 million-$300 million. We expect it to be broadly contribution positive in 2027. We're not given an exact timing point on that, and then cumulatively positive into 2028.
In the meantime, we'd anticipate that within that time horizon, you'd see more states regulating online sports, but where ultimately that's the big prize for us and our North Star, and that's what we're shooting towards.
Are you seeing any green shoots in that regard at the moment?
I mean, we're in legislative season now. Obviously, we had one state over the line last week. There's a number of bills that are actively being discussed. We don't like to get too far ahead of ourselves. I think what we always come back to is what we said at the Investor Day back in 2024 in terms of how we think this will play out in the short to medium term, and that was 2% incremental sports population each year. We've broadly been tracking to that. This year, we have Alberta, Arkansas now. There's one or two others that are being debated. We said one new iGaming state, and there's a couple that we think are getting a bit closer there, including Virginia.
Yeah. It'd be great to see an iGaming state get over the line. Yeah.
Yeah. Do you, I think, I guess If we round the debate to where people were worrying in, I don't know, August, September, October last year was about will you be able to do prediction markets at all. You've clearly come to a point where, you know, your existing states are allowing you to continue on a normal basis, and then you're doing prediction markets in states where you don't offer OSB. Structurally, you're a little bit different to some of the pure prediction markets operators who are obviously fully national. What sort of cannibalization are you seeing or that you can detect? How do you broadly think about the capacity for PMs to cannibalize?
You know, as you said, we're sitting here in California, we're gonna have a product addressing a whole load of extra population that's clearly an opportunity. In the short term, especially within the context of handle, people worry about the negative side as well. How do you frame it? What do you see in the data that gives you a perspective?
Yeah. Our data gives us, you know, real confidence that we're not seeing the cannibalization in states where you've got regulated OSB.
Mm-hmm.
I think a great sort of, you know, example of that is the recent launch we had in Missouri, right? You know, where we saw, you know, one in 20 of the population sign up to FanDuel within the first month of us being live in the state. I think, you know, it's a good vindication of the, you know, of how people would prefer to take a regulated OSB over prediction markets. There's two reasons for that. One is the generosity strategy...
Mm-hmm
...that you can pursue in a regulated OSB, the second is the breadth of the product offering. I think they're really important sort of tent poles for us in sort of maintaining our success. You know, when I look at the opportunities around sort of, you know, prediction markets, for us, there's a lot of incremental business we can go after, whether it's in California or Texas or Florida, you know, the states we couldn't have previously addressed. I think that's super exciting. I think there'll be, you know, there are gonna be some states where we'll be operating predicts where we'll know we'll never have regulated OSB. You know, Utah's never gonna pass regulated OSB. You know, we have to, you know, think about, you know, the opportunities in Utah with that in mind.
You know, here in California, you know, we hope that at some stage there's some, you know, we can see some regulated OSB come to market. That gives us a different perspective in terms of ability to acquire customers, then better cross-sell them in the future.
Prediction markets is fast evolving. One of the areas that I think creeps up increasingly in conversations is whether prediction markets will go into gaming adjacencies. Do you think that will happen? If it did happen, would you follow?
I think the, you know, the U.S. market is unusual in that, you know, we've got relatively low levels of, you know, population penetration in terms of, you know, eligibility for iGaming.
Mm-hmm.
You know, we're about 11% at the moment.
Mm-hmm.
you know, I think the best case scenario you can see that getting to is 40%.
Right.
Now that, you know, that would be a big, you know, step up from where we are. It still means there's gonna be 60% of the U.S. population are gonna be living in states where there's no online provision for iGaming. I think it is interesting to ask yourself the question around how are people meeting that need today, right? You know, when we look at the prevalence of, you know, retail one-day options, when we look at some of the equity trading that's happening, when we think about some of the, you know, other financial markets that people are speculating, are they getting that, you know, are they scratching that sort of dopamine itch that ordinarily they would have got through iGaming in that area? I think, you know, there are, you know, other sort of, you know, closer substitutes.
We see social casino and, you know, and other products as well. Look, I think the extent to which we can participate in that sort of white space, which is not our regulated, you know, iGaming side, you know, is really interesting for us. You know, I think, you know, there's a possibility prediction markets allows people to play there, but I think there's other angles as well that we can contemplate.
Okay. Europe's largest gambling market is Italy. Business retook top spot there during Q4. Could you talk a little bit about what you're seeing there? There's obviously a licensing event. Do you see that as a big opportunity to get a step change in market share? Perhaps ask you to touch on the Snaitech integration, of which this is where the rubber hits the road this year, I guess.
Yeah. Rob, do you wanna pick that up?
Yes. We're delighted with our performance in Italy and the Sisal business since we acquired it has gone from strength to strength, you know, particularly from an online perspective. Since Snai came under the Flutter umbrella last year, we've really seen a turnaround in terms of the underlying performance, and that's into growth year on year. We're operating some of the playbook that we've already deployed within Sisal. We've brought it into an SEA framework. We've got the Sisal team that have got the experience of the market running alongside the Snai team. We're really pleased about it. In terms of the online licensing piece, we don't see that as a huge game changer in terms of market share. We think it's probably worth, you know, 1 or 2% market share to us.
Clearly now, one of the interesting things when we have our operational reviews with the SEA team is the amount of times they use all-time high and record. I mean, every month they're coming back and they're actually, you know, the underlying performance is extremely strong, as mentioned in Sisal and Snai. We've got great business in Turkey, where the growth is, you know, 30% plus year-over-year. We've put a poker product, so, the PokerStars transformation, the first part of that is in Italy. It's performing fantastically. We've actually had better numbers on our poker product in Italy in 2025, at the end of 2025, than we did during COVID in an all-time record period. You know, really pleased. We've got Tombola, Bingo deployed in Italy now as well.
Really pleased with the trajectory in Italy and the growth prospects which we're seeing through this year.
About the same time you did Snaitech, you did NSX in Brazil. To do that, you have upweighted your investment into Brazil this year. Looks like margin was pretty tough for everyone in H2. What sort of underlying trends are you seeing there competitively in Brazil? You know, why is now the right time to put more investment in, and how should we think about the sort of growth prospects through this year and into next year?
We're incredibly excited about the Brazilian market. It's a huge market, you know, very soccer-focused, plays to a lot of our expertise, and we're really pleased with the progress that we've made since we bought Betnacional. You know, we've put a number of experts from around the business down into Brazil. A lot of their processes were actually quite immature when we bought them because they didn't really have any meaningful generosity or CRM. We've gone in and fixed quite a lot of basics. Actually in the second half of the year, lapping the regulation that we obviously saw in the first part of last year, we've seen some, you know, brilliant green shoots within Betnacional. You know, that gives us huge confidence to put this additional investment behind, and we think 2026 going to be a key year.
We feel really validated because actually at the same time, the Betfair business that we had in Brazil, we've been struggling to get as much traction with that business.
Mm-hmm.
Betnacional, we're really getting traction and moving forward. You know, we're tremendously excited to think the World Cup's gonna be a big event in Brazil as well, and I think our Brazilian business will go from strength to strength.
The other one thing I'd add is, you know, when I, when I think about the integration efforts that we're making, you know, we've seen, you know, early success in casino, and I think we're seeing really strong performance there on Betnacional. We know we've got some exciting stuff to do from a user experience upgrade we're about to deliver and all of our pricing capability you'll see in land. You know, we're. You know, that's why we wanna put our money, you know, behind, you know, the strength and momentum that we're seeing in the market.
The UK, obviously it's a big part of the international business. Obviously some very difficult tax headwinds to face. What do you see? Are you seeing anything so far in terms of operator response, or what should we expect in terms of, what your posture will be, I guess, through that transition from April onwards?
Yeah. We've made sure that we've sort of positioned our business to, you know, think through the tax changes, right? We're already reflecting that into all of our sort of LTV calculations and, you know, we've set ourselves up to work on that basis.
You know, even, you know, with that additional tax burden, I think we're very, you know, we see very good returns, right? I think the question for us is how we can invest even more into the U.K. market. We've got more headroom in gaming than we actually have in sports, and we think we've got some really good opportunities to dial that out with some of the content that we have. I think we'll see some of the longer tail operators struggle post the tax changes, but I don't think they're gonna take action before they start seeing their new tax bills landing and, you know, the impact that that has in the business.
Go on to a little bit about 2026 and leading to 2027 CMD guidance. It's been from September 2024, you laid it out. You know, we've been working towards it. Obviously, with the 2026 guide where it is, which is, you know, little progression year on year in terms of, in terms of EBITDA, it does make those targets look very stretching, let's put it that way. I really wanted to focus, Rob, if you have a perspective on how that affects the cash conversion targets as well, because I think that's a big part of what we found positive around the CMD. Obviously, with less EBITDA progression, that creates some sort of pressure. You've also talked about optimization and platforming and all this other kind of stuff in remarks.
How should we think about cash conversion in this business this year and into next year? What's the right kind of normalized state for improvement?
Well, what I'd mention just before I come on to cash quickly is that in terms of our medium to longer term guidance from an EBITDA perspective, we're very confident around the foundational box. If you think about the key things and tenets that we talked about in terms of structural win margin, the progress that we're making around that, the penetration within the sports book, the iGaming growth, the operating leverage, these are all things that we're potentially been pushed slightly to the right from where they are, given where we are with our 2026 guidance, but the fundamental foundation's still in place. From a cash conversion perspective, there's a few things that give us real confidence about the ability to really dial up the adjusted free cash flow conversion over time. One is the transformation work that we're doing.
At the Investor Day, we talked about a $300 million envelope of cost that we're going to take out of the business. A lot of this delivered by the various transformation initiatives that we have in play. One being the PokerStars transformation, which we talked about earlier with Italy.
Mm-hmm.
Another being the Sky Bet migration in U.K., the Snai synergies, all of these progressing really well. By the time we get to 2027, a lot of that will be delivered, and that cost will be out of the business. A lot of that cost is exceptional cost at the moment. That cost comes out of the business and hopefully leads, like we've seen with PokerStars in Italy, to some top-line improvement as well. We're gonna have CAPEX efficiency. If you think about the CAPEX within the business at the moment, it's currently $800 million. A lot of that we're spending on tech and product. We're going through a review at the moment, but actually, you know, of the 8,000 technologists that we've got in the business, a huge proportion of that is the software development life cycle.
A lot of this is now being done by AI or supported by AI, we're looking at the amount that we spend on tech within the business. There's huge efficiencies within CAPEX. Tax as well. You know, we just made some changes to our debt structuring, where we've moved some of our debt to the U.S., become more tax efficient, and we think we're gonna make more tax over this time. There's a bunch of things coming through very quickly. I would say adjusted free cash flow conversion for 2025 was around 25%. We think that'll move into the low to mid-thirties this year, and we're very much working towards our longer-term target of +40%.
Okay. In the few seconds we have left, Peter, when you look towards 2026, what are you most excited about? What do you think is perhaps least appreciated about when you look at the business and excites you and when you talk to investors about where they are, what's the area you're most focused on?
Yeah. Look, I think we, you know, we spend, you know, more time talking about international now just, you know, today than I have done in many meetings. That I think is a very important component for us when we think about, you know, the progress with some of these transformation initiatives and the impact that that has on the sort of EBITDA progression that the business will have. I think, you know, here in the U.S., you know, our casino business is performing incredibly well, and it's going from strength to strength. We're really using our scale to our advantage there. I'm super excited to see what we can deliver this year in sports off the back of the loyalty program changes we're making and some of the other initiatives we've got.
also this big new opportunity to go after the half of Americans who can't currently access our regulated OSB with Predicts.
Okay. Thank you very much.
Thank you.