Flutter Entertainment plc

1. DESCRIPTION OF BUSINESS

Flutter Entertainment plc (the “Company” or “Flutter”) and its subsidiaries (together referred to as the “Group”) is a global online sports betting and iGaming entity, operating some of the world’s most innovative, diverse and distinctive online sports betting and gaming brands such as FanDuel, Sky Betting & Gaming, Sportsbet, PokerStars, Paddy Power, Sisal, tombola, Betfair, TVG, Junglee Games, Adjarabet and MaxBet. As of June 30, 2024, the Group offered its products inover 100 countries.

The Group is a public limited company incorporated in the Republic of Ireland.

Public Listing on the New York Stock Exchange (“NYSE”)

On January 29, 2024, the Group completed its registration process with the United States Securities and Exchange Commission (“SEC”), and listed on the New York Stock Exchange (“NYSE”) for public trading. On May 31, 2024, the Group moved its primary listing to the NYSE following the approval of shareholders at the Company’s Annual General Meeting held on May 1, 2024. In addition, the Group maintains a listing on the main market of the London Stock Exchange (“LSE”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

— These unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting and the rules and regulations of the SEC. As such, certain notes or other information that are normally required by U.S. GAAP have been omitted if they substantially duplicate the disclosures contained in the Group’s audited consolidated financial statements as of and for the year ended December 31, 2023. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Group’s consolidated financial statements included in our Annual Report on Form

10-K

for the fiscal year ended December 31, 2023, as filed with the SEC on March 26, 2024 (the “2023 Annual Report”). These condensed consolidated financial statements are unaudited; however, in the opinion of management, they include all normal and recurring adjustments necessary for a fair presentation of the Group’s unaudited condensed consolidated financial statements for the periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year, due to seasonal fluctuations in the Group’s revenue as a result of the timing of various sports seasons, sporting events and other factors.

Recent Accounting Pronouncements Adopted

In January 2024, the Group adopted Accounting Standards Update ASU

2022-03,

Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance in Accounting Standards Codification Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions and Leases (Topic 842): Common Control Arrangements (ASU

2023-01),

which requires leasehold improvements associated with common control leases to be amortized over the useful life to the common control group. The new standards did not have material impact on the Group’s unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU

2023-07,

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. This ASU is effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. While the Group is continuing to assess the timing of adoption and the potential impacts of ASU

2023-07,

it does not expect ASU

2023-07

to have a material effect, if any, on its consolidated financial statements.

In March 2024, the FASB issued ASU

2024-01,

Compensation – Stock Compensation (Topic 718): which clarifies how an entity determines whether a profit interest or similar award is (1) within the scope of ASC 718 or (2) not a share-based payment arrangement and therefore within the scope of other guidance. The ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years with early adoption permitted. While the Group is continuing to assess the timing of adoption and the potential impacts of ASU

2024-01,

it does not expect ASU

2024-01

to have a material effect on the Group’s consolidated financial condition, results of operations or cash flows.

3. SEGMENTS AND DISAGGREGATION OF REVENUE

The Group reports its financial statements based onfour reportable segments:

The segment information aligns with how the chief operating decision maker (“CODM”) reviews and manages the business. The Group determined that it is the Chief Executive Officer and Chief Financial Officer jointly who are performing the function of CODM.

Beginning January 1, 2024, the Group revised its definition of Adjusted EBITDA, which is the segment measurement used to evaluate performance and allocate resources. The definition of Adjusted EBITDA now excludes share-based compensation as management believes inclusion of share-based compensation can obscure underlying business trends as share-based compensation could vary widely among companies due to different plans in place resulting in companies using share-based compensation awards differently, both in type and quantity of awards granted.

Effective January 1, 2024, subsequent to the Group’s decision to close the sports betting platform “FOX Bet”, the Group reorganized how the PokerStars (U.S.) business is managed which resulted in a change in operating segment composition. From January 1, 2024, PokerStars (U.S.) is included in the International segment as opposed to the U.S. segment.

Segment results for the three and six months ended June 30, 2023, have been revised to reflect the change in operating segment measurement and change in operating segment composition.

The Group manages its assets on a total company basis, not by operating segment. Therefore, the CODM does not regularly review any asset information by operating segment and accordingly, the Group doesnot report asset information by operating segment.

The following tables present the Group’s segment information:

iGaming revenue includes Poker and Lottery.

The information below summarizes revenue by geographical market for the three and six months ended June 30, 2024 and 2023:

The information below shows the reconciliation of reportable segment Adjusted EBITDA to income (loss) before income taxes for the three and six months ended June 30, 2024 and 2023:

4. OTHER (EXPENSE) INCOME, NET

The following table shows the detail of other expense, net for the three and six months ended June 30, 2024 and 2023:

5. INTEREST EXPENSE, NET

The following table shows the detail of interest expense, net for the three and six months ended June 30, 2024 and 2023:

6. INCOME TAXES

For interim income tax reporting the Group estimates its annual effective tax rate and applies it to its

year-to-date

ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about beginning of year valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. The Group’s effective income tax rate was a provision of 15.1% on profit before income taxes for the three months ended June 30, 2024 (provision of 57.3% on profit before income taxes for the three months ended June 30, 2023) and was a provision of 36.0% on profit before income taxes for the six months ended June 30, 2024 (provision of 2,250.0% on loss before income taxes for the six months ended June 30, 2023). The difference in the effective income tax rate compared to the Irish corporation trading tax rate of 12.5% primarily reflects the tax impact of the impact of amortization of acquired intangibles and profit mix across jurisdictions, as well as the tax impact of discrete adjustments which includes our loss making jurisdictions and the fair value loss on Fox Option Liability.

The Group doesnot expect there to be any material changes to its existing unrecognized tax benefits over the next 12 months, due to the current position with taxing authorities. The Group regularly reviews its tax position on the basis of current law.

The Organization for Economic Cooperation and Development (OECD) is coordinating negotiations to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2). Certain aspects of Pillar 2 became effective from January 1, 2024 and other aspects are effective from January 1, 2025. The Group does not expect Pillar 2 to have a material impact on its effective tax rate, however as this legislation is enacted in jurisdictions in which the Group operates, transitional rules lapse, and other provisions of Pillar 2 become effective, we expect that our effective tax rate and cash tax payments may increase in future years. Under US GAAP, the OECD Pillar 2 rules are considered an alternative minimum tax and therefore deferred taxes would not be recognized or adjusted for the estimated effects of the future minimum tax.

7. EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of the Group’s basic and diluted net earnings (loss) per ordinary share attributable to the Group:

The number of options excluded from the diluted weighted average number of ordinary share calculation due to their effect being anti-dilutive as the assumed proceeds were greater than the average market price was 458,811 and 462,122 for the three and six months ended June 30, 2024 respectively (2023:179,280 and 2,329,480 for the three and six months ended June 30,

respectively).

8. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables presents the changes in accumulated other comprehensive income / (loss) by component for the three and six months ended June 30, 2024 and 2023:

9. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following as of June 30, 2024, and December 31, 2023:

10. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following as of June 30, 2024, and December 31, 2023:

Loss contingencies include accruals related to regulatory investigations and proceedings including those relating to gaming taxes to the extent to which they may apply to our business and industry.

The Group includes contract liability in relation to sports betting open positions in the Consolidated Balance Sheet. The contract liability balance was as follows:

Due to the short term nature of our contract liabilities, a substantial portion of the contract liability at the beginning of the period is recognized in revenue in the immediately subsequent reporting period.

11. BUSINESS COMBINATIONS

MaxBet

On January 10, 2024, the Group completed the acquisition of 51% of MaxBet, a leading omni-channel sports betting and iGaming operator in Serbia. The purchase comprised of a provisional cash consideration of $144 million (€132 million), which remains subject to the finalization of the completion accounts as defined in the share purchase agreement and any consequent adjustment to the provisional purchase consideration.

The share purchase agreement also includes call and put options to acquire the remaining 49% stake. The call and put options are exercisable in 2029, commencing on the date on which the option price is determined in accordance with the terms set out in the shareholders agreement and ending on a date that is 30 days thereafter. The options expire if neither the Group nor the

interest shareholder groups exercise the options within the option exercise period. The option price is calculated using a multiple of MaxBet’s EBITDA less net debt or plus net cash, as defined in the shareholders agreement, subject to a cap calculated as $7 billion (€6 billion) less the purchase consideration. The options can be settled, at the Group’s election, in cash or freely tradable shares of Flutter.

The provisional fair value of assets and liabilities acquired was $118 million which comprised of identifiable intangible assets of $135 million consisting primarily of $100 million of trademark and $22 million of customer relations. The provisional measurements of fair value for certain assets and liabilities may be subject to change as additional information is received. The Group expects to finalize the valuation as soon as practicable, but not later than one year from acquisition date.

The acquisition resulted in the recognition of $116 million goodwill on the acquisition date which has been allocated to the International segment and reporting unit. The main factors leading to the recognition of goodwill (none of which is deductible for tax purposes) is the opportunity for the Group to enter the market in the Balkans region where MaxBet is one of the market leaders with an established retail and online presence. There are also tangible opportunities to deliver synergies from the acquisition of MaxBet through (i) leveraging MaxBet’s retail channel to grow online deposits for existing Flutter brands and (ii) enhancing MaxBet’s online capabilities by utilizing the Group’s technology and marketing resources.

The fair value of redeemable

interest was $89 million, which was provisionally estimated by applying a discount for lack of marketability of 20% considering the output of the Finnerty method and discount for lack of control of 20% using implied discounts from observable transactions and data based on Mergerstat studies.

Acquisition-related costs during the three months ended and six months ended June 30, 2024 and June 30, 2023 were not material and are included in the general and administrative expenses in the Group’s consolidated statement of comprehensive (loss) / income.

Since the date of acquisition to June 30, 2024, MaxBet has contributed revenue of $99 million and $8 million of profit after tax to the results of the Group. For the three months ended June 30, 2024, MaxBet contributed revenue of $52 million and $5 million of profit after tax to the results of the Group.

BeyondPlay

On May 31, 2024, the Group completed the acquisition of 100% of BeyondPlay for a consideration of $26 million. The provisional fair value of the assets and liabilities acquired was $17 million which comprised of technology intangibles of $18 million and deferred tax liability of $1 million. The acquisition resulted in the recognition of $9 million of goodwill which has been allocated to the U.S. segment. The contribution of BeyondPlay to the revenue and profit after tax of the Group was not material.

Considering that the size of the acquisitions are not material, no additional pro-forma information is

provided

.

12. LONG-TERM DEBT

The Group’s debt comprised of the following:

As of June 30, 2024, the contractual principal repayments of the Group’s outstanding borrowings, excluding accrued interest, amount to the following:

During the six months ended June 30, 2024, the Group has drawn $126 million (June 30, 2023: $609 million) and repaid $851 million (June 30, 2023: $687 million) under the GBP revolving credit facility. The Group had an undrawn revolving credit commitment of $1.3 billion (£1 billion) as of June 30, 2024 (December 31, 2023: $537 million (£422 million)), of which $13 million (December 31, 2023: $13 million) was reserved for issuing guarantees.

On March 14, 2024, the Group entered into the First Incremental Assumption Agreement (the “Assumption Agreement”) to the TLA/TLB/RCF Agreement dated as of November 24, 2023 (as amended, the “Credit Agreement”). After giving effect to the Assumption Agreement, the aggregate principal amount of Term B loans outstanding under the Credit Agreement increased by $514 million (the “First Incremental Term B Loans”), which is fungible with the existing Term B loans outstanding under the Credit Agreement. The proceeds of the First Incremental Term B Loans were used to refinance the USD First Term Loan B due 2028. As the terms of First Incremental Term B Loans were not substantially different from those of the original USD First Lien Term Loan B due 2028, the refinance was treated as continuation of the original debt instrument for accounting purposes.

On April 29, 2024, the Group issued $525 million aggregate principal amount of

USD-denominated

senior secured notes due 2029 (the “USD Notes”) and €500 million aggregate principal amount of

EUR-denominated

senior secured notes due 2029 (the “EUR Notes” and, together with the USD Notes, the “Notes”), each issued at 100% of their nominal par value, by its subsidiary Flutter Treasury DAC. The Group used the proceeds of the Notes to repay the EUR First Lien Term Loan B due 2026 under the existing syndicated facility agreement dated July 10, 2018, and to repay borrowings under the GBP Revolving Credit Facility due 2028, and pay certain costs, fees and expenses in connection with the offering of the Notes. The Group incurred issuance costs amounting $13 million in connection with the Notes which has been reduced from the debt’s initial net carrying amount and amortized as additional interest expense over the life of the debt. The Group recognized an extinguishment loss of $5 million on repayment of the EUR First Lien Term Loan B due 2026 during the three and six months ended June 30, 2024.

The USD Notes have interest at a rate of 6.375% per annum and the EUR Notes bear interest at a rate of 5.000% per annum, both payable semi-annually in arrears. The Notes are senior secured obligations and rank pari passu in right of payment with all existing and future senior debt. The Notes are secured on a first-ranking basis by security interests granted over the collateral that also secure, as applicable, the obligations of the Group under the Credit Agreement.

Prior to April 15, 2026, the Group is entitled, at its option, to redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of such Notes being redeemed, plus accrued and unpaid interest and additional amounts, if any, to, but excluding the date of the redemption, plus a make-whole premium. In addition, prior to April 15, 2026, the Group is entitled to redeem up to 40% of the aggregate principal amount of each series of Notes using the net cash proceeds from certain equity offerings at a price equal to 106.375% of the principal amount of the USD Notes and 105% of the principal amount of the EUR Notes being redeemed, plus accrued and unpaid interest and additional amounts, if any, to, but excluding the date of the redemption, subject to certain conditions set forth in the Indenture that governs the Notes. Furthermore, at any time prior to April 15, 2026, the Group is entitled, during each twelve month period commencing April 29, 2024, redeem up to 10% of the aggregate principal amount of each series of Notes at a redemption price equal to 103% of the principal amount redeemed, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the date of redemption. On or after April 15, 2026, the Group may redeem some or all of the Notes at redemption prices as set forth in the Indenture that governs the Notes.

Following repayment of the EUR First Lien Term Loan B due 2026 and the USD First Lien Term Loan B due 2028, the facilities under the Credit Agreement and the Notes are secured by a first priority security interest (subject to permitted liens) (x) in respect of obligors organized or incorporated outside of the United States, over the shares held by an obligor in another obligor and (y) in respect of obligors organized or incorporated in the United States, substantially all of our assets (subject to certain exceptions), in each case, in accordance with the Agreed Guarantee and Security Principles (as defined in the Credit Agreement).

As of June 30, 2024, the Group was in compliance with all debt covenants.

13. DERIVATIVES

In the normal course of the Group’s business operations, it is exposed to certain risks, including changes in interest rates and foreign currency risk. In order to manage these risks, the Group uses derivative instruments such as futures, forward contracts, swaps, options and other instruments with similar characteristics. All of the Group’s derivatives are used for

non-trading

activities.

Cash flow hedges of interest rate and foreign currency risk

Interest rate and foreign currency risk arising from a portion of the Group’s floating interest rate USD First Lien Term Loan B maturing in 2030 and foreign currency risk arsing from the Group’s fixed rate USD Senior Secured Notes maturing in 2029 are managed using interest rate swaps and cross-currency interest rate swaps, which are designated as cash flow hedges with the objective of reducing the volatility of interest expense and foreign currency gains and losses in the case of the USD First Lien Term Loan B maturing in 2030 and foreign currency risk in case of fixed rate USD Senior Secured Notes maturing in 2029.

Under the terms of the cross-currency interest rate swaps designated as a hedge of the interest rate and foreign currency risk arising from USD First Lien Term Loan B maturing in 2030, the Group makes fixed rate interest payments and principal repayments in pounds sterling (GBP) and receives variable interest amounts in U.S. dollars (USD) from counterparties over the life of the agreements effectively converting the variable rate term loans into fixed interest rate debts with the exchange of the underlying notional amounts over the term of the loan whereby the Group will receive USD from and pay GBP to the counterparties at exchange rates which are determined at contract inception. Under the terms of the interest rate swaps designated as a hedge of the interest risk arising from the USD First Lien Term Loan B maturing in 2030, the Group makes fixed rate interest payments and receives variable interest amounts in USD from counterparties over the life of the agreements, effectively converting the variable rate term loans into fixed interest rate debt. Under the terms of the cross-currency interest rate swaps designated as a hedge of the foreign currency risk arising from the USD Senior Secured Notes maturing in 2029, the Group makes fixed interest rate payment in GBP and receives fixed interest rate payments in USD with the exchange of the underlying notional amounts at maturity whereby the Group will receive USD from and pay GBP to the counterparties at exchange rates which are determined at contract inception, thereby effectively converting the USD Senior Secured Notes to GBP Senior Secured Notes.

The notional amount of cross-currency interest rate swaps accounted for as cash-flow hedges was of foreign currency and interest rate risk on the USD First Lien Term Loan B was $1,595 million as of June 30, 2024, and $1,603 million as of December 31, 2023 with maturities of ranging from September 30, 2024 to June 30, 2025. The notional amount of interest-rate swaps accounted for as cash-flow hedges was $1,089 million as of June 30, 2024 and $1,094 million as of December 31, 2023 with maturities ranging from September 30, 2024 to June 30, 2025. The notional amount of cross-currency interest rate swaps accounted for as cash-flow hedges of foreign currency risk on the fixed rate USD Senior Secured Notes was $525 million as of June 30, 2024 and $0 as of December 31, 2023 maturing on April 15, 2026. Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in other comprehensive

, until earnings are affected by the variability of cash flows. Amounts recorded in accumulated other comprehensive

were recognized in earnings within interest expense, net when the hedged interest payment was accrued. In addition, since the cross-currency interest rate swaps was a hedge of variability of the functional-currency-equivalent cash flows of the recognized term loan liability remeasured at spot exchange rates under ASC 830, “Foreign Currency Matters,” an amount that offset the gain or loss arising from the remeasurement of the hedged term loan liability was reclassified each period from accumulated other comprehensive

to earnings in the

foreign exchange (loss) gain, net, which is a component of other (expense) income, ne

t.

The amount reclassified from accumulated other comprehensive income / (loss) into earnings was a net loss of $12 million for the three months ended June 30, 2024, and a net loss of $41 million for the three months ended June 30, 2023 and a net gain of $2 million for the six months ended June 30, 2024 (net loss of $84 million for the six months ended June 30, 2023).

The Group expects to reclassify a gain of $5

million from accumulated other comprehensive income (loss) into earnings within the next 12 months.

Net investment hedge

The Group has investments in various subsidiaries which form part of the Group’s International segment with Euro functional currencies. As a result, the Group is exposed to the risk of fluctuations between the Euro and GBP exchange rates. The Group designated its EUR First Lien Term Loan A maturing in 2028, EUR First Term Loan B maturing in 2026 (repaid in full on April 29, 2024

)

(the EUR First Lien Term Loan A maturing in 2028 together with the EUR First Term Loan B maturing in 2026, the EUR Term Loans), the EUR Senior Notes due 2029 and receive fixed rate, pay fixed rate cross-currency interest swaps whereby the Group will receive GBP from and pay Euro to the counterparties at exchange rates which are determined at contract inception, as a net investment hedge which are intended to mitigate foreign currency exposure related to

non-GBP

net investments in certain Euro functional subsidiaries.

As of June 30, 2024, the nominal exposures of EUR First Lien Term Loan A and EUR Senior Notes designated as net investment hedges was $408 million and $500 million respectively. The nominal exposures of the EUR Term Loans was $980 million as of December 31, 2023. The designated hedge amounts were considered highly effective. The Group has also designated certain EUR cross currency interest rate swap contracts in net investment hedging relationships. The notional amount of cross-currency swaps accounted for as net investment hedges was $347 million as of June 30, 2024 and $359 million as of December 31, 2023. The designated hedge amounts were considered highly effective.

The foreign currency transaction gains and losses on the euro-denominated portion of the term loan and the cross-currency interest swaps, which are designated and effective as a hedge of the Group’s net investment in its euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Gains, net of tax, included in the foreign currency translation adjustment were $50 million for the three months ended June 30, 2024 (gains, net of tax amounting to $8 million for the three months ended June 30, 2023), and gain, net of tax amounting to $29 million for the six months ended June 30, 2024 (gain, net of tax amounting to $12 million for the six months ended June 30, 2023). There wereno amounts reclassified out of accumulated other comprehensive income (“AOCI”) pertaining to the net investment hedge during the three months ended June 30, 2024, and 2023 as the Group has not sold or liquidated (or substantially liquidated) its hedged subsidiaries.

Economic hedges

The Group uses cross-currency interest rate swaps to economically hedge the Group’s net foreign currency exposure arising from 1) the risk of fluctuations between the EUR and GBP exchange rates from the Group’s investment in various subsidiaries which form part of the Group’s International segment and 2) the risk of fluctuations between the USD and GBP exchange rates arising from the portion of the Group’s USD Term Loan that is not designated in a cash flow hedge. The cross-currency interest rate swaps are also used to manage the interest rate risk arising from the portion of the Group’s USD Term Loan that is not designated in a cash flow hedge. Under the terms of the cross-currency interest rate swaps, the Group makes fixed-rate interest payments in EUR and receives variable interest amounts in USD from counterparties over the life of the agreements effectively converting the variable rate debt into fixed interest rate debt with the exchange of the underlying notional amounts at maturity whereby the Group will receive USD from and pay EUR to the counterparties at exchange rates which are determined at contract inception. Changes in the fair value of these instruments are recorded in earnings throughout the term of the cross-currency interest rate swaps and are reported in other income, net in the Condensed Consolidated Statements of Comprehensive (Loss) Income. As of June 30, 2024, the cross-currency interest rate swaps are set to mature in September 2024.

The following table summarizes the fair value of derivatives as of June 30, 2024 and December 31, 2023:

14. SHARE-BASED COMPENSATION

During the three and six months ended June 30, 2024, the Group granted 52,902

options under the Flutter Entertainment plc 2015 Deferred Share Incentive Plan at the weighted average grant date fair value of $

207.70

and,

7,466

options under the Flutter Entertainment plc 2022 Supplementary Restricted Share Plan at the weighted average grant date fair value of $

200.14

. The fair value of the options granted was based on the quoted trading price of the Group’s share on the date of the grant.

In the three and six months ended June 30, 2024,

792,246

options were also granted under the Flutter Entertainment plc 2016 Restricted Share Plan. Of the options awarded under the Flutter Entertainment plc 2016 Restricted Share Plan,

197,519 options have a market condition based on the Total Shareholder Return (TSR) relative to the TSR performance of the S&P 500 equity index. This market condition was directly factored into the fair value-based measure of the award at the grant date. The Group engaged a third-party valuation specialist to provide a fair value for the awards using a Monte Carlo simulation model. The key inputs in the model were the expected weighted-average volatility of 35.58

% and the weighted-average share price of the Group at the date of grant of the award of $

196.70. The weighted-average fair value of the awards at the grant date was $73.98

. The remaining 594,727 options had a weighted average grant date fair value of $194.08 based on the quoted trading price of the Group’s share on the date of the grant.

For the three and six months ended June 30, 2024, the Group granted a further

45,733 share options with a nominal exercise price under the 2023 Long Term Incentive Plan. The Group engaged a third-party valuation specialist to provide a fair value for the awards using a Monte Carlo simulation model. The key inputs in the model were the expected weighted-average volatility of 39.94% and the share price of the Group at the date of grant of the award of $180.70. The weighted-average fair value of the awards at grant date was $62.14.

On June 26, 2024, the Board adopted the Flutter Entertainment plc 2024 Omnibus Equity Incentive Plan (the “2024 Incentive Plan”) as a vehicle to continue granting equity to the Group, and the Group’s affiliates’, current and prospective employees, together with officers,

non-employee

directors and consultants. The 2024 Incentive Plan provides for an initial share pool of 1,770,000 shares, with such reserve amount to be reduced by the number of shares (if any) covered by awards granted under the Group’s legacy equity-based incentive plans (including the Sharesave Scheme).

During the three months ended, June 30, 2023, the Group adopted the Flutter Entertainment plc 2023 Long Term Incentive Plans (“2023 LTIP”) which enables the Group to grant share awards and nil cost options with a single award vesting in tranches (if the relevant performance conditions are met) after the end of the performance period applicable to the tranche. Awards granted under the 2023 LTIP have a performance period of not less than three years. The awards granted under the 2023 LTIP have a market condition based on the Total Shareholder Return (“TSR”) relative to the FTSE 100 (excluding house builders, real estate investment trusts and natural resources companies). This market condition was directly factored into the fair-value-based measure of the award. The Group granted 44,820 share options with a nominal exercise price under the 2023 LTIP. The Group engaged a third party valuation specialist to provide a fair value for the awards using a Monte Carlo simulation model. The key inputs in the model were the expected weighted-average volatility of 35.91% and the share price of the Group at the date of grant of the award of $199.22. The weighted-average fair value of the awards at the grant date was $111.60. The performance targets associated with a further 134,460 share options were not determined as of June 30, 2023 and as a result no grant date has been established under ASC 718 andno compensation cost recognized in the period ended June 30, 2023.

In respect of other employee share schemes, for the three months ended June 30, 2023, the Group granted 7,813 restricted awards and share options with a nominal exercise price (six months ended June 30, 2023:34,419 restricted awards and share options with a nominal exercise price). The weighted-average grant date fair value of awards granted in the period under other plans was $

214.77

(six months ended June 30, 2023: $163.75) based on the quoted trading price of the Group’s share on the date of the grant.

For the six months ended June 30, 2023, the Group granted 519,212 restricted awards and 469,084 share options with a nominal exercise price under the Flutter Entertainment plc 2016 Restricted Share Plan. The weighted-average grant date fair value of awards granted in the period was $171.53 based on the quoted trading price of the Group’s share on the date of the grant.

As of June 30, 2024,3,963,314 restricted awards and options were outstanding across all employee share schemes.

Total compensation cost arising from employee share schemes for the three and six months ended June 30, 2024, and June 30, 2023, was $59 million and $64 million, and $100 million and $110

million respectively in the Condensed Consolidated Statements of Comprehensive (Loss) Income.

15. FAIR VALUE MEASUREMENTS

The following tables set forth the fair value of the Group’s financial assets, financial liabilities and redeemable

interests measured at fair value based on the three-tier fair value hierarchy:

In accordance with subtopic

360-10,

Pokerstars’ trademark held and used with a carrying amount of $1,093 million was written down to its fair value of $368 million, in the fourth quarter of 2023 resulting in an impairment of $725 million, which was included in sales and marketing expenses. The Group utilized the relief from royalty method under the income approach to estimate the fair value. Assumptions inherent in estimating the fair value included revenue forecast, royalty rate of 5.0%, income tax rate of 12.5%, and discount rate of 12.5%. The Group selected the assumptions used in the financial forecasts of cash flows specific to the remaining useful life of the trademark using historical data, supplemented by current and anticipated market conditions and estimated growth rates. Financial forecasts beyond the period covered by the plans were estimated by extrapolating the forecasts based on the plans using a steady growth in line with the long-term average growth for the countries in which the trademark is used. As the fair value measurements were based on significant inputs not observable in the market, they represented Level 3 measurements within the fair value hierarchy. There wereno transfers between levels of the fair value hierarchy during the three and six months ended June 30, 2024, and December 31, 2023.

Valuation of Level 2 financial instruments

Available for sale – Player deposits – investments

The Group has determined that the fair value of available for sale – player deposits – investments is determined by using observable quoted prices or observable input parameters derived from comparable bonds/markets. Although the Group has determined that a number of the bonds fall within Level 1 of the fair value hierarchy, there are a class of bonds which have been classified as Level 2 due to the existence of relatively inactive trading markets for those bonds.

Derivative financial assets and liabilities – Swap agreements

The Group uses derivative financial instruments to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis of the expected cash flows of each derivative and incorporates credit valuation adjustments. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, such as yield curves, spot and forward FX rates.

As of June 30, 2024, the Group assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions, determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Group determined that its valuations of its derivatives in their entirety are classified in Level 2 of the fair value hierarchy.

Valuation of Level 3 financial instruments

Equity securities

The Group determined the fair value of investments in equity securities that do not have a readily available market value amounting to $7 million at June 30, 2024 (December 31, 2023: $9 million) using the Market Comparable Companies Approach based on EBITDA multiple. The movement in the fair value of equity securities for the three and six months ended June 30, 2024 and 2023 was immaterial.

Non-derivative

financial instruments

Fox Option

The fair value of the Fox Option amounts to $490 million at June 30, 2024 and $400 million at December 31, 2023 which was determined using an option pricing model. As of June 30, 2024, and December 31, 2023, the option price was $4.4 billion and $4.3 billion, respectively. The significant unobservable inputs were the enterprise value of FanDuel, the discount for lack of marketability (“DLOM”), the discount for lack of control (“DLOC”), implied volatility and probability of Fox getting licensed.

The enterprise value of FanDuel was determined using an equal weight to the value indications of the discounted cash flow analysis and the guideline public company analysis. The discount rate used in the discounted cash flow analysis was 21.0% and 19.0% as of June 30, 2024 and as of December 31, 2023, respectively.

Additionally, management applied a combined 35.0% discount for lack of marketability and lack of control as of June 30, 2024, and as of December 31, 2023. A range of DLOMs obtained using various securities-based approaches was 12.4% to 19.2%. DLOC was estimated at 18.4% using implied discounts in previous observable transactions involving FanDuel’s equity ownership and data based on Mergerstat studies as of June 30, 2024, and as of December 31, 2023 respectively.

Management selected a discount rate of 35.0%, which is on the higher end of the third quartile based on the ranges considered by management.

The volatility was 35.0% and 36.0% as of June 30, 2024 and year ended December 31, 2023, which was within the range of selected comparable companies. In developing the fair value measurement, the probability of a market participant submitting to and obtaining a license was estimated at 75.0% as of June 30, 2024, and as of December 31, 2023.

Changes in discount rates, revenue multiples, DLOM, DLOC, implied volatility and probability of Fox getting licensed, each in isolation, may change the fair value of the Fox Option. Generally, an increase in discount rates and DLOM, DLOC or decrease in revenue multiples, implied volatility and probability of Fox getting licensed may result in a decrease in the fair value of the Fox Option. Due to the inherent uncertainty of determining the fair value of the Fox Option, the fair value of the Fox Option may fluctuate from period to period. Additionally, the fair value of the Fox Option may differ significantly from the value that would have been used had a readily available market existed for FanDuel Group LLC. In addition, changes in the market environment and other events that may occur over the life of the Fox Option may cause the losses ultimately realized on the Fox Option to be different than the unrealized losses reflected in the valuations currently assigned.

Redeemable

interests at fair value

The terms of symmetrical call and put options agreed between the Group and Boyd require exercise price to be calculated at fair market value without giving effect to DLOM and DLOC. FanDuel’s

pre-discount

enterprise value determined in the same manner as discussed earlier for June 30, 2024 and December 31, 2023 is considered in measuring the fair value of redeemable

interests owned by Boyd.

Contingent consideration

The contingent consideration payable is primarily determined with reference to forecast performance for the acquired businesses during the relevant time periods and the amounts to be paid in such scenarios. The fair value was estimated by assigning probabilities to the potential payout scenarios. The significant unobservable inputs are forecast performance for the acquired businesses.

The fair value of contingent consideration is primarily dependent on forecast performance for the acquired businesses in excess of a predetermined base target. An increase and decrease of 10% in the excess over the predetermined base target during the relevant time periods would increase and decrease the value of contingent consideration at June 30, 2024 by $2 million and $2 million, respectively (December 31, 2023: $2 million and $2 million).

Movements in the three months period in respect of Level 3 financial instruments carried at fair va

lu

e

The movements in respect of the financial assets and liabilities carried at fair value are as follows:

16. COMMITMENTS AND CONTINGENCIES

Guarantees

The Group has uncommitted working capital overdraft facilities as of June 30, 2024 of $21 million (December 31, 2023: $21 million) with Allied Irish Banks p.l.c. These facilities are secured by a Letter of Guarantee from Flutter Entertainment plc.

The Group has bank guarantees: (i) in favor of certain gaming regulatory authorities to guarantee the payment of player funds, player prizes, and certain taxes and fees due by a number of Group companies; and (ii) in respect of certain third-party rental and other property commitments, merchant facilities and third-party letter of credit facilities. The maximum amount of the guarantees as of June 30, 2024 was $327 million (December 31, 2023: $322 million). No claims had been made against the guarantees as of June 30, 2024 (December 31, 2023: $0). The guarantees are secured by counter indemnities from Flutter Entertainment plc and certain of its subsidiary companies. The value of cash deposits over which the guaranteeing banks hold security was $52 million as of June 30, 2024 (December 31, 2023: $29 million).

Other purchase obligations

The Group is a party to several

non-cancelable

contracts with vendors where the Group is obligated to make future minimum payments under the terms of these contracts as follows:

Legal Contingencies

The Group is involved, from time to time, in various litigation, administrative and other legal proceedings, including regulatory actions, incidental or related to its business. The Group establishes an accrued liability for legal claims and indemnification claims when the Group determines that a loss is both probable and the amount of the loss can be reasonably estimated. The estimates are based on all known facts at the time and our assessment of the ultimate outcome. As additional information becomes available, the Group reassesses the potential liability related to our pending claims and litigation, which may also revise our estimates. The amount of any loss ultimately incurred in relation to these matters may be higher or lower than the amounts accrued. Due to the unpredictable nature of litigation, there can be no assurance that our accruals will be sufficient to cover the extent of our potential exposure to losses. Any fees, expenses, fines, penalties, judgments, or settlements which might be incurred by us in connection with the various proceedings could affect our results of operations and financial condition.

Austrian and German player claims

As previously reported, the Group has seen a number of player claims in Austria and Germany for reimbursement of historic gaming losses. The basis of these claims is rooted in the Group having provided remote services in Austria and Germany (outside of Schleswig-Holstein) from Maltese entities on the basis of multi-jurisdictional Maltese licenses, which the Group continues to believe is compliant in accordance with EU law. However, the Austrian Courts and certain German Courts consider the Group’s services

non-compliant

with their respective local laws. The Group strongly disputes the basis of these claims and judgements made by Austrian and German courts in awarding the player’s claims.

As of June 30, 2024, the Group expects to settle claims amounting to €13 million ($14 million) and has recognized an accrued liability within loss contingencies forming part of other current liabilities. It is reasonably possible that the actual losses could be in excess of the Group’s accrual. The Group is unable to estimate a reasonably possible loss or range of loss in excess of its accrual due to the complexities and uncertainty around the judicial process. In addition, there are further claims made against the Group amounting to €43 million ($46 million) as of June 30, 2024, the settlement of which is predicated on the merits of the case and whether the enforcement proceedings are successful in laying claim over the Group’s Maltese assets for settlement of these claims. The Group, based on advice from its legal counsel, believes such cross-border enforcement of judgements is in contravention to Maltese public policy and Regulation (EU) 1215/2012 and has not accrued any liability for these claims. The Group has filed countersuits before the Maltese Civil Court for setting aside these claims. The defendants have also filed garnishee orders with the Maltese Civil Court to attach the Group’s Maltese assets, some of which have already been declined by the Maltese Civil Court. Should the Maltese Courts decide in favor of the Group, there would be grounds for dismissal of all pending player claims instituted against the Group.

While the Group believes that it has strong arguments, at this time, the Group is unable to reasonably estimate the likelihood of the outcome due to the complexities and uncertainty around the judicial process.

Tax dispute in relation to operations in Italy

As previously reported, the Italian Tax Police initiated an investigation of the operations conducted by PokerStars business in Italy (hereinafter referred to as ‘PS Italy’), alleging that PS Italy’s server infrastructure located in Italy amounts to an Italian permanent establishment for corporate tax purposes. As of June 30, 2024, the Group has fully settled this tax dispute with the Italian Tax Authorities for an amount of €8 million ($9 million).

Goods and Services Tax (“GST”) rate applicable to operations in India

As previously reported, India’s Directorate General of Goods & Services Tax (the “DGGI”) is currently investigating the historical characterization of products such as rummy, fantasy games and poker as ‘games of skill’ (subjects to tax of

% on player commission) rather than ‘games of chance’ (subject to

% tax on player stakes). In making GST returns, Junglee and PokerStars India have consistently followed the Supreme Court of India’s rulings in relation to the distinction between games of skill and games of chance.

The DGGI has issued notices to multiple online gaming businesses alleging historical underpayment of GST, including to the Group’s operations in India (Junglee) of

₹

179.1

billion ($

2.1

billion). Junglee disputes that any additional tax is payable and has been advised that the notice received is not in accordance with the GST provisions applicable to past periods.

As of the date of issue of these unaudited condensed financial statements, Junglee is in the process of filing a petition with the Supreme Court of India, with the intention of joining its case to the cases of other online gaming operators pending at the Supreme Court of India. The lead case (The Directorate General of GST Intelligence vs. Gameskraft Technologies Private Limited) was ruled in favor of Gameskraft, the taxpayer, at the Karnataka High Court in May 2023, and found that taxes had been paid in accordance with the law, but the case remains unresolved at the Supreme Court of India.

On June 22, 2024, a meeting of India’s Goods and Services Tax Council (the “GST Council”) (a constitutional body responsible for the formation and recommendation of GST law changes, held by the Supreme Court of India to be the ultimate authority on the GST issues), recommended amending the GST law to empower the Indian Central Government, on the recommendation of the GST Council, to waive any historical taxes not paid, where the common trade practice was either:

The recommendation of the GST Council has been incorporated into the Finance Bill (the “Bill”) and is expected to be enacted during the third quarter of 2024.

Whilst the proposed law is not industry specific, if enacted and recommended by the GST Council to be applied to the online gaming industry, we would expect the

% GST already paid on commissions for past periods to be accepted as the applicable tax rate and the litigation will cease.

As of the date of issue of the unaudited condensed consolidated financial statements, no liability has been accrued as the Group has determined that it is not probable that a liability has been incurred considering the progress of the cases pending at the Supreme Court of India, decisions of the State High Courts in favor of the industry, the arguments of legal counsel representing the industry and the opinion of the Group’s own legal counsel.

The Group is unable to make an estimate of any reasonably possible loss or range of

losses

, if any, were there to be an adverse final decision in the cases pending before the Supreme Court of India associated with the notice received.

Others

During the three months ended June 30, 2024, no additional information has become available that would cause the Group to reassess the potential liability related to the Group’s pending claims and litigation in relation to the Group’s cybersecurity incident as disclosed in our 2023 Annual Report.

17. SUBSEQUENT EVENTS

The Group evaluated subsequent events through the date of issuance of the unaudited condensed consolidated financial statements. There were no events requiring disclosure.