Operator: Hello, everyone. Thank you for joining us, and welcome to Flutter Entertainment Q1 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Paul Tymms, Group Director of Investor Relations. Paul, please go ahead.

Paul Tymms: Hi, everyone, and welcome to Flutter's Q1 update call. With me today are Flutter's CEO, Peter Jackson; and CFO, Rob Coldrake. After this short intro, Peter will open with a summary of our operational progress and then Rob will go through our Q1 financials and our updated guidance for 2026. We will then open the lines for Q&A. Some of the information we are providing today, including our 2026 guidance constitutes forward-looking statements that involve risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations and we undertake no obligation to update any forward-looking statement, except as required by law. Also, in our remarks or responses to questions, we will discuss non-GAAP financial measures. Reconciliations are included in the results materials we have released today available in the Investors section of our website. And I will now hand you over to Peter.

Jeremy Jackson: Thank you, Paul. I'm pleased to share our Q1 results and update you on the progress made against the key strategic objectives we outlined in February. But first, I wanted to address the management changes we've announced today. Amy Howe will be leaving the business. I'd like to thank Amy for her contribution to Flutter and FanDuel and recognize the impact she's had on the business since joining in 2021. We wish her every success for the future. Looking forward, the U.S. market and FanDuel's #1 position within it represents one of the most significant growth opportunities in our industry, and it is essential that we have the right structure and leadership in place to fully capitalize on it. Daniel Taylor's track record of driving growth and executing on complex strategies, make him ideally suited for his expanded role. Christian Genetski has proved to be an exceptional leader and has been instrumental in scaling the FanDuel business and market leadership. These changes will sharpen our focus on the U.S. sportsbook, strengthen the connection between our U.S. and international divisions and fully leverage the group's expertise, capital and strategic ambition. I'm confident this gives us the right structure for long-term success and strengthens our ability to deliver sustained long-term growth. Now turning to the results in the quarter. In the U.S., we saw encouraging signs in underlying growth in Q1. Overall, AMPs were 1% behind last year and revenue grew 6% with headline KPIs improving as the quarter progressed. As outlined in February, overall sportsbook performance was adversely impacted by NFL trends observed in Q4 where persistently high gross revenue margins negatively impacted customer activity, leaving us with a smaller player base as we enter 2026. We outlined our sportsbook and generosity improvement plans to maintain our leadership position in these areas, and we're now executing against them. From a generosity perspective, we are focused on delivering a truly customer-first proposition. Examples include the launch of early win promotions through March Madness and opportunistic payers to capture the social side of betting, which aided engagement, Mets fans will know what I mean. In April, we began rolling out our sportsbook loyalty program, which has had a very positive response from the initial cohort of customers to gain access to the program. We also launched Bet Protect+, an industry-first generosity mechanic, allowing customers to ensure their bets for the full game for small fees. The initial response has been excellent, with adoption rates double our expectations and continuing to grow. From a sportsbook perspective, product enhancements in the quarter included expansion of our popular "Pass the Leg" feature to Super Bowl, more personalized and simplified NBA Same Game Parlay building with "Bet it again" and full screen streaming for key sports. And these changes are gaining traction with our customers. Underlying trends across our headline KPIs have been positive. With AMPs, handle and structural revenue margin all improving through the quarter. Looking ahead, we have a strong pipeline of improvements planned, and we expect these positive trends to continue into Q2. This includes significant expansion of our new loyalty program through Q2 and Q3 ahead of a full rollout of the NFL 2026/2027 season and new soccer product features ahead of the World Cup. In iGaming, FanDuel delivered another strong growth quarter -- another strong growth of growth -- another strong quarter growth with AMPs up 10%. Expansion of our direct casino player base coupled with improved frequency among higher-value cohorts drove revenue growth of 19% year-over-year. This was driven by enhanced rewards delivered through our loyalty program, including daily reward boxes and the continued rollout of new and exclusive content. At the start of April, we migrated PokerStars customers to the FanDuel platform, unlocking improved products and cross-state liquidity for poker customers. Turning now to prediction markets. First, we continue to see limited cannibalization impact on prediction market operators on our sportsbook growth. We believe this is attributable to the fundamental differences in product propositions between sportsbook and prediction market platforms, customer age profiles and concentration of prediction market activity amongst entertainment first and low-value users. However, we continue to monitor the impact that prediction market operators in the broader sports betting ecosystem. Second, in terms of the opportunity, we continue to view prediction market as an attractive incremental customer acquisition opportunity ahead of sports betting regulation in new states. The fast-moving and complex regulatory environment has at times has made product delivery time scales challenging. However, we are prioritizing new product rollout and focus on building the operational flexibility required to deliver our ambitions. In March and April, we widened our range of sports markets and early testing of our generosity capabilities saw encouraging returns with strong app downloads through March Madness. We launched the FanDuel One App at the start of April, dynamically serving customers, sports betting and sportsbook space or prediction markets in non-sportsbook space. Critically, this now allows us to leverage FanDuel's strong nationwide brand awareness, where just One App delivers access to an increasingly compelling sports experience. While Q1 revenues were modest, reflecting the early stage of the journey, we are focused on delivering the improvements needed during 2026 to serve customers an exciting sports bet experience by Q4. The '26/'27 NFL season launch will be a major milestone with further improvements planned for the FIFA World Cup. We believe our world-class proprietary pricing capabilities can also unlock significant market-making opportunity. We began market-making services on a major third-party prediction market platform in April. Early indicators have been encouraging, and we expect to launch the initial phase of our market-making platform in the coming months. Turning to our International segment. Our performance in Italy has been extremely strong. We are the clear #1 operator online, outgrowing the market and our main competitors. This performance is even more remarkable given the drag from our Snai business, which while in growth during the quarter had yet to benefit from the migration onto the SEA platform, which successfully completed at the end of April transitioning around 2 million accounts. Sisal's market-First MyCombo product saw excellent engagement with multi-leg bets contributing half of prematch soccer handle with over 30% of bets carrying 5 or more legs. And this drove a significant step-up in parlay penetration and structural margin. In iGaming, Sisal benefited from the continued rollout of exclusive content. I'm very excited about the outlook for the rest of the year in Italy. With Sisal's ongoing exceptional performance and the unlocking of Sisal's market-leading product for Snai following the platform migration. In the UKI, strong double-digit iGaming revenue growth was delivered across Paddy Power, Tombola and Betfair driven by new slot content and robust retention. Although Sky Bet's performance has been behind our expectations, as customers adapted to the new user interface post migration, momentum has improved with its highest customer acquisition volumes in 5 years in January, and underlying sportsbook revenue returning to growth in March. Market competitiveness remains stable ahead of the U.K. iGaming tax increase to 40% on the first of April. We now expect less profitable operators to begin adjusting marketing and generosity strategies. As a leading U.K. operator, Flutter is well placed to deliver material first order litigation, as previously outlined, and to benefit from second order market share gains over time. In Brazil, performance remained encouraging with Betnacional AMPs over 40% higher year-over-year. We will soon integrate our proprietary pricing capabilities, unlocking a best-in-class parlay product and promotional improvements ahead of the FIFA World Cup in June. In APAC, we saw modest year-over-year growth in sportsbook AMPs and handle. In racing, excluding greyhounds, were still declining year-over-year, was ahead of our expectations. We also welcome advertising restrictions announced in April and believe sports bet is well placed to build on its market-leading position. Overall, I'm pleased with how we've executed on our priorities across the group and particularly in the U.S., we've made significant progress embedding the improvements discussed in Q4. FanDuel's predicts is building momentum and I'm excited about our market-making opportunity. Internationally, our Snai and NSX integration is progressing well, and we are investing with commission in Brazil. We now have the right organizational structure in place to deliver against our strategic priorities, giving me confidence in the outlook for the year and our ability to deliver sustainable shareholder long-term value. Finally, I wanted to note our plans to review our London Stock Exchange listing as we consider streamlining the dual listing. We expect this review to conclude during Q2, and we'll update on our findings at that time. I'll now hand you over to Robert.

Rob Coldrake: Thanks, Peter, and good afternoon, everyone. Group delivered 17% revenue growth in Q1 2026 with adjusted EBITDA up 2%. This reflected contributions from our Snai and Betnacional acquisitions and a positive year-over-year swing in sports results. Performance included 10% sportsbook revenue growth with excellent underlying momentum in SEA and the U.S. showing encouraging signs of improvement, as Peter outlined. We also delivered continued strong iGaming performance across the U.S., SEA and UKI, with total iGaming revenue growth of 28%. Net income of $209 million declined $126 million year-over-year, driven by a $71 million increase in interest expense and $122 million increase in depreciation and amortization. These were partially offset by an $88 million noncash year-over-year benefit from the Fox Option fair value adjustment. Earnings per share and adjusted earnings per share declined to $1.23 and $1.22, respectively, reflecting the factors mentioned above and $61 million year-over-year noncontrolling interest benefit as we lapped the prior period. This included an expense reflecting Boyd's 5% ownership of FanDuel. Net cash provided by operating activities increased by $142 million or 76% year-over-year primarily driven by positive year-over-year swing in player funds for $153 million from an outflow in the prior year related to Sisal lottery payout with inflow in the current quarter. This more than offset higher tax interest payments and a Super PAC contribution in the period to support our U.S. advocacy initiatives. Capital expenditure was higher year-over-year due to lower prior year phasing in the quarter. As a result, free cash flow, including financing, CapEx and excluding player funds declined by 46%. There is no change to our full year 2026 capital expenditure guidance. Our disciplined capital allocation policy provides the flexibility to respond effectively to evolving market conditions and emerging opportunities. We continue to prioritize organic investment in our core business and strategic investment, including emerging opportunities such as prediction markets, which we continue to view as an optionality driven investment within a defined cost envelope. While deleveraging is now a priority, buybacks also remain an important part of our capital allocation policy. At our Q4 earnings in February, we communicated our plans to return $250 million to shareholders commencing in H1. This tranche began in Q1 and remains ongoing. As of May 1, $190 million has been returned to shareholders. Consistent with our flexible approach, we will continue to evaluate the buyback program as we progress through the year. From a leverage perspective, we ended Q1 with a leverage of 3.7x. We expect leverage to decrease by the end of 2026, initially increasing through Q2 and Q3, reflecting the profitability profile of the business before reducing in Q4 and moving us towards our target ratio of 2 to 2.5x over the medium term. We also continue to drive efficiencies across the business and have already embedded significant cost savings through our ongoing cost transformation programs. In international, we are on track to deliver the full $300 million run rate from our cost efficiency program by the year-end with most major milestones already achieved. We are now actively defining the next phase of cost transformation into 2027 and beyond with a clear emphasis on sustained cost discipline and operating leverage. In the U.S., we are equally focused on cost efficiency with 2026 savings realized across initiatives, including payment provider efficiencies, improved supplier rates and overall process optimization. This includes the closure of our FanDuel TV racing network and FanDuel Picks products in 2026 in order to optimize costs and ensure investment is directed towards the highest return areas. Moving to our 2026 outlook. We are pleased with the trading momentum in April and our full year guidance is unchanged on an underlying basis, adjusting only for unfavorable Q1 sports results in the U.S. and international and launch costs in Arkansas not previously included. Guidance also reflects the internal transfer of management of our PokerStars North America business from our international business to the U.S. Group revenue is now expected to be $18.3 billion at midpoint with adjusted EBITDA of $2.865 billion for the year, representing 12% and 1% year-over-year growth, respectively. Additional detail and guidance is available in today's release. To reiterate Peter's comments, I'm encouraged by the positive operational signals we are seeing, which give me conviction in our full year outlook. Peter and I are now happy to take your questions. I'll hand back to Samantha to manage the call.

Operator: [Operator Instructions] Your first question comes from the line of Jordan Bender with Citizens.

Jordan Bender: I do want to start, I guess the management changes over the last couple of months, but including today, from our perspective and just some of the questions we're getting, like, how should we be viewing kind of these changes in real time? Is this an effort to kind of get back to where we were maybe to start the NFL season with Christian and Daniel? Or is this kind of a change in strategy on what you're trying to do, including maybe like willingness to spend on generosities. And then the second question, Robert, Peter, you 2Q EBITDA, about $104 million by my math. Can you maybe just help us with some of the inputs to -- you have a lot of moving pieces in the quarter, just kind of how we get to that number.

Jeremy Jackson: Jordan, look, I'll take the first question and I think, Rob will probably pick up the Q2 EBITDA one. In terms of the management changes, now is the right time for us to put in place new leadership in the business. I'm excited to see what Christian and Dan can do. But we're getting on to the front foot as a business. The sportsbook improvement plan is working. We're starting to see some of those sequential benefits of it in the quarter. And look, I'm excited to see what we can do with our loyalty program as that launches and rolls out through the course of the year. I think we've been trading the business harder. I mentioned that the stuff we've been doing with the Mets and some other things, I think, the team has been doing to get on the front foot which is working, and I'm pleased with the progress we're making with Bet Protect. So look, there's no change in our strategy or posture in the business.

Rob Coldrake: Just picking up on your Q2 question, Jordan, in terms of where we are. So there's no change in our expectations for Q2 from where we were previously. And actually, if you look at our trading at the moment, we're trading in line with our expectations, and we've actually seen some slightly favorable sports results in recent weeks. I think if you look at consensus, there's potentially some adjustments that need to be made to the phasing within that where it's slightly too high in Q2 and too low later in the year. The main things to consider in the year-on-year bridge, when thinking about Q2 would be -- the prior year included about $70 million from sports results. We've also got some prediction market spend in the forecast for this year in Q2, which we expect to ramp up slightly from Q1. And then we've got some marketing around the World Cup, which will kick off in Q2, and that's in addition to the new states investment that we'll continue to lay down around Missouri and Arkansas. And just from an undying perspective, clearly, as we said in Q1, we've got a slightly lower player base that we started the year off with and that flows through from an underlying perspective. But ultimately, no change in Q2 from our previous expectations.

Operator: Your next question comes from the line of Barry Jonas with Truist.

Barry Jonas: Great, the prediction legal environment remains pretty active, I'd say. Curious to hear your expectations for how you think this plays out in the court. And does that weigh into how you think about your investment spend going into next year and beyond?

Jeremy Jackson: Barry. Well, you're certainly right that the -- there's a lot of noise around the legal position concerning solution markets. I think it's important that we remember a few things. I mean first of all, I think the team have made good progress recently. I think launching the market-making capabilities, the One App, which allows consumers wherever they are across America to access sports on FanDuel, I think, its important progress. And I think we demonstrated the strength of our brand, some of the stuff we did around March Madness. So I'm excited about the incremental opportunity this presents for us. Until we get through and understand ultimately what the Supreme Court say, I think, we're going to live with this uncertainty. I think in the meantime, we're going to continue to invest in the market-making. We're really pleased with the early indications that we're seeing from that, and it's a good opportunity for us to monetize this business. And then from the core predict product, look, ultimately, we will acquire as many sports customers we can ultimately onto our regulated OSB products. And that's what our real focus is. And so that's -- our intention is to build a great sports experience for customers wherever they are in America. And that's what we're going to do with One App.

Barry Jonas: Got it. And then just for a follow-up. I think a lot has happened since your 2024 Analyst Day and Street numbers are certainly adjusted. But I'm curious to get your thoughts at a high level if -- how you think about the path and timing about ultimately hitting those original targets.

Rob Coldrake: Yes. Let me pick that one up, Barry. So ultimately, we still see a very compelling pathway to growth in the short to medium term, obviously, from the targets that we set out at the Capital Markets Day in 2024, it's right to assume that things have moved out to the right slightly given some of the underlying changes in the business since that time. But if you think about some of the key structural foundations that we set out at the Investor Day. We retained confidence of those, we retain confidence in our ability to be able to increase structural margin. We continue to see higher penetration. We continue to see move into new states in terms of regulated OSB. We said it would be 2% per year, and we've broadly seen that since. We said on new iGaming stake in the next 3 years. We're actually seeing some encouraging conversations and hopefully there'll be music moving in the right direction there. So we're still feeling very confident about the longer-term plans. We need to trade through the next couple of quarters and see where we're exiting 2026, and we'll be able to give a bit more color at that point in time.

Operator: Your next question comes from Jed Kelly with Oppenheimer.

Jed Kelly: Great. Just going back to the market making and as you're able to integrate that into your product, can you talk about -- does that just give you the ability to merchandise that product better either through customer credits or other things you can do to drive engagement. Can you just talk about the importance of putting market making behind that?

Jeremy Jackson: Jed, you're right that market making is an exciting opportunity. And I think it's a great way that we can showcase the quality of our pricing capabilities that we have in the business more generally. And so when we think about the opportunities, it's principally around the combos. We're going to be market making in as many platforms as we can. And I think it's a good opportunity for us to monetize our pricing expertise in doing so. I think the point you're raising is the extent to which if we're doing it on our own platform, it may allow us to change the dynamics of the customer perspective. I think there are some interesting possibilities to that, that we -- of course we're considering.

Jed Kelly: Got it. And then just as a follow-up, just philosophically, in the U.S., how does the -- how do you guys kind of toggle, maximizing for net win margin versus trying to drive maybe more players. Do you ever think about toggling down the net win margins maybe to get more players and maybe the net win margins in the U.S. for whatever reason, might not be as high as other countries?

Jeremy Jackson: The biggest driver of our net win margin is really the bet mix and the extent to which customers are building the same game parlay products. And look, this is something that people want to do. And that's -- we're simply meeting that customer need. You then have to look at the relationship, of course, between the structural gross win margins of generosity and you've got to get the balance right between them. And as we know, if you don't get the balance right, you can see customers quickly become dissatisfied and not have that good experience. We've got lots of experience of that around the world. And I think we're well placed here in the states to deliver great experiences for our customers.

Operator: Your next question comes from Trey Bowers with Wells Fargo.

Raymond Bowers: I just wanted to revert back to kind of the cadence in the U.S. As I just run the math on the second half loading, it looks like Q2, the expectation is slightly down revenue and EBITDA down 75% year-over-year, but then the back half is 25% revenue growth and 100% EBITDA growth year-over-year. So if you guys could just kind of dig in a little bit on another layer of kind of expectations, I don't know, around promotional activity or just some of the signposts we should look to that should help give confidence that back half loading is doable at this point?

Rob Coldrake: Yes. Let me pick that up, Trey. So the first, I'd say that we set this out with our initial guidance with Q4 a couple of months ago, we said we anticipated sequential improvement as we move through the year on the top line, and that's something that we're starting to see already. I think the best way to look at this simplistically, is to view the year in 2 halves. And in H1, broadly a continuation of the trends that we're seeing. As we said, we exited 2025 with a slightly smaller customer base, and we're seeing handle slightly down year-on-year, albeit with some improvement in Q2 versus Q1. We've also had some slight amends to structural margin impacted by the sports mix. With the new launches in Arkansas that we talked about previously and also with Alberta in July and the World Cup but also see a slightly higher generosity in the first half, but actually for the year overall, we're anticipating a broadly similar generosity envelope. So then into the second half of the year, we do lap a weaker prior year NFL performance, and we are expecting handle and structural revenue margins to move to some modest growth year-on-year. We also expect to get some significant efficiency in our generosity as we lap the launch of Missouri last year, and we also get the benefits from the loyalty program that we've launched that we're already starting to see some green shoots from. So to put it all together, we feel very comfortable. I think, as I said in the answer to the previous question, we've not moved from where we previously were and actually we always said that we'd have some sequential improvement as we move through the year, and we're starting to see that at the start of Q2. So we're quite comfortable with our position.

Raymond Bowers: And then just as a follow-up on the prediction market side, given you're up in the investment a little bit for the year. As we exit this year, what would you guys view as a success in terms of kind of user levels in the non-licensed states to prove out that the investment is playing out like you would like?

Jeremy Jackson: Trey, we're not up in the level of investment. But I think what I'd say around what we're doing with prediction markets, there's opportunity to monetize this category through our market-making capabilities, particularly in combos, and that's something you'll see us do. And then I think, look, we are focused on delivery of the One App, it is in the market now, and that lets us utilize and leverage the FanDuel brand nationally, right? So wherever you are, you can open the FanDuel sportsbook app up and access either regulated OSB. If you are here, like I am in Manhattan or if you're in California, you'd access our [ VIX ] products. And I think we want to acquire as many customers as we can on that -- through that platform. And I think leverage the national marketing that we already have. We know that FanDuel brand resonates very well. We're building out and improving the quality of our predict experience for customers. We know how to do this, and we will expand the catalog and deliver a much better experience for the customers. And so that's what we're focused on delivering this year.

Rob Coldrake: It's worth also building [indiscernible] what Peter said, to say that we will remain very disciplined in terms of our investment around prediction markets. And we will invest more if we see opportunities to do. It'd be a great positions in at the end of the year if we're getting real traction, and we really want to put our shoulder behind the world with this. But equally, we will follow the same rigorous framework that's driven our success in the sportsbook business and we will continue to monitor the returns and the CACs to LTVs as we move through. But certainly, when the improved product is in place for the World Cup and then start of the NFL season, we certainly see some exciting opportunities.

Operator: Your next question comes from Jeffrey Stantial of Stifel.

Jeffrey Stantial: Can you hear me?

Operator: Yes, we can.

Jeffrey Stantial: Two from us. First, Peter, you mentioned in the release some challenges shipping product for prediction markets just at the velocity you would have expected or consistent with sports, given some regulatory constraints. Can you just talk about or clarify sort of where this bottleneck is most pronounced. Is there sort of a function of the JV partnership? Is this more the lack of guardrails that you're seeing from the [ CFDC ], just sort of what explains this restriction, the product development pacing? And then second, just a clarifying question. The release does note revenues were about $90 million ahead of your guidance in Q1, if you exclude the $45 million of hold impact. Can you just clarify where is this $90 million come from? Is this sort of core sports, core casinos, is this Arkansas or prediction markets and then the decision not to sort of flush this through to the guide?

Jeremy Jackson: I'll pick up the predicts product question, first of all. I think we have made some good progress in the first quarter. I referenced that. I think the fact that we are now live with our unified or One App is important. I think, is a great step for us and we also launched the market-making capabilities. I think we are working hard to improve the breadth of our sports coverage we have, particularly around sort of combo. There have been some as I said in the release and challenges around that, I think it's principally around our ability to access the range of content on our -- rather than a sort of product front-end issue. And I'm confident that our teams have the capability to deliver great user experience and products for our customers. If you look at the -- actually the Betfair predicts product, which is live in the U.K., I think, it's a fantastic example of what the teams can deliver. And look, I know that there's a lot of work going on to make sure that we can expand the range of product particularly from a combo perspective onto our own platforms. And we will make sure that we adapt as we need to in order to win in sports.

Rob Coldrake: Picking up on your question around the underlying [indiscernible], yes. So there were a couple of factors that we certainly saw some strong NBA handle in the quarter, which helped us offset the impact of slightly unfavorable sports results and the Arkansas launch. Thinking about the year as we set out our guidance, a couple of months ago we did say that we're taking a sensible and measured view to the guidance. It's early in the year. Encouragingly, we are seeing some early signs that our plans are gaining traction. But given it's early in the year, we're not going to be updating the guidance at this stage aside from the technical factors mentioned in the release.

Operator: Our next question comes from the line of Bernie McTernan with Needham & Company.

Bernard McTernan: Great. First, just wanted to follow up on the continued theme on the second half ramp. Just maybe any building blocks you can give in terms of how you think you're going to get back to year-over-year handle growth in the second half of the year? And just by the response of the last question, it sounds like NBA is trending positively. Would it be possible to see if any sort of quarter-to-date trends on handle just so we can compare versus the 1Q results? And then I have a follow-up.

Rob Coldrake: Yes. So as I mentioned, Bernie, we're pleased with the momentum that we're seeing at the moment. We see some positive year-on-year handle trends in NBA. As we talked about many times on this call, we're not obsessively looking at handle as the one metric, and that's one of the factors and building blocks for the full year, but we don't actually need to see a huge incremental improvement from where we are in the year-on-year handle variance for us to hit the targets that we set out in the guidance, that we set out. We're also anticipating a small amount of structural margin expansion as we move into the second half of the year, which should be helped by the mix of sports. And as I said, for the overall generosity envelope for the full year, we're expecting that to be broadly in line. But I'd say in the short term, we're seeing some encouraging trends, and it's absolutely in line with our expectations and the phasing that we did certainly set out when we look at our guidance.

Jeremy Jackson: And Bernie, I think the -- when I look at the sportsbook improvement plan, the changes that we're delivering, the benefits we're seeing, as you think about loyalty already, the perception data that I'm seeing clearly demonstrates the benefits we're getting from the very early cohort on to the program. Excited to see what happens when we roll that out for the full year. The Bet Protect stuff, I think, is getting real traction. So there's a lot of good things coming down the track, which I think we see the benefits of already. And as we get to the back half of the year, I think we'll -- we'll see those in full rollout, and we'll get the full benefit of it.

Bernard McTernan: Okay. And then just one financial question. Just gross margin in the U.S. were almost 200 basis points lower year-over-year despite revenue growth. What was the major driver there? Any one-timers? Was this just launch impacting the promotional spending? Just any puts and takes you provide there would be helpful.

Rob Coldrake: Yes. There's a couple of facts. I think one would be the tax increases that we've seen year-on-year from a state perspective. We have New Jersey, Illinois, Louisiana and a couple of others, which is approximately 220 basis points total. So that's probably the main moving part. And of course, when you look at this year-on-year, the sports results impact to take into account. We're making great progress, as we've said before, and things like payment and fraud costs, and we've really got cost of sales in our crosshairs in terms of how we make more efficiencies as we move forward. But the main movement margin-wise year-on-year will be down to the tax changes.

Operator: Your next question comes from the line of Ben Shelley with UBS.

Benjamin Shelley: I've just got 2. One on U.S. promotions. I'd like to understand more about how U.S. online sports betting promotions in the quarter, excluding state launches, how did they fare on a same-state basis? And then with regards to prediction markets and CAC inflation. Can you comment on whether you're seeing any inflationary impact on customer acquisition costs from prediction market-related marketing spend?

Jeremy Jackson: Ben, why don't I pick up the question around the prediction market inflation. And I think from our perspective, we are not seeing any change in terms of the competitiveness we have in the market. We have reasonably long-term deals in place for a lot of our marketing deals with our partners. And so we're not subject to sort of vagaries of short-term fluctuations and people trying to spend more money or not. So I think it's -- it remains a very competitive place, but it has been for some time. And I think the nature of our national partners and deals that we have put us in a good space.

Rob Coldrake: Yes. When you look at the generosity year-on-year, you have to take in probably about 50 basis points from the new states. I think our focus at the moment is on how do we get the biggest bang for our buck from our generosity lay down across our customer base. And as Peter outlined earlier, I think we've seen some really encouraging response so far from the changes that we've made and the customer feedback has been incredibly positive from Bet Protect+ and so the early days of the new loyalty scheme in sportsbook that we launched. So we're really positive about that. We've said previously that our generosity envelope for the full year, we anticipate being broadly in line with 2025, and we've not changed our view on that.

Operator: Your next question comes from the line of Brandt Montour with Barclays.

Brandt Montour: The first one is on prediction markets. How do you think about the cadence of the spend on prediction markets, 2Q, 3Q, 4Q in light of the fact that I assume that the One App is not necessarily where you wanted to eventually be in terms of the product level, but then also the sports calendar, do you need to be there in a big way for World Cup. Do you want to wait and save dry powder for NFL? And how do you sort of balance that sports calendar as well against that?

Rob Coldrake: Yes. Let me pick up on that, Brandt, in terms of how we're currently thinking about that. So starting off in Q1, that was really about testing and learning for us really in terms of generosity and marketing around our predict products and demonstrating our ability to be able to acquire customers and actually established some presence in the category. We spent a circa $40 million in Q1. As I said in my previous answer, it's pretty early days, but actually, we've always said consistently that we anticipate the majority of our spend on this to be in the second half of the year and our view has not changed. So we will invest behind the World Cup, and we expect to ramp our spend slightly from where we've been in Q1 in Q2. We also retain the right to flex that, as I mentioned earlier, because we're going to closely be looking at the returns that we're getting on CAC and LTV basis on the prediction customers that come into our ecosystem. And then we really want to get behind the start of the NFL season in the second half of the year. But we need to make sure that we've got the right products in place to do that. And we'll be looking at the prediction investment envelope alongside what we're doing in our core sportsbook as well. And as we've always said, our capital allocation framework, we'll be investing where we see the best returns in the business. But we don't see the overall envelope changing from where we were previously at. We predict at this point in time, but it's an evolving picture. As I said earlier, it would be great to be here at the end of the year, saying we're actually spending more because it's really taking off behind NFL in the second half of the year.

Brandt Montour: Okay. Great. And then just a separate question on iGaming. That market in the U.S. slowed a little bit sequentially and one of your key competitors hinted at that being a tougher competitive environment, yet you guys outgrew the market and gained share. How sustainable is that sort of performance that you saw? And do you also think that the market's gotten any either less growthy or more competitive sequentially?

Jeremy Jackson: We were really pleased with the iGaming performance in Q1. The AMPs were up 10%, revenues up 19%, and revenue growth from the direct casino customers was even higher. So to some extent, our performance was impacted by the fact we came into the year with a smaller sports business. I think the focus we've had on our Rewards Club, and this is a sort of second year we've had the program, the focus on our exclusive content and the relationships we have with the key influencers have been really important for the business. And I think the team is doing a great job executing. As it relates to market growth, the market can't keep growing at the same percentage rates, right, because it becomes -- as the market grows, you inevitably see some slowdown. But when I look at the market penetration level, there's still a long way to go. So I think the team are executing well, and we've got the leading position in iGaming, and we're performing well.

Operator: [Operator Instructions] Our next question comes from the line of Joe Stauff from Susquehanna.

Joseph Stauff: Just in time. I wanted to ask on your generosity investment -- reinvestment in FanDuel OSB. Is it fair to say that largely started in March. I'm wondering if AMPs grew in April?

Jeremy Jackson: Did you have a second question, Joe. Are you just taking one?

Joseph Stauff: Yes, sure. For the World Cup, Peter, you had mentioned another exchange that you could plug into. Will you be plugged into that more than the CME going into the World Cup?

Jeremy Jackson: Let me take -- I'll take the World Cup question and then follow up on your first question. We want to make sure that we have as compelling sports offering for our customers as we can. We have got a very exciting set of products to brings to our regulated OSB, leveraging the Flutter edge and the global expertise we have in soccer. So we're excited about that opportunity to bring customers onto the platform. I think from predicts product, we do have the right to connect up with other venues is something we are focused on and the timing of it is tight, but we will see where we can get to in terms of that for the World Cup.

Rob Coldrake: Yes. On your first question, Joe, from an AMPs and [indiscernible] perspective. So as we've said, we're laying down a number of new initiatives, which we're very pleased with some of the traction that we're getting and we are seeing sequential improvement in a number of our KPIs from Q1 into Q2. We're not getting overly hung up on any one metric. But across the board, we're seeing a lot of green on the dashboard, which is helpful. We also have some noise. We said we'd see this around March Madness where we had a very customer-friendly period in the prior year, and you always get some noise around handle and AMPs as you move through that period, but actually we'd be taking the March Madness that we had this year over last year every day of the week. So we're quite pleased with the way that, that played through for us. And we're pleased with the momentum that we're now seeing into Q2.

Operator: Our next question comes from the line of Ed Young with Morgan Stanley.

Edward Young: In your shareholder letter, Peter, you said that you've got a clear plan of improvement for the sportsbook, and you've laid out a lot of the product and kind of iterations that are coming. But I wonder if you could sort of help us take a step back and give a bit more of the diagnosis of what you think has gone wrong within the business? Obviously, you've made some changes and it's good to see some decisiveness there. But on a bigger picture level, where is the business not been doing what it should have been doing? And are there any kind of beyond organizational changes, any kind of macro changes in terms of how FanDuel needs to approach the market in terms of competitive intensity or promotional intensity. It doesn't sound like that's what you're saying, but you're also saying that Dan Taylor is coming in to sort of review and oversee the business. So please use your diagnosis and perhaps could you share some of it with us today?

Jeremy Jackson: Evening. Well, evening your time, Ed. I think we've been pretty clear around what the issues are for us from a sports perspective in the U.S. And look, I would describe the intentions of the team as being one way, we just -- we're getting back to focus on the customer-first approach, yes. And we've seen that with the way in which we've been trading the business in the last -- in this last quarter where I mentioned in my opening remarks, the stuff we've been doing around the Mets. I think there's been some good sort of justice refunds the team have been doing. And I think it's engaging and it gets you on the front foot from a sort of social perspective. And that's important to do. And I think it's something which we do around the world. I think that, Bet Protect product was important as we needed to deal with the issue of injuries, which was -- has been a real challenge for us in the market. And I think we've got a great solution in place. As I mentioned, we've seen the twice the level of engagement that we had expected with that product already and there's certainly plenty of ways in which you can see us evolving it in time. Clearly, one way we can evolve it is with the launch of the loyalty or reward program, there may be tiers of it, for example, where we can give customers access to free Bet Protect. And so the integration of all of the different aspects of the product is something which is going to be really important for us to make sure that we're offering great value to our customers. So there's -- this isn't about a fundamental change in posture of margin and generosity or anything like that. I think we know what we need to do around loyalty. We know what we need to do around the injury stuff. We are getting better on the front foot from a trading perspective. And I think we're making lots of progress there. I think the 2 other things I'd pull out from a product perspective is we have superior structural gross win margins in comparison with everyone else in the market. And that's something which is -- doesn't hand back and I think it's as a result of the quality of our accuracy of our pricing, and that's something that's really important and it's something that we intend to continue to invest behind and sustain. And I think that is a feature that you see from us in all of our markets. And the other aspect I'd pick on is there's a lot we're doing from a sort of core product hygiene perspective. And it sounds like these are simple things. The IRS launch time is now less than 2 seconds. We've got full screen streaming available for key sports. We've upgraded some of our live betting with simplified Same Game Parlay buildings, and you could track 5 bets on the [ lock street ]. There's just lots of small enhancements like that, that we will continue to roll out and deliver and actually, the cadence of delivery of this stuff is all being improved with our sort of investment and focus in AI. So the throughput we're seeing from a product perspective is stepping up materially. And it's really exciting to see that translate into the product that customers are seeing in their hands on their phone. So there's no change in strategy, I think we've got clarity. I think we're putting customers first, and we're getting back on the front foot, and we're starting to see the sequential benefits of that.

Operator: Your next question comes from the line of Estelle Weingrod with JPMorgan.

Estelle Weingrod: I've got one on the U.K. Sports handle was a negative 5%. You mentioned in your remarks an improving momentum in March. Could you elaborate on the actions you are taking in the U.K. in that segment? And are these improvements confirmed and sustained in April and May?

Jeremy Jackson: I mean the biggest drag on performance in the U.K. is Sky Bet. And -- but we are -- an area where we're seeing now sequential improvements coming as time passes by since the migration, we've seen a big step change. If we look at revenues up 9% on a normalized basis in March, which is compared with -- flat for the Q1 period as a whole. So good sequential improvements in sports. And I think from a gaming perspective, we're also making progress. And if I look at the leading indicators, we've had the highest customer acquisition volumes 5 years onto the brand. Sky Gaming has now got more than 1 million customers, which is the first time ever. That happened in March. And actually, the Eilers & Krejcik rank the second. So there's been a big step-up in how that's perceived from a customer perspective. And it's #1 for betting interface and esthetics. So there's been a strong chat, lots of other metrics we could talk about. I think from my perspective, it just feels very similar to the experience we had post the Paddy Power migration where there was a first year sort of reset and then we've obviously seen very strong performance from Paddy subsequently. And we've now got great products for the Sky customers. We've addressed some of the issues that we've seen post migration, and I think we're starting to see some of the green shoots come through.

Operator: Your next question comes from the line of Paul Ruddy with Davy.

Paul Ruddy: Just one follow-up on the U.S. generosity and customer acquisition journey. Just regarding paybacks on the state launches, and I suppose the customers you're trying to win...

Jeremy Jackson: Paul, we've lost you. Sam, are you still there?

Operator: Yes. We will move on to the next question and reconnect Paul when we can. Our next question comes from Chad Beynon with Macquarie.

Chad Beynon: Just one for me. Just given your previous success in acquiring brands, most of which had podium positions. Given the stock dislocation right now in our sector, whether it's B2C, B2B, sports data, affiliate, what's your appetite to maybe do another deal at this time given depressed valuations in the market?

Jeremy Jackson: We have done plenty of deals, as you say, Chad, and I think we've been really pleased with the progress we're making with the integration in Brazil. It's going to be great to see the benefits of the pricing and promo capabilities go into that business ahead of the Soccer World Cup. I think it's going to be super exciting to see what Snai do with all of the capabilities we'll give them access to now that the migrations happen successfully there. There's a lot for us to go after across the business. We are always open to sort of M&A, if we think that the prices are right. I think right now, for us, we are continuing to focus on those integrations. And there's a lot to do in the U.S. business. We also need to acknowledge our sort of leverage, and I think there's a focus at the moment on deleveraging.

Operator: Your next question comes from the line of Ryan Sigdahl with Craig Hallum.

Unknown Analyst: This is Will on for Ryan. Just wanted to ask on sort of some of the portfolio optimization we've seen lately. You shuttered FanDuel Picks last month, FanDuel TV racing is shutting down. I think Betfair in Mexico has also ceased operations. Just curious if there's an increased focus on sort of portfolio and resource optimization and if there are any other products and/or markets that are being considered?

Rob Coldrake: Yes. Will. I mean this is a constant focus for us in terms of optimization and efficiencies and the decisions that we take around FanDuel TV and Picks are relatively easy for us in terms of where we want our focus to be in the U.S. with FanDuel at the moment and actually a bit in particular with FanDuel TV that delivers some good cost efficiency for us. I think with regards to the broader portfolio across the group, we will continually review but as we sit here today at the moment, the majority of our brands are performing well for us, and that's not a problem that we have in the near, we'll continue to focus on costs and where opportunities present themselves will lead into that.

Operator: Your next question comes from the line of Shaun Kelley with Bank of America.

Shaun Kelley: So Peter and Rob, just maybe super high level. We noticed that there was an application for a direct FCM license recently. Just wondering if any of the management changes may allow for a bigger or slightly bigger rethink on strategy and your approach to vertical integration in prediction markets. And then, Rob, if we could just give a little color for the second half on sort of your thoughts around revenue contribution and what's baked into the guide directionally, obviously, not solid numbers, but directionally for prediction markets in terms of contribution in the second half.

Jeremy Jackson: Sure. I'll be very brief because you've asked 2 questions. On the license application, I think, in general, I'd get back to what I was referring to earlier on the call. We want to make sure that we can adapt and do what we need to do in order to win. I mean, I think we're very much focused on ensuring that we can build a great sports solution for customers wherever they are. And we need to make sure we've got the right range of products available to them. We're connecting to other venues at the moment. But of course, we have made an application which provides us with further optionality. We've got to adapt and do what we need to do in order to win for our customers.

Rob Coldrake: And on the prediction market revenue contribution, we're not guiding in detail at this stage. I think that the best indication, Shaun is, is what mentioned earlier in the sense that we intend to step up the spend as we move through the year. So we'll see some uptick in Q2. And then we'll intend to do more behind the NFL in Q3 and give more detail [indiscernible].

Operator: Our next question comes from the line of John DeCree with CBRE.

John DeCree: Peter and Rob, maybe an easy one. I think there was a comment about reduced cross-sell from sportsbook casino in the U.S. Obviously, iGaming results kind of offset that. But we kind of assume that might just be the lower AMPs in the sports platform in the quarter, but curious if there was any change in behavior among cross-sell?

Jeremy Jackson: You answered the question, John. That's exactly the point. We've seen very strong performance in the direct casino part of our business as we always have. And with a smaller phase coming into the year, it impacted our denominator effectively. So this is not an issue in terms of any change in behavior other than that.

Rob Coldrake: And we continue to be the top brand awareness and preference on direct casino customers. So we'll continue to harness that.

Operator: Your next question comes from the line of Monique Pollard with Citi.

Monique Pollard: I just had a question on this market-making capability in the U.S. around prediction markets as you're trialing it and then you're going to be launching it later in the year. It feels to me like potentially that could be quite a material opportunity. So just trying to understand if you think it can be quite material over time and whether in that second half U.S. adjusted EBITDA guidance, anything is baked in for that market-making capabilities that ramp up through the year?

Jeremy Jackson: Monique, I've spent time with the team who are doing this market-making. I'm excited about it. I mean it's great. We're making money today from offering this capability, particularly focused on combos and leveraging the pricing expertise we have. It's small scale at the moment. And we will launch our own platform in the coming months. And I think we'll then be able to step up the volumes that we're doing. The only bit that's factored into our guide at the moment is the investment. And look, we need to wait and see how we are, and then we can talk to you about the revenues that we're generating. But I think we're -- I think we've got some conviction around our ability to offer a very compelling service in this area, leveraging the pricing expertise that we have.

Operator: Your next question comes from the line of Robert Fishman with MoffettNathanson.

Robert Fishman: Just curious, how did the [indiscernible] striking partnerships with the major U.S. sports leagues impact how you plan to partner or approach the leagues going forward?

Jeremy Jackson: I think from our business perspective, we have relationships with lots of leagues and sport bodies and teams across the country. We want to be the -- we are the #1 place for people to go for regulated online sports betting. And I think we want to be the premier destination for sports, whether that's through OSB or the prediction market rail. And I think our One App allows us to do that dynamically. So wherever you travel across America, you better access our products and capability. And I think we can leverage our national sort of advertising as a consequence of that. And I think there will be some interesting questions and conversations for us to have with those leagues and sporting bodies and other relationships we have. Okay. I think we have no further questions now. So I'd like to thank everybody for dialing in and asking us all the questions. Much appreciate it if you have any follow-ups or other questions, please let us know afterwards. Thank you.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.