Good morning, and welcome to the Flutter First Quarter 2024 Earnings Call hosted by CEO, Peter Jackson; and CFO, Paul Edgecliffe-Johnson. Please note, this conference is being recorded and for the duration of the call your lines will be in listen-only. However you will have the opportunity to ask questions. [Operator Instructions] I will now hand over to your host Paul Tymms to begin today's conference.

Hello, everyone, and welcome to Flutter's Q1 2024 results call. With me this morning are Flutter's CEO, Peter Jackson; and CFO, Paul Edgecliffe-Johnson. After this short intro, Peter will open up with a brief run-through of our good progress during the quarter, and then Paul will take you through the Q1 financials. We will then open up the lines for Q&A. I would also like to remind you that some of the information we are providing today, including our 2024 guidance constitutes forward-looking statements under U.S. securities laws. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. There are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors are described under forward-looking statements in our earnings press release, our annual reports on Form 10-K and our upcoming Form 10-Q to be filed with the SEC. In addition, all forward-looking statements are based on current expectations as of the date of this call, and the company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, 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 websites. And with that, I will hand you over to Peter.

Thank you, Paul. Before we get into Flutter's excellent performance in the quarter, I first wanted to update you on our U.S. primary listing. As you will have already noted, our proposal to move our primary listing from London to the New York Stock Exchange received overwhelming support at our recent AGM on May the 1st. With this approval now in place, we expect the transition to become effective on May the 31st. This is a key milestone in the natural evolution of Flutter as FanDuel continues to scale rapidly and the U.S. becomes an even greater part of our business. We have now established our operational headquarters in New York, reflecting just how fundamental the U.S. is to our long-term future growth. Moving now to the performance of the business in Q1 2024. I was really pleased with the progress made during the quarter on our strategic objectives. In the U.S., FanDuel is off to a very strong start consolidating our sports leadership position with a 52% online NGR sportsbook market share. We also achieved a 27% share in iGaming, where FanDuel is now the number one brand. This clear leadership position was delivered through both our leading product offering and our relentless focus on disciplined customer acquisition investment where our superior structural margins and higher retention rates are delivering payback periods at very attractive levels. Our investments in customer acquisition and product innovation means we are embedding future profits into the business as we continue to scale. The effectiveness of this strategy is reflected in our strong execution during the quarter. Total U.S. AMPs were 15% higher than the prior year and included a record 2.6 million customers for Super Bowl in February. This includes a 12% year-on-year increase in newly acquired players in pre 2022 states, demonstrating…

Thanks Peter. And good morning everyone. The Group delivered another strong set of financial results in the first quarter and remains on track for strong growth in the full year. Our revenues grew by 16% to $3.4 billion. And our adjusted EBITDA by 46% to $514 million. We delivered a 310 basis point improvement in our adjusted EBITDA margin, driven by strong operating leverage in our U.S. business, despite our continuing strategy of investing into new customer acquisition. On a reported basis, the Group had a net loss of $177 million. This was after amortization of acquired intangibles of $172 million and a $184 million charge from marking to market the value of the Fox option. This notional value charge resulted in earnings per share and adjusted earnings per share declines of $0.52 and $0.59 respectively. Adjusted free cash flow was $207 million higher than the prior year at $157 million, while our leverage ratio reduced from 3.1 times at the full year to 2.8 times at the end of March, closer to our 2 times to 2.5 times target. Turning now to each of the divisions. In the U.S., our disciplined investment in customer acquisition and retention drove strong top line growth, with revenue up 32% year-on-year. Sportsbook revenue grew 30%, with staking up 24%, including continued growth in staking in pre-2022 states of 19% and an increase in our net revenue margin of 40 basis points to 7.3%. Promotional spend levels were in line with last year, while our superior product and pricing accuracy continued to drive structural margin improvements with our expected structural margin in line with what we saw in quarter four. These gains were partly offset by $76 million of un-favorable sports results in the final two weeks of March, in the March Madness college…

[Operator Instructions] And your first question comes from the line of Ed Young from Morgan Stanley. Your line is open.

Good morning.

Good morning. My first is on your – on the U.S. division. Could you please help by bridging us from the current 59% cost of sales you delivered in Q1 to the better than 56.5%. You'll need to average for the remainder of the year to meet your 56.5% full year guidance? The second one also in the U.S., the iGaming performance continues to be very strong, and obviously, you've got very good momentum there. I just wondered if you could perhaps give us some color on what’s driving such excellent slots performance mean 73% growth is very high. I’d be interesting to hear a bit more color on that? Or looking at the other way around, is this something that’s not as good on the table games side that is either a drag relative to that number or an opportunity going forward, it would be interested to see how you see the of iGaming growth going forward? Thank you.

Thanks. Let me just quickly deal with the iGaming one, and then I’ll let Paul come in with a slightly more complicated one around costs. But I think from an iGaming perspective, we always were sort of confident that 2024 was the year where we try and take market leadership, think about what we said Capital Markets Day, it was about fixing broken things. It was reaching product parity and getting ahead, and that’s what we’ve done. It’s important to recognize that we’ve got ahead by acquiring a lot of business in the direct to casino space. And if you look at customers’ preferences, the direct casino players are much more interested in slots then there are table games. Table games are typically used by customers, sports customers to cross-selling. So that’s why we see that strong growth in slots. And it’s aligned with the strategy we’ve had to continue to grow the iGaming business whilst ever we meet the great return criteria. And in terms of the U.S. division, Ed, the 59% cost of sales that we saw in the first quarter is really in line with what we’re expecting. We are investing heavily in that quarter into the North Carolina launch, which, as you know, is a big state. So we have made a significant investment. And we’ve won the state as far as we can see the data. We’ve signed up with one in 20 adults, so we’re really pleased with the results there. But obviously, it comes at a cost. And with the sports results that we saw around March Madness that has depressed revenue somewhat. So it will normalize through the year to the 56% we’ve guided to, which you’ll remember is in line with our prior IFRS guidance. So that will just come back and normalize across the year. Thanks, Ed.

Okay. I just could just follow-up on the answer because presumably, your structural hold is going to be lower in future quarters or leads in two and three versus Q1 and Q4. So does that mean your promotions all to be lower? I’m not really sure what the difference would be quarter-on-quarter. And I guess putting it the other way, if you’re going to be better than 56% for most of this year, does that mean it might be above 56% in future years?

So if we talk about the structural hold, which we saw in the fourth quarter of last year is at 13.5%, and we’ve said that it’s very similar in first quarter of this year. And given the mix of sports and the strong proportion of parlays, which drives that higher margin. We have seen the biggest state launch of the year in the first quarter. So there’s a big investment there. We’ve also seen significant losses, which we’ll have to see will happen through the course of the year. But that has impacted the percentage there. Otherwise, it would have been in line with what we talked about, the 56%. So we will – you’d expect to see the book end of Q1 and Q4 where we had the highest structural hold. And where there’s most business, that’s where you have more promotional intensity because that’s where you want to try and win customers. So that’s where you’d expect to be investing more. So hopefully that helps, Ed.

Thanks.

Thanks, Ed.

Your next question comes from the line of Jordan Bender from Citizens JMP. Your line is open.

Good morning, everyone. I want to stick with the iGaming business in the U.S., the data isn’t always perfect that we get, but it seems like your generosities were up significantly in the quarter. So with the share gains, is that a combo of – is it new product and higher promotions? Or I think you mentioned in the prepared remarks, you’re just seeing better cross-sell with your offerings? Thank you.

Good morning, Jordan. I think the key factor for me and you’ll hear us talk a lot about this. We continue to acquire as much business as we can whilst we meet the return criteria. We aim for less than two years, and we’ve been well within that. And that’s as true for iGaming as it is for sports. I think the – look, the team are doing a terrific job in executing. And [indiscernible] now the number one player in iGaming, and we’ve taken significant share. We’re doing that with real strength in the direct to casino space. I mentioned earlier the strength we have in slots. It is 70% of the market is the fastest-growing part of the market. So it’s a place you want to be strongest, and we’ve got some exclusive content there. We are very sophisticated with our application of generosity is something that we think is a very important component of our approach in all facets of the business, whether it's how we apply our generosity into our sports customers but also into iGaming and we've got some unique mechanisms that we can apply in iGaming. So we're very pleased with the performance of the business. We've got good product. We've got – I think the team are doing a great job around marketing and attracting the direct casino customers. Of course, we're continuing to benefit from the size of our sports betting business as well as cross-sell.

Great. And then just on…

Go ahead. If you have another question, Jordan, please?

Yes. Sorry, I just want to – on the follow-up, I just want to make sure I got the message right. You're unchanged on the guidance for the U.S. business despite that $76 million headwind. Is that primarily just outperformance in North Carolina? Are you seeing anything else coming in better than your expectations?

We've had a – thanks, Jordan. We've had a very good launch in North Carolina. So we're very pleased with the market share we've gained the – we're very pleased with the market share we've got across the U.S. as a whole. 52% of the NGR, we think, is a fantastic place to continue to build from. And the business is going well as we look at April numbers and our outlook for the rest of the year, it's all very positive. And on the basis of that, we have held our guidance.

Thank you.

Nothing further really can say on that, though, Jordan. But thank you very much.

Your next question comes from the line of Monique Pollard from Citi. Your line is open.

Hi, good morning, everyone. Thanks for taking my questions. The first one I just had was whether you could give some color on I guess North Carolina also higher, the two states that have been the most successful launches, what you've done differently in those states that's allowed you to acquire so many players, so rapidly? And whether you find that there's some specific advantage to acquiring these players very early on, so in the first five days versus sometime within the first 12 months? That's the first question. And then the second question, more of a technical one for Paul. I'm struggling to get to the net interest guidance, the $370 million for 2024. I guess if I look at the 1Q, we're really at $112 million. And I know you've done the refinancing, but from what I can work out that saves you about $12 million of interest per annum. So just trying to understand how we get to that $370 million for the year?

Thank you, Monique. So let me talk to you about North Carolina and Ohio, but it's also true for Vermont or any of the other states that we've launched in. And I think with each new state launch that we have, we find that we get even better at refining our playbook in going to market. We do have a big advantage in being able to convert our DFS customers into sports betting customers. That's an important component of what we do. There's also the fact that we have our large established customer base. And so we're able to use mechanisms like to refer a friend, which become important and allow us to benefit from our scale. We have also though switched to national advertising. And so the brand and the product is becoming better known to consumers in states when they launch, and there's a lot of pent-up demand. And answering to your question around, is there an advantage in acquiring their customers early, we believe there is. I mean we've got the best product in the market. And so the extent to which customers are able to get on to the best product early, they stick with us. And if we look at the way that the cohorts are performed from those customers are required back in 2018 or subsequent years, they're stuck with us. So I think it's important to get in early. We find that actually the acquisition cost in doing so from the benefits of our scale really help us. And look, having a bigger business allows us to get ultimately more sort of operating leverage and gives us greater scale. So it's all very helpful.

And in terms of the net interest, Monique, I mean, the two components, obviously, are what we pay on our debt balances and then the interest that we receive on our cash balances, which do fluctuate through the year. And it’s building in that interest received through the year, which may be where you’re not getting the right number because that does obviously fluctuate quite significantly during the course of the year. But very happy to follow-up with you on that afterwards because that can be quite a big number. So as I say, happy to follow-up afterwards, Monique. Thanks very much.

Okay. Thank you.

Your next question comes from the line of Clark Lempen from BTIG. Your line is open.

Good morning. Thank you. I have two. Peter, I want to come back to U.S. guidance. I know you’ve mentioned historically that FanDuel has sometimes left some profitable AMP acquisition opportunities on the table. Does the guidance for 2024 OpEx now sort of leave you more flexibility to be aggressive if the market gives you – if the market remains, I guess, attractive and you can lean into it? And if so, is that benefit sort of contemplated in 2024 guide? Or would that show up more in 2025? And then Paul, on the capital return philosophy, could you just remind us as we’re getting closer to the leverage targets and sort of generating some excess capacity. How robust is the opportunity set for acquiring the MaxBet like local heroes relative to I guess in absence of that, would the priority be, I guess, beginning to return capital to shareholders? Thank you.

Good morning, Clark. Thank you. I think what you have to look at with our business is we’ve maintained this posture of sort of acquiring as much business as we can whilst we meet the return criteria. And historically, I have stated several times that would wish we’ve been able to lean in harder and take more business. Typically, that’s because we found that the customers have ended up being more valuable than we had initially anticipated, possibly through higher retention rates, more parlay penetration, more legs on the parlay, better cross-sell into gaming. So all those things have helped benefit the value of the cohorts we’ve acquired in the past. You would’ve seen from the data we’ve published for our first quarter, we are pleased with the posture that we have in the market and the volumes the customers we’re acquiring. I think it’s very important that we focus on embedding future growth and value into the business by acquiring as much business as we can. We’re not subject to sort of constraints in trying to optimize around a certain EBITDA threshold or anything like that. We’re just trying to build as big or most valuable business as we can.

And in terms of the capital return philosophy, Clark, so we’ve talked about our priorities, the use of capital, first, of course, being to invest in the business, as Peter has just talked about, because that does give the best returns the best paybacks. And then acquiring businesses and you talked about MaxBet, that’s been a great acquisition for us, very pleased with how that’s going. Similarly with Sisal, that’s going extremely well. If you think a little further back with tombola, there’s lots of these national champions that we really like. And as long as they are strategic, so the market works and the financial economics work, then we are actively looking for businesses like that. And then beyond that, within the framework that we’ve talked around for leverage, which is sort of being at 2x to 2.5x levered, if there’s capacity to return cash to shareholders, we absolutely will do that. And as we think about how rapidly the EBITDA will grow in this business over the course of 2024 and beyond, there will be capacity to do all those things, invest into the business, to make acquisitions and to return cash to shareholders, but just not sort of being prescriptive as to exactly which year we’ll do which in, as you can imagine. Thanks very much, Clark.

Thank you.

Your next question comes from the line of Ryan Sigdahl from Craig-Hallum Capital Group. Your line is open.

Good day, guys. I want to start with, I guess, the U.S. So trying to do the math, I guess, on the last two weeks of the quarter from March 17 through the end of the period, I get something north of $200 million in delta relative to kind of the first 11 weeks of the quarter, that growth rate to the down 51% for the last two weeks, $76 million of it is low hold. But I guess curious what else is going on in there? Secondly, kind of to that, I guess, you reported on March 26, we selectively disclosed kind of performance through the week prior to that, the 17th, I guess, why not include some of this the level set expectations into your first U.S. quarter here? And then last one is just kind of the mark-to-market on FOX Bet option. What changed in that calculation relative to the end of 2023 for the revision?

I'm happy to say the easy one, which is that the value of FanDuel goes up because the business continues to grow. More customers is a bigger business. So the value of – unfortunately, it was sort of slightly counterintuitive as the value of FanDuel grows, we have to take more costs on to the value of the Fox Option.

And that is likely to be every quarter, but we will call it out so that you can sort of strip it out. Obviously, it's a noncash charge. But as Peter says, that is required under U.S. GAAP. In terms of your first question around the math on the U.S., yes, you've got the losses in March Madness. And then, of course, we've got the investment into the North Carolina launch, which is significant. As I said earlier, we won the state there. We took a very high proportion of the business. So, we invested heavily. And I think that's the component of the math that you're trying to work through there. In terms of why we only reported up to a certain date, that's when we had the numbers for. So, we reported to the latest state that we had the reliable trading data too, which was so that's the reason.

Thanks, Ryan.

Your next question comes from line of Joe Stauff from Susquehanna. Your line is open.

Thank you. Good morning. I realize on the U.S. iCasino, I realize you're in the process of kind of bringing all, if not most of your iCasino tech stack in-house. Just wondering how long that process would take? Is it fair to assume a year or something like that, trying to get an idea there? And then I apologize if you did state this, but just wondering where your North Carolina handle share was in March, curious?

Hi Joe, I'm happy to pick those up. The iGaming tech, man and this is part of what we talked about to the talk at the Capital Markets Day in terms of the three phases of it. It's about fixing things that are broken, reaching – poverty [ph] with the market and getting ahead. We have broadly done the work now to bring the tech stack in-house. It's – you can see from the rest of the group, we are the world's largest iGaming operator. So being able to bring those capabilities to the U.S. markets and actually what will help us maintain our leadership position in the market, and that's something that the team are very much focus on, but that sort of tech migration is broadly done. And unfortunately, North Carolina is from states where they don't disclose the operators. And so – we're not going to share our figures. You might be as to try and reverse engineer base and the number of customers we told you signed up with, but we're not disclosing the numbers.

Okay. Could I squeeze one more in? I guess with respect to your AMP growth for iCasino in the first quarter, again, FanDuel, it was 34%. Is it fair to say that I guess the bulk of that AMP growth is really from the direct casino customer?

Yes.

Thanks a lot, Peter.

Thank you, Joe.

Your next question comes from the line of Robert Fishman from MoffettNathanson. Your line is open.

Good morning. Two questions for you guys. Can you speak to the competitive dynamics in the U.S. today? And would you expect an elevated level of competition to continue? Or do you think that the market is becoming even more rational despite the new competitive launches over the past couple of quarters? And then just separately, with the recent FanDuel free ad-supported channel launch on Roku and others, can you just speak to or update us on the company's U.S. media strategy and whether this helps offset national marketing spend? Or how you're approaching the U.S. market from a media side? Thank you.

Morning, Robert, and welcome to the call. It's nice to talk to you. The competitive dynamics we're seeing in the U.S., I mean, there's never been a time when it has not been very competitive. So the market remains very competitive. But I think the point that you talk to around players being rational is important. We're not seeing people spend in ridiculous amounts of money trying to persuade customers to try out a product, which isn't very good. I think the market is competitive, but much more rational. And of course, having the best product in the market stands us in a good stead. And the returns that we're seeing because of the our play penetration and all the other benefits that we have in the business means that we're continuing to acquire customers at very attractive returns. The observation that you made about FanDuel TV and for those people who are not aware of it, this is essentially our offering. We have two channels that are available on cable, but also OTT and on digital platforms. This allows customers – historically, it’s been very much focused around racing. So of course, the [indiscernible] was a fantastic opportunity for new customers to get into rating and then they’ll see a lot more content available on FanDuel TV. But it’s an ability for us to stream content and our customers to sort of bet and watch, and it’s something that actually predated FanDuel. So TVG and the operation there was something that we’ve been doing for a long time and had national reach and audience rating interestingly, it allows us to go into states often in advance of sports betting because there’s a different set of legislative [ph] results around horseracing.

Great. Thank you.

Thanks, Robert.

Your next question comes from the line of Dan Politzer from Wells Fargo. Your line is open.

Hey, good morning, everyone. First question, on gross structural hold, I think it was up around 220 basis points in the first quarter, which is a similar year-over-year pace as the fourth quarter. So just trying to get a better sense of how we should think about this over the course of 2024 and if you can kind of keep that pace of gains? And then for my second question, on sales in terms of the U.S. and the cost buckets, I think your sales and margin costs were up 16% in the quarter, which is a similar increase in tech and G&A. How should we maybe think about the pacing of these buckets if there’s any difference in the growth rates over the course of this year? Thanks.

Thanks, Dan. So yes, pleased with the structural hold, which as we said, was very similar in Q1 of this year to what we saw in the fourth quarter of last year. And that’s largely driven by mix of product. So when we see more parlays which do have a higher hold rate and more parlays with more lakes, then we will see a higher hold there. And Q1, Q4 do tend to be higher. So we’ll have to see how that progresses through the course of the year. But – and whether we have the same quarter-on-quarter increases. But certainly, we would expect to see Q1 and Q4 be the high water mark. And in terms of investing through the business and quarter-by-quarter, Again, we invest where we think there is the greatest return to be had from that on a marketing and generosity basis at Q1, Q4 tend to be higher given the way to support that. And in terms of other OpEx, other elements of OpEx, that will be more consistent through the year as you’re building our capabilities to support the bigger and bigger business that we’re generating.

Got it. Thanks so much.

Thank you, Dan.

Your next question comes from line of Paul Ruddy of Davy. Your line is open.

Hi. Good morning, both of you. Just two quick questions, if that's okay. Just the first is on the U.S. Just really quickly, the H1, H2 EBITDA split, I think you referenced 30-70 before, does that still stand? And then the second, maybe just to jump out of the U.S. for a second, if that’s okay. In Italy, it looks like you’re back taking market share. Could you just give some of the dynamics in the Italian market what drove that pickup in share? And how is the overall health of the Italian market at the moment?

So yes, in terms of half one, half two split, we had envisaged 30-70 and given the sports results in Q1 and also the successful launch we’ve had in North Carolina, we think that, that will be a bit more back-end weighted now. So more weighted into the second half and into the fourth quarter, when we will start to see those returns from North Carolina coming through. So won’t differ massively from that 30-70, but it will be a bit more second half weighted. And in terms of Italy, yes, we are pleased to be taking market share there. It’s performing well. April has been a good month.

Yes. I mean I think from my perspective, in Italy as Paul says, we’re taking market share. The team is performing very well. A lot of it is driven as we see in the states and other markets by getting the core things right. So we’ve made some significant product improvements. We launched the new sports betting app in Q3 2023, which is helping support the business. They've got some really interesting product features in that market. So there's possibility more to feed into the flutter edge over time. And I think in terms of how the market is evolving, obviously, there's no advertising and different players are pursuing slightly different approaches to generosity. But I think we've got a very good product. We can drive cross-sell from our lottery operations. It's a great top of the funnel product for us into casino and then into sports, and that's proving very well. Paul said, we're hitting record levels of market share for online customers in sports and casino.

Thank you, Paul.

Thank you

Your next question comes from the line of Simon Davies of Deutsche Bank. Your line is open.

Good morning, guys. A couple from me, please. Can you give us any color on trading in the month of April? And then any surprises, either positive or negative? And in particular, you're seeing signs of recycling of all those consumer winnings in the U.S. from late March? And secondly, in the U.K., we now have a bit of clarity around affordability guidance. Are you comfortable with the outcome there? Do you see any positive or negative ramifications from that in terms of your previous guidance for the U.K. market? Thanks.

Thanks Simon. So in terms of current trading, we're not giving any specifics other than to say we are happy with what we're seeing in April, and we remain very confident in our outlook for the year. And without getting into specifics, you would expect there would be some recycling, there always is. So I think that's a rational thing to expect.

Yes.

And within the U.K., there's no change to the guidance of $25 million to $50 million in total with its likely in H2 2024. I think we're pleased to see further progress. There's clearly a little bit further to go, but it's good to get a bit more clarity for the market.

Thank you, Simon.

Great. Thank you.

Your next question comes from the line of Ben Shelley from UBS. Your line is open.

Good day everyone. Thank you for taking my questions. Two for me, if I may. One on cash in the U.S. Could you provide some color on how customer acquisition costs have fared through the quarter in the U.S., please? Are you still seeing efficiencies here despite the heightened levels of investment? Or is it too soon to tell? And my next question is on U.S. taxation. So of course, a lot of talk around potential increases to state taxes in the U.S. I'd love to get your thoughts on the potential for contagion risk across states and how you think the future looks and how you feel you can offset future state tax increase through other means?

Hi Ben. On the customer acquisition costs, we have obviously quite a lot of customers in the quarter. We've been very pleased with our efficiency of those acquisitions. We have not really seen any change in the long-term trends in terms of the number of months of payback, frankly. So the team continues to execute very well, and it's embedding a lot of future value into the business.

And in terms of tax, I think what we've seen and what states have seen is that having a healthy gaming environment where the tax is set at the right level means that actually the tax take in the state is optimized. So in Illinois, there are conversations with the state governor going on, but there's no new news on that. So if there is, then we'll come back and update but nothing more on that for now Ben. But thank you very much.

Thank you team.

Your next question comes from James Rowland Clark from Barclays. Your line is open.

Two questions, please, from me. The first is on moving the operational headquarters to New York. Would you mind just providing a bit of color on exactly what that means, and does that involve more costs or more cost going to the U.S.? And then sort of related question to that what would be, what would you do with your registered headquarters? And then my second question is on U.S. again. So the sort of AMPs in Q1 grew at 15% year-on-year, and that follows 34% in Q4. It just looks like a bit of a slowdown. I appreciate the incredibly strong Ohio performance and launched there, sorry, North Carolina, but you might mention that actually it's Ohio's comp that means that the AMPs slows down a bit in the first quarter. I'm just interested to know in a really any color as to why that has slowed down from the fourth quarter trends? That would be very helpful. Thank you.

Good morning, James. I think you probably answered your own second question, but I'll let Paul come in and if there's anything you want to answer it in a moment. On the operational HQ, there's going to be no significant change from a cost perspective. We're going to have our board meetings there. I'm obviously spending a lot more time on there this week, and we'll be having a lot more of the ExCo there in person. But in practical terms, it's not going to change a lot from a cost perspective.

And James, yes, I think you sort of answered your own question. You got Ohio in the comps for a full quarter. But only the three weeks of North Carolina coming in there. So we are very pleased with the growth we're continuing to see both in the new states and in existing dates where we are those pre-2022 states, where we're seeing very strong growth announced still. So really pleased with the underlying health of the business. Thank you, James.

Thank you.

Your next question comes from the line of Andrew Tam from Redburn Atlantic. Your line is open.

Good morning guys. Just touching on the U.S. sales and market expenses up 16% year-on-year. Can you provide any color on where you're making those investments? Is the bulk of that largely do with the state launches in North Carolina? Or is it across existing states as well? And just in terms of the run rate, is that something we could expect throughout the rest of the year? Or can we expect that to dial down in future quarters? Thanks.

Yes. Good morning. Look, I'm happy to give you some color on that. I mean – we are spending money where we can, right? So we've shown very strong growth in our existing states. We continue to acquire a lot of customers in the states as penetration rates continue to grow and we'll spend money there, whilst ever we can meet our return criteria. And that's as true of the sports as it is for gaming. And clearly, we do put our shell to behind a wheel when we launch in a new state, it's very important to win in the early days, which we try hard to do. And so the shape of it of an investment. It will not be that dissimilar to what we've seen in the prior year. I mean there's obviously periods of time where naturally you see a sort of greater interest in new sports. So the prelaunch of the football season and that type of thing where we'll lean in heavier and that's what ultimately ends up skewing the numbers. But it's sort of very carefully calculated and all factored into our customer acquisition costs and giving us very good returns and driving a lot of embedded value into the business for the future.

Thanks, Andrew.

Your next question comes from the line of Joe Thomas from HSBC. Your line is open.

Good morning, Peter. Good morning, Paul. Yes, just firstly, I wanted to ask you about India. You're talking about net revenue down 25% there. Can you just talk through how you're expecting India to pan out how those tax changes have come in? I think you said there's some sequential improvement, but there's also been a benefit of an earlier IPL. So perhaps you could can talk about how you're mitigating that and what the long-term prospects are? And then elsewhere, just with respect to the – in the other divisions with respect to the change in in structural hold that you're making. It looks like there's been swaps in the UK and Australia and down in international perhaps. Perhaps you can just explain that. If I've got it right, even? And how you – how that's impacting the recycling that you're seeing? Thanks a lot.

Yes. Good morning, Joe. The important factor to remember in India is that we saw a shift in the tax from GGR to deposits. And we mentioned, I think, last time we talked about this, that we anticipated that we would get the business back to sort of positive growth towards the end of the year. And I think we still stand by that. So the material impact here is the impact on the change in tax rates in India. I mean on an underlying basis, the business is performing very well, and we're very pleased with the changes we've made to our rate to deposit ratio. So, I think India is performing well. Of course, we are benefiting somewhat from the earlier IPL, but I think the business is standing in good stead. Paul, you want to talk about what we're seeing from a structural hold perspective?

Yes. Thanks, Peter. So in terms of the structural hold, we're seeing the benefits of more poles and also BetBuilder, in the UK and I, in particular, and greater efficiency in our promotional expense. So that is all continuing to drive up margins. Of course, we're trying to keep that at the right level. I don't want that to go too high, but we're happy where it is for now.

Thank you, Joe.

Thanks.

There are no further questions at this time. So I'd like to hand back to presenters.

Okay. Well, I think we've rattle through lots of questions from me this morning. Thank you very much for taking the time. For those of you, who are in the U.S., thank you for getting up so early to accommodate us. We appreciate it. And if there's anyone to follow up with us, we are always here for you. Thank you.

Thanks, everyone.