Hi, everyone. This is Brandt Montour from Barclays. Thanks for joining. I am pleased to have here Dan Taylor, CEO of Flutter Entertainment, as well as CFO Rob Coldrake. For the audience, please email me, Bloomberg me your questions, and we will weave them in as best we can. Without further ado, Dan, Rob, if you are ready to dive in, we will get started.
Thanks, Brandt. Nice stuff.
Okay, great. Maybe, Dan, we can kick it off with this. You just had your first quarterly results. You set out in your shareholder letter your four immediate priorities. Can you just take us through high level what needs to happen for you to deliver on those priorities?
Yeah. Thank you, Brandt. Look, it is great to be here. As I have been with the business for over 11 years, I think that means I know the business well, and I have a good understanding of both where our strengths are. There is also where some things I think we can do better. We have got amazing brands around the world, and we have got incredible scale, both in our local markets and around the world. But I think we can extract even more value from that going forward. As you said, I talked about four priorities. The first of those is focus on strengthening our leadership position in the U.S. around our core sports betting and iGaming. And I feel good about, we are starting to see some improvements in momentum there.
The momentum around customer numbers, AMPs, player days, frequency, things like those metrics that we talked about in the earnings call, those are feeling good, but the market is subdued. We want to keep, ultimately, we need to keep protecting and growing our leadership position across both of those regulated categories. Secondly, we talked about capturing the prediction market opportunity, and doing that with the appropriate level of agility and flexibility that reflects the market circumstances that we're in and the regulatory uncertainty. I feel really good about the progress we've made on our product, and we're confident about delivering a really, really compelling product experience through FanDuel One App. I also feel good about leveraging the brand, the national scale, the FanDuel brand, to bring more customers from outside of our core state into the FanDuel ecosystem. We feel good about that.
We feel good about the progress in market making too. We'll be disciplined and choiceful about the level of incremental investment and the payback we want to get. We recognize that this is an uncertain regulatory environment, and we need to be really disciplined. The third priority I set out was around our international business. I think our international business, it's obviously one I know very well, having run it for many years, but I think it's in many ways underappreciated. We've got amazing leadership positions in some of the most attractive and largest regulated markets all over the world. We're taking share across the U.K., across Italy, across Central and Eastern Europe, in growth markets like Turkey.
I think there's more we can get, both by leveraging our scale to deliver even more efficiency and capture the benefits that come from being part of Flutter, whilst continuing to capitalize on further market share gains. We're making great progress on our transformation journey. The fourth priority I set out was really on simplifying the business. We have built up over time an enormous business. We're the biggest operator in the world. We've got great local scale, but also phenomenal global scale. I truly believe that scale matters in our sector. I think that's how you navigate some of the regulatory challenges that we have faced. I think there's more we can get from our scale. That means simplifying our business.
It means removing complexity, de-duping, and that ultimately allows us to go faster, but it also allows us to do things more efficiently. Investing that back into the customer to deliver further market share gains. I think, if I look at the progress we're making in Q3, I feel like, overall, we're seeing some positive signs. Market share gains in the U.S., market share gains in the U.K., market share gains in Italy, our three biggest markets. I feel good about that. We've got some tough decisions to make, and we've got some challenges ahead.
Okay. That's a great intro. Immediately, we've gotten several questions, and it's all the same question. I'm going to just ask this now, because you just brought it up on the efficiency side. But when you think about your cost structure, how do you think about phasing and/or delivering these various cost programs into 2027 and beyond? When we think about your G&A in the U.S., you have G&A in the U.S., you have G&A in the international, you have G&A at the corporate level. I think that a lot of folks think that that looks a little inefficient versus how some of the competitors are structured. Obviously, you talked about scale mattering, but maybe talk about some of the opportunities across bucket overall. Then that same question also, as it applies to CapEx as well.
So let me give you a very high level, and then I'll let Rob talk. I think you're right. I think that we have accepted levels of duplication as part of business' scale, but we think there's a price to go from. We've set out the $500 million, but I'll let Rob talk to the details.
Yeah, so specifically, I would say that we set out a phase one of cost transformation back in 2024, and that was a $300 million envelope. The work on that is largely complete. That included PokerStars transformation, which the majority of that's now done, and we'll be seeing kind of full annualized savings into next year. We had some UKI efficiencies in there, some of which have kind of been swallowed up along the way by tax increases, and we had the Snai synergies in there as well. So that's all gone really well, and I think actually exit rate on the $300 million will actually end up exceeding that. So that was a significant program of work.
We then had the U.K. tax shock last year, and initially our thinking was that we would mitigate sort of circa, I think we said 27% in the first year and 40% in the second year, largely through marketing and generosity. I think as we've sort of been on that journey, we've realized and appreciated that we would like to keep more of the marketing envelope intact in the U.K. So we've gone a lot deeper in terms of restructuring cost efficiencies. A lot of those cost savings in the U.K., up to $200 million, have now come out from the fixed cost base, and we made an announcement a couple of weeks ago, unfortunately, where 1,400 colleagues were put at risk and will be leaving the business.
We then got a second phase, which Dan alluded to, and this is more business-wide across the business, and it touches all parts of the business, so all divisions, all functions. The two more material aspects of that relate to how we're thinking about simplifying the operating model across the group, and then also how we're thinking about our tech strategy. We've said on a number of occasions before, we spend a lot of money on tech across the group. It's 9% of our revenue. We're looking at materially reducing that over time by aligning and harmonizing our platforms and doing it in a more efficient way, and also availing of AI as that technology develops.
In addition to all of that, Dan and I are also looking at a number of other cost initiatives in conjunction with the team, where essentially, we are re-looking at almost every dollar of spend across the business. So, we are going right back to basics, looking at zero-based budgeting in a lot of areas and really kind of scrutinizing spend, which will help next year. If you step back from that and say, "Well, what will that deliver?" Well, in the short term, it very much helps underpin the growth algorithms that we've talked about. So in international, where we talked about being at the high end of the 5%-10% range, this underpins that, and also will improve things like cash flow as we move forward. In the U.S., we had a program of work this year which has delivered $40-odd million.
That will annualize at closer to $90 million next year. Our initial thinking in relation to that is that will help with investment behind fighting on a number of fronts in the U.S., but continuing to invest behind the business to make sure that when we come out of this next period, that we remain the market leader in the U.S. and we're in the best position to capitalize on the opportunities that lay ahead. From a CapEx perspective, we've done a good job, and CapEx is very much in our crosshairs as well. We had a CapEx number and a forecast back at Q2, if you remember, that was closer to $850 million. We brought the guidance down to $815 million.
We're working on that number next year, being close to seven, starting with a seven, but with a fair wind, we're pushing that even harder and hoping to get more out. So we'll be taking significant CapEx out of the business, and that journey will continue as we work through that program of work. So, I think we're leaning into this more than we've ever done before, and you can feel that across the business. You can feel that in terms of the impact that it's having in the business. Dan and I did various internal comms last week, but a lot of the questions that we're getting internally is about these changes that we're making and how necessary they are. We've been very honest with the business in saying there's a need to simplify, there's a need to remove complexity.
Over a period of time, as Flutter's grown, part of that through M&A, we've built in some complexity and duplication into the business, and now's the time to get after that.
That's great color. Thanks for that, Rob. If we circle back onto the top line, the core OSB business is a focus for you guys. How would you describe that core OSB growth opportunity at the moment? What are the key drivers for continued market growth, and what are the drivers for the continued Flutter's growth in that market?
Yeah, so if we think about the U.S. market now, we still believe that the U.S. is a hugely attractive opportunity for us, of course, in sports betting and iGaming. If I think about sports betting, I think we see three real drivers of that going forward. One is we do see scope for further penetration growth in those states. When we look at our international businesses, we see the scope for further penetration growth in our existing regulated states. Secondly, we think there's a really big opportunity to drive frequency, ARPU, and player days from our existing base. If I look at our U.S. business and compare it to our international markets, I actually see the sort of conversion from monthly to weekly play is quite a lot lower.
I see quite a lot, yeah, substantially fewer bets per player than I do in many of those international businesses. I think that's a level of maturity of the market, right, with the players and the product. I think there's a ton of opportunity there to drive that, and I think that FanDuel's also, over time, been a little bit lighter on the VIP side, perhaps in the market, which also would drive that number upwards. So there's definitely a prize there in driving the frequency of play and ultimately ARPU. Then, of course, there's a massive prize for us in TAM expansion. We're slowly in half of the U.S. in sports betting and 10% from an iGaming perspective. We feel good having seen the results in the midterms. We feel positive about renewed momentum on TAM expansion.
That for us remains our sort of North Star. We are this leading player with the regulated sports betting and iGaming, and we see both runway in existing and in new states.
Okay. That's great. That's a great segue into my next question, which is really about OSB products in the pipeline. What is there, I don't want to call it what's left, but what's out there on the horizon or in terms of the way you're thinking about the future product that can get players excited? Not necessarily again, but you were the same game parlay, the innovators behind that. Is there anything on the horizon that could have the same impact as something like that?
Yeah. Look, man, it's a great question, but as you were saying, I was thinking back to my time here, showing my tenure somewhat. But I remember when we were the first business in the world to have a mobile app for sports betting, right? We with Betfair were the first business on the planet to do cash out. I remember when we first launched same game parlay in 2018, by the way, first in the U.K. and Australia, and then we took it to the U.S. And when those things happened, no one quite knew the impact they were going to have, right? Calling the next SGP is hard, right? But I have seen us innovate over the years on multiple fronts, and this is one of the ways that our scale really matters, because we're innovating all the time in different geographies.
We're always copying and learning and fast following from other products. Yeah, we've seen that with our social products, right? Where we had an amazing social product in Australia, and subsequently we copied that in Italy, and now we're rolling that, and we've seen great progress with our social product on FanDuel in the U.S. But if I think about Q3, one of the things I think I said on the call, and it's really important to me, is that we do talk about these big product innovations, and they are exciting, and they are easy for people to latch onto. But actually, some of the things that matter the most are getting the basics right. One of the things I've really focused on since spending time with the FanDuel team, was challenging the team and pushing the team around some of those basics.
We've seen big steps forward in product speed. We've seen big step-ups in cash-out availability, in uptime for the live betting. Those sorts of things ultimately matter, often more than some of the more exciting features. If I look at the ratings we have for our product, our product right now is absolutely top class in the market. Obviously, through the quarter, we also made great progress on our loyalty scheme. We know that was a gap in the product, and we feel really positive about the way the loyalty scheme's landed. We think our monthly loyalty scheme is pretty unique. Again, we're taking lessons from different schemes we've run around the world, and we feel really, really good about that. That's translating into the growth we're seeing in AMPs, and they got 9% in frequency in bet count.
Those sorts of metrics I described to you about driving frequency of play and share of wallet and ARPU, they come from those product improvements. Look, we've got a pipeline of exciting things as well. We're starting to innovate with AI, including AI-led experiences to explore the product and navigate that. We've got FanDuel Labs as well, and that's allowing us to unpick and leverage some of our core, say, betting engine capabilities. We don't know quite which one, and I'm not going to predict which one resonates and takes off with customers yet, but we're testing and learning all the time with different ways of delivering the power of our unique betting engine to the customer.
Okay. You said the word predicts. Not quite to the prediction section yet of the hour. We will get there, Dan. I know you want to talk about it. Before we get there, I do want to level set. You guys had an investor day a couple years ago, and the target back then for 2027 U.S. EBITDA was $2.4 billion for existing states. Consensus has you now in between $800 million and $900 million for next year. Look, understanding there's obviously a certain amount in the street's expectations for prediction investment, right? That's changed. What else has changed in your view since then? Can you just walk through the major factors from like TAM to competition to structural margins and the way we kind of think about the big drivers of the business?
Yeah, sure. As you say, Brandt, we've had the emergence of prediction markets, which have created an investment opportunity for us. We've created some other challenges, but also, we firmly believe are expanding the TAM for the overall sector in the longer term. Clearly, as we've talked about on the call last week and as part of Q3, there has been some elevated competition in the sector as well, with people spending more on both marketing and promotional spend, and that's something that we've needed to respond to. We think it's very important that we maintain our leadership position and go forward from a position of strength. I think as we reflect back to what we said in 2024, and clearly we didn't have a crystal ball, but everything was going up and to the right at the time.
Candidly, the OSB market growth has been not quite as high as we anticipated at the time, and that's something that we're working through. We will talk a bit more about when we talk more fulsomely about our strategy next year. I think, however, if you step back from it all, we do remain optimistic about the longer term and the medium to longer term, because the profitability outlook for the U.S. and for the broader business, for that matter, remains pretty positive. If you think about the assets that we've got, the scale that we've got, we wouldn't swap that with anyone else in the sector. We think we've got the assets to capitalize on the growth. If you think about how we've got to those leadership positions in the international markets, scale ultimately matters, and you go through periods of regulatory and tax change.
That's one of the other factors where we've potentially not seen quite as much TAM expansion as we would have anticipated at this point in time. Equally, given what we saw last week in the midterms, again, we remain quite optimistic about the prospects for 2027 and beyond in terms of TAM expansion. You have to remember that we're still only accessing 50 for our core sportsbook and circa 10% on iGaming, so there's a lot to go after there. This is something that, if we would have liked to have been in a slightly different place, there's been a confluence of factors that mean that we are where we are at this point in time.
If you take a step back, look at our assets, look at our scale, we're very optimistic about how we can continue to grow that envelope in the future. We know that there's headroom on things like parlay penetration and structural margin, and we know that we've got those levers to pull. The other thing that we'd say, which we've been quite consistent on, is we don't think this elevated competitive outlook that we're seeing at the moment will sustain forever, and at some point, it will start to moderate. Unfortunately, I don't have a crystal ball for that either, but we do think that'll be the case in the fullness of time.
Okay. That's really helpful, Rob. I want to drill down just into the OSB structure hold just for a second. I think, again, at that investor day, you were laying out some numbers that got everyone really bulled up, 16% structural GGR hold, 4% promo for sort of a 12% NGR win margin. Just, again, high level, are those still how we can think about the right long-term upside targets based on-
Yeah, let me get my perspective on that.
Sorry, penetration? Yeah.
Dan might add in on this as well. Ultimately, we do believe we can still expand the margin over time. I think we've been quite frank and candid about where we see it for 2027 in the current landscape and environment. I think, also being very honest, if you look back to Q4 last year, potentially there was a period where we tried to push too hard in the short term, and for a short period of time, over-monetized the customers. I think what gives us that confidence is if you look around the world and in other mature markets like SEA and the U.K., we have been able to get those net revenue margins to 12%-13%.
If you look structurally at the U.S. and you look at the nature of the sports and the propensity for people to want to bet on SGPs and parlays in those sports, it definitely feels like there's a lot more headroom from where we are today. I think we need to think about the right cadence and the right chronology for expanding that and not to try to do too much too soon in what's quite a competitive backdrop. I don't know, Dan.
Yeah, no, I think ultimately that's right. I'm not sure that we'd want to give the level of precision on the makeup of GGR and NGR and promos through margin versus free bets. To be honest, I focus less on that, and across the international markets, you see different variations in how generosity is delivered in the customers. That's ultimately what matters. But as Rob said, I think at the end of the day, a net revenue margin across all the markets that we look at around the world, that's 11%, 12%, 13%. That's sort of where they all end up. I don't see any reason why the U.S. doesn't get there. But we know there's a sort of maturity profile as we grow towards that.
Right. That's helpful. So iGaming. I think the industry, we talked about this on your earnings call. I think it's been a theme of the whole quarter, right, is that the industry has slowed its pace of growth a bit. I think some of that is a natural maturation cycle, which I think is the way you described it. Is there a macro element here when you think about, when you see what the different states are doing, when you see the different parts of your database, who's betting what amounts? When you look at all those things, is there a way to kind of unpack what's going on with iGaming at the industry level?
Yeah, I think when we look at what's going on, it's not hugely unexpected when we, again, when we look around the world and we saw market growth, the GGR level of around 12%, is a slowing down of the market, but that's more, I'd say, it's a more natural maturing of a bunch of states that have been online for a long time now. That was slightly elevated by Michigan, where we had the Hard Rock entry at a market level. Look, and we had a slightly more challenging quarter. We were lapping some very tough comps last year with the Huff N' Puff title that we had a bonanza in Q3 last year that supported us. So, no, I feel like that's a bit more natural evolution through the maturity curve, but also recognizing that the competition has improved, right?
I think that the quality of the competition this time, this year versus last year, is more intense, and the products of some of the competitors are better. But when I step back from it, one of the things that gives me great conviction is what we saw as the TAM expanded, and we haven't seen that a lot on the iGaming side, but we did see that in Alberta. The pace of growth there has really surpassed my expectations. So, in the first quarter, we're north of 20% market share. We acquired customers at four times the rate we acquired in Ontario. It really shows how much pent-up demand there is for the FanDuel gaming product. When we are allowed to offer it, the customer demand is just there ready for us to capture.
As I think about the future growth of iGaming, that gives me real excitement and conviction as we look to open up more of the tap.
Okay. Yeah, that Alberta market share number is really impressive. I'm glad that you noted that again. Back in the U.S., though, I mean, when we think about the iGaming competition, and you noted that too, is that a market that you think you can take share in 2027, or is it basically because of how maybe promotional some of these smaller players are, you're looking more to just defend where you're at?
Well, I think the first part of the answer to that question would be to reiterate how well we've done in the last couple of years, and I think we've significantly outperformed in iGaming, and I think gone to share leadership in pretty much all of these existing states. I think we're pretty realistic about 2027. We think the growth rates for our gaming across the U.S. will be similar to what we've seen this year and in the second half of this year, and we think that the competitive intensity will sustain. We know that there'll be a couple of new entrants into a couple of those states next year, and there'll be a bit of share changing hands. It's realistic for us to assume that we'll hold our share in 2027.
I don't think it's realistic to assume that we're going to be making massive share gains in the short term. I think when you look further out, there's a lot to be optimistic about in iGaming, and I think some of that TAM expansion that I alluded to earlier, we're hoping comes more near term in iGaming. We're hoping that one or two of these shoes drop in 2027, and we start to see some expansion of states, because that's something that will ultimately really help with the economics and the model as we're able to scale this over time. I think, yeah, reiterating some of the things that Dan said, we think we've got brilliant product, we've got a great team, and the execution's been stellar in this area, and we expect to continue that into 2027.
If you look at the catalog of content and new games that we've got coming up, all the things that have worked for us well in the past, influencers that we've got signed up behind the brand, the rewards club, and the way we lay down promotions, et cetera, for our iGaming business, we will continue to lead out on that in 2027. We feel that we can continue to do really well within this space, but we need to be realistic that we're not going to be taking huge amounts of share in the short term. But as the TAM continues to expand over time, we're very optimistic about iGaming. And then even longer term, when you think about some of the market access arrangements that we've got in place on iGaming, they won't be around forever.
We'll be able to reset some of those over time, which will make the economics slightly more favorable for us as well.
Okay. Okay, that's helpful. We're on to prediction. I think that, Dan, given that capturing that opportunity does sound like it's front and center for you and on your mind, maybe we could just start with your thinking about the strategy over the next 6-1 2 months, and how much capital you think you're going to invest this year and next year.
Yeah, look, I mean, as obvious as it is, but this is a very fast-moving and dynamic space, and it's one that we've got to stay agile. I focus really on the three areas that I've been thinking about within the Predict space. The first of those, and this is one I really pushed the team on when I started getting closer to the FanDuel business earlier in the year, is on the product side. And I think we've made great progress on the product side. We are now delivering nationwide through one app. You can play with FanDuel across the U.S. And the product experience we're delivering through Predict is compelling, and we see that in the customer data. We see that in the retention rates, in the frequency. We see that come through in the handle equivalent metrics that we're seeing.
We are acquiring customers at a good level. One of the things that excites us is actually this is allowing our existing customer base to keep playing with FanDuel wherever they are in the U.S., and other customers that over time have wanted to play with FanDuel, and now they can. We are delivering them that through the same great sports experience that they have become very familiar with on Sportsbook, through a different regulatory model. The first thing is the product. The second piece is leveraging the scale the national FanDuel brand. We know we have an amazing brand. We know that we deploy a ton of marketing spend already, frankly, nationwide, building that brand and driving awareness across the country. We now have a way of leveraging that spend in the half of the U.S. where we do not have sports betting to deliver the product.
On top of that, we will be investing some incremental dollars to acquire those customers in states. We are focused very much on states where we see a greater level of regulatory certainty with a more credible pathway over the medium term towards sports betting, because we think that is a way to hedge what is a pretty dynamic regulatory situation. We are seeing good CPAs. We are seeing those materially below what we see on our sportsbook. Frankly, the lifetime values there are still early to predict because, no pun intended, this is early on. We are also really focused on the market-making side. We think that is an area of core expertise for us. Our capabilities on pricing, the models that we build that power our sportsbook, we think they are the very best in the business.
They have what supported us to our leadership position on sports betting and support us around the world. We are having some good success with that. So, we expect broadly to be investing this year, I think, a couple of hundred million. I think it will remain dynamic, but sitting here today, we would expect a broadly similar amount into next year. We will be responsive and adapt as the market does and as the regulatory situation evolves.
Okay, great. That is a good overview on prediction. I think we are all trying to figure out what the underlying economics of the business look like and how it is different from sports. One of your, or your key competitor, has been quoting a take rate equaling about a little over 7% of total consumer volume for them. How does that compare broadly with what you guys are seeing so far?
I think the first point that I'd make on that, Brandt, is these comparisons aren't always apples to apples. We've seen some quite interesting takes from different competitors on what their take rates and volumes are. With regards to our direct competitor, it's quite difficult to compare the unit economics because of the JV structure that we've got. We've been consistently maintaining, and it's still our view, that the majority of the economics in this space at the moment, and we think in the short to medium term, will accrue to the market makers, and we're making really good progress there. I think when you look at the B2C side of things, Dan alluded to some of this, but we've made great progress there as well.
One of the most important things is actually having a product that's more competitive, because we know it wasn't earlier this year, but we feel it is with FanDuel One App and the progress that we've made now. We've almost got five times as many markets now that we're plugged in with Crypto.com. We've got that sports-driven experience with the FanDuel One App, and we've got real momentum going since the start of the NFL season, with the volumes and the actives nearly tripling in October versus what we had in July. If you step back from that, our volumes are still relatively low compared to some of those leading out on this, but we think that we can catch up now that we've got a more competitive product. That's something that we're looking at. As Dan said, we need to remain disciplined around our investment on that.
You could torch a lot of dollars quite quickly in this space if you don't remain disciplined. We're very thoughtful about where we deploy our investment and where it works hardest for us, and how that's going to ultimately make us win in this space in the medium to long term, which I say we're very confident about.
That's a great segue into this next question, which is really about prediction markets and promotion, right? How you promo in prediction markets. One of the differentiators we've always thought of between OSB and prediction markets is the more efficient, or let's say, the way that OSB can promote the VMs, and if you don't exactly know who is on the other side of particular trades. Again, I hate to quote your peer, but they gave very specific data. They quoted a promo rate of 18%. It's very specific. When you think about this, what needs to be the case for your prediction markets, for your prediction business to be able to promote as effectively as OSB?
Yeah. Look, I think it is true that Predicts economics make promos more challenging, right? You do not always own the end-to-end full ecosystem. You have got a market maker in the middle of that. That means that the economics around generosity are a little more challenging. We have navigated that candidly for a long time. We run the Betfair Exchange, the original prediction market all over the world, and have done for many, many years. We know what that is like when you only control certain parts of the value chain. So, it does make it a little bit more challenging. But no, it is not that you can do nothing. I think if we were in a world where you have a more walled garden approach and you controlled fully that ecosystem, that makes it easier.
The CFTC are clearly consulting on market making on your own exchange yourself. I think that will be an interesting driver as to if that is allowed or not allowed. That will probably shape, to some extent, the long-term ability of what the economics look like and to what extent the constraints are. The other point is the one you made, right, about the knowledge you have of the counterparty and your ability to be how much you understand the customer, the risk profile, and what we do from a model-driven generosity perspective, which is very important to our sports business. We do not think that is quite as easy in a Predicts world, again, where you do not have all the same insight, we do not think.
But look, we are acquiring customers that look a lot like our sports customers, and we are trialing lots of different things, lots of different mechanics, and we are seeing I have been really impressed by the agility our team are showing. So, I think, yeah, we are working through those, but there are some fundamental differences to be aware of.
Okay. Okay, that is helpful. One more on PM is just, I think what probably matters more than anything is regulatory clarity. So, what is the latest thinking that you think about milestones, path of Supreme Court, how investors should maybe what they should be calendaring over the next few months to follow along here?
Yeah. Okay. I think that, I wish I had a crystal ball on this one more than most things, to be honest. It is a tricky one. Our team had always said they expected a split decision from the circuits, and that is what we have got. We do think this, therefore, is on a pathway to the Supreme Court, which the earliest that could probably be is next summer. It could run through into 2028. We will also see a ton of pressure and bumps at the state level as well. I think the intersection of the state-level politics, particularly post-midterms, the pressures there, and the path to the Supreme Court, I think, as I said, sometime between six and 18 months, we will probably get to that Supreme Court. We may get to clarity sooner if states take it upon themselves. I wish I had that crystal ball.
It would make our jobs a lot easier if we did.
Yeah. Okay, great. We spent most of our time talking about the U.S. I do have some international questions. I think what we will start off on the international side is just, given the Brazil news was obviously a surprise, I do want to know maybe the latest and greatest thinking about the timeline there. I know you guys kind of already made some decisions there. Just more broadly speaking, are there any countries that you are focused on right now that have similar risk and things that we should be tracking in terms of regulatory sort of red flags or risks there? Yeah.
Well, look, first of all, stating the obvious, we are obviously incredibly disappointed with the Provisional Measure in Brazil. It is an unpredictable road from here. We do think there is a pathway back to some form of regulated sports betting and iGaming, but we do not want to prejudge that. Obviously, we are not operational today. We decided to take the decisive action that you alluded to and taking cost out of the business now, but whilst ensuring we are set up to win as and when that market can return in whatever form it does return is important to us. We have had two, I think, quite unique situations in Brazil and India. I do not think that there is a read across to other markets, and there is certainly nowhere that I would point to with that sort of regulatory risk.
But tax changes, regulatory changes in the round are part of this sector. They are part of any business in this sector, and they are part of life. For me, for the last 11 years, as we have navigated running a global business in this sector, there have been many shocks and changes in regulatory environment, thinking back over the years, even before India and Brazil. So, that in itself is something to be aware of. But our strength, I think, comes from our combination of scale and diversification. We are the biggest operator. We have the leadership positions in those big attractive markets like the U.K., Ireland, Italy, and across Central Eastern Europe, Australia, and the diversification that comes with that.
That combination is really powerful because it truly owns the two insulating factors from regulatory change and of any form, whether it is product restrictions, taxes, regulatory changes in a different form. The two insulating factors are scale, that allows you to grow through it, and diversification, that allows you to manage through it. So, that is what we have got in greater than anybody else, and that is the real strength of our portfolio, of our international business. So, we feel great about our position. We are winning market share in all those key markets, and we feel really good about the business looking forward.
Brandt is frozen on our screen.
I do not know whether Brandt has frozen for others or we are frozen. Okay. We have been told that Brandt froze, not us, so hoping Brandt is returning soon.
Can you guys hear me?
Yes.
Yeah.
Wow.
We can hear you now. We lost you for a minute there.
We lost complete connection. Thanks for being patient. I apologize to the audience as well.
I hope it wasn't something I said.
You took our question. It was a good segue because you guided to the higher end of your longer term international growth CAGR range of 5%-10%, which is a very healthy growth rate, and yet I do not think it got really much attention. The question is, do you know why that is? Do you have any reason why you think that you are not getting the attention that we think you deserve for that international outlook that you gave two weeks ago?
I think there is a few reasons, and we have consistently said this over the last couple of years, that sometimes we do not think the international business and portfolio gets the credit it deserves given the leadership positions that we have got there. I think part and parcel of that is being a U.S.-listed business with a large U.S. investor base where there tends to be a lot of focus on the domestic operation. There has clearly been lots happening in the U.S. over the last couple of years as well, which have probably amplified that interest. We have got fantastic business outside of the U.S. Dan mentioned some of it there, but if you just step back and look at the portfolio of businesses that we have got, Italy is doing tremendously well. The Sisal business is going from strength to strength.
We are really confident about what we can do and achieve with the Snai brand. The integration is going really well. In the U.K., despite some of these significant tax headwinds, we are still performing exceptionally well there. I think the team has done a great job in terms of navigating some very difficult tax changes that, by the way, on a two-year basis, will annualize a $600 million EBITDA impact to the business if they were unmitigated. We think that we are going to be able to keep the EBITDA and margin broadly kind of flat, which is real credit to the team in the U.K. for that. In Australia, we have seen a period of slower growth with that business, but we are still the number one, and we feel optimistic about our ability to continue to win there.
We never really get the chance to talk about our business in Central Europe, but that is growing really well, growing double digits. We have migrated it onto a common platform, which will also help going forward. We feel really confident. This is all underpinned by a lot of the cost work that we were talking about earlier, which allows us to deliver at the top end of that growth algorithm. Without that, we would not be able to. We are leaning in very hard there, and that is helping us protect that algorithm, but also enabling us to invest behind these businesses in marketing, in other areas, to make sure that we continue to win and grow those businesses over time.
In markets like the U.K., where we've had the significant tax increases that we have, those with subscale economics over time will continue to struggle, and we continue to see that. If you look at iGaming in the U.K., 30%-35% of the market there is still the long tail, and there's significant opportunities for us to go after in time.
Yeah. No, that's an interesting opportunity there. M&A, and this will, I think, will be a time, so this may be the last question, but you guys have a long history of rolling up top brands in promising markets around the world. Obviously, the balance sheet's the focus right now, and you paused your share repurchase program. Just thinking purely strategically, how would you sort of rank the attractiveness of new markets around the world that you aren't in or markets that you are in that maybe is poised for pretty good performance for the next few years and is ripe for potential consolidation? How do you think about the world from an M&A perspective?
Yeah, so there's a couple of key points here. As you rightly point out, Brandt, our focus in the short term is around deleveraging and protecting the balance sheet. We are pretty confident that we've got strong cash generation, and we will deleverage pretty quickly over the next 12-18 months. I think then we look at the investment opportunities through a couple of lenses, but the first step back is to say there's a huge international TAM to go after here. We said previously we think that's around $300 billion worldwide. Our view on that has not materially changed. I think given some of our experiences in the last couple of years with India and Brazil, we need to try and choose our investment bets very carefully.
Prior to what happened in India, we were incredibly confident about that as a market, and it may come back in time. Let's see what happens with Brazil. Not much happens from an M&A perspective in the sector without it coming across our desk. I think once we've got the balance sheet to a position that we're comfortable with, we will think about further opportunities in the future. I think when you look more broadly at our sector, there are going to be more opportunities for consolidation in time. As we say, over time, the benefits will tend to accrue to the scale of players. We'll look at those opportunities when they come along. The other thing that we're really excited about is our ability to be able to enter markets more organically.
There's a lot of nascent markets out there where you can get into without writing huge M&A checks. We demonstrated this in Turkey, for example, where we've gone into Turkey and almost from a standing start there, we've now got a business that's doing more than $100 million EBITDA a year. We think that we've got the team, the capability, the assets to go and potentially do that in other markets as well. That's something that we're looking quite closely at the moment and quite excited about.
No markets you'd be able to call out? You don't want to make an announcement here on this, but
We don't want to lay out our playbook, but be assured that there's a number of markets that we're looking quite closely at.
Got it. That's really helpful. Well, that is the time we have for today. I want to thank you, Dan, and Rob as well, for the time and helpful thoughts, and the audience for dialing in. Have a great weekend, everybody, and we'll talk soon.
Thank you, Brandt.
Thanks, Brandt.