FDJ United, the European gaming powerhouse, posted mixed results for Q1 2025, demonstrating resilience amid increasing regulatory pressures across key markets. While headline revenue figures showed impressive year-on-year growth, the company faces significant challenges in certain regions as it continues integrating its major Kindred acquisition and advancing its digital transformation agenda.
About FDJ United
FDJ United is the esports division of Française des Jeux (FDJ), the French national lottery and gaming operator. It was launched as part of FDJ’s strategic expansion into the rapidly growing world of competitive gaming. Established in 2017, FDJ United was created with the intention of bridging the gap between traditional gaming audiences and the emerging esports community. The team initially entered the scene through partnerships and tournaments, leveraging FDJ’s extensive expertise in entertainment and responsible gaming to create a trusted brand within esports. Its focus was not only on fielding competitive players but also on fostering a broader community through educational and promotional initiatives.
Over time, FDJ United evolved from a marketing initiative into a more structured esports presence. The team participated in multiple game titles, including popular ones like Counter-Strike: Global Offensive and FIFA, and worked closely with young talent to develop professional careers in esports. The brand also supported research into the psychological and behavioral aspects of competitive gaming, aligning with FDJ’s long-standing commitment to responsible gaming practices.
Q1 2025 Financial Performance: A Tale of Two Narratives
The French lottery and gaming giant reported first-quarter revenue of €925 million, representing a substantial 30% year-on-year increase compared to Q1 2024. However, this headline figure masks a more complex reality – when adjusted for the Kindred acquisition completed in late 2024, like-for-like revenue actually declined by 1%.
This modest contraction stems primarily from regulatory headwinds in key European markets, particularly the Netherlands and United Kingdom, where tightened gambling restrictions and increased taxation have significantly impacted performance. Despite these challenges, FDJ United’s Chief Executive Officer Stéphane Pallez maintained an optimistic outlook during the company’s April 15th earnings call.
Pallez stated:
FDJ United’s performance in the first quarter is in line with the trajectory planned for 2025. Against the backdrop of tougher regulation and taxation in some of its markets, it reflects good momentum in points of sale and an increase in the number of online active players in all its markets. Beyond this, the group is fully committed to the transformation associated with the implementation of its international and digital strategy.
The results position FDJ United to achieve its 2025 revenue target of €3.8 billion, building on 2024’s strong performance of €3.07 billion (which represented a 16.93% increase from 2023). The company’s projected EBITDA margin remains healthy at above 24%, demonstrating solid profitability despite market pressures.
Retail Strength Counters Online Challenges
A detailed breakdown of FDJ United’s Q1 performance reveals contrasting trends across business segments. French lottery and retail betting operations continued their strong momentum, generating €640 million in revenue – a 4% increase driven by a 6% rise in stakes. This retail resilience was bolstered by a record number of Euromillions jackpots during the quarter, which helped attract new players to both physical and digital channels.
Conversely, online operations faced significant challenges, with revenue declining 10% to €231 million. This drop was particularly pronounced in the Netherlands, where regulatory changes severely restricted monthly deposit limits and taxation increased from 30.5% to 34.2%, resulting in a dramatic 41% revenue plunge in that market. Similarly, UK operations saw revenue contract by 27% due to new responsible gambling regulations and challenging year-on-year comparisons.
Notably, excluding these two challenged markets, FDJ United’s online business would have registered 8% growth, highlighting the company’s strength in other territories. Online lottery revenue proved especially robust, climbing 14% to €79 million, while point-of-sale sports betting saw a modest 1% revenue decline despite increased stakes – a result of unfavorable betting outcomes for the operator.
Regulatory Headwinds Intensify Across Europe
The regulatory landscape for gambling operators has tightened considerably across multiple European markets, creating significant operational challenges for companies like FDJ United. In the Netherlands, which implemented substantial gambling reforms, net monthly deposit restrictions and a taxation increase to 34.2% have dramatically altered the market dynamics.
The Dutch government’s modernization of gambling legislation, which previously prohibited online gambling services, now heavily regulates providers with strict monitoring requirements aimed at ensuring fair play and preventing addiction. Under the new regime, gambling tax is levied at 29% on the service provider’s gross profit margin rather than on player winnings, fundamentally changing the economics of the Dutch market.
Similarly, the United Kingdom has enacted major gambling law reforms designed to protect vulnerable users in the smartphone era. These measures include mandatory levies on betting firms to fund addiction treatment, new player protection checks, and stake limits for online slots, including crypto slots. The UK Gambling Commission has also received expanded powers to enforce these regulations, recently demonstrating their authority by fining William Hill over £19 million for compliance failures.
These regulatory changes are having material financial impacts on FDJ United’s operations. The company estimates that increased taxes in France will impact earnings by approximately €45 million, while Dutch tax changes will cost an additional €10 million. In response, FDJ United has implemented €20 million in mitigation measures for 2025, with plans to expand these to €100 million by 2027.
Digital Transformation and Strategic Initiatives
Despite near-term challenges, FDJ United continues to advance its digital transformation agenda. The company has been focusing intensively on digital growth, with digital revenues expanding by over 25% year-over-year prior to the recent regulatory impacts. The FDG Emois project represents a cornerstone of this strategy, enabling omnichannel accounts that provide seamless integration between online play and point-of-sale experiences.
During Q1, FDJ United made significant progress in its digital platform rollout, finalizing account separation in France and completing the migration of 32Red systems in the UK. These developments align with the company’s broader vision of leveraging artificial intelligence and data analytics to transform operations and customer engagement.
The appointment of Sebastien Rozanes as Chief Digital Officer at the Executive Committee level underscores FDJ United’s commitment to digital innovation. Rozanes has emphasized AI and data as core pillars of the company’s strategy, positioning these technologies as critical enablers of future growth and operational efficiency.
Active Player Growth Demonstrates Digital Potential
Despite revenue challenges in certain markets, FDJ United saw encouraging growth in player engagement metrics during Q1 2025. The number of online active players increased by nearly 10% year-on-year across all markets, indicating strong underlying demand for the company’s digital offerings. This growth in the player base positions FDJ United favorably for future revenue recovery once market conditions stabilize.
Kindred Acquisition: Transformative Growth Opportunity
The Kindred Group acquisition, completed in October 2024, represents a transformative development for FDJ United’s market position in Europe. Through this €2.5 billion transaction, FDJ acquired 90.66% of Kindred’s capital, significantly expanding its geographical footprint and product portfolio.
The acquisition has positioned FDJ United as Europe’s highest-valued gambling public company, following competitor Flutter Entertainment’s move to the New York Stock Exchange. It has enabled FDJ to enter five new markets – the UK, Sweden, the Netherlands, Denmark, and Belgium – while adding prominent brands including Unibet, 32Red, Bingo.com, Maria.com, and games studio Relax Gaming to its portfolio.
FDJ initially proposed a cash offer of SEK 130 (€11.50) per share for Kindred, representing a 35% premium on the target company’s weighted average closing share price for 2023. The transaction received unanimous recommendation from Kindred’s Board of Directors and CEO Nils Andén, with regulatory approval granted on September 16, 2024.
While the acquisition creates tremendous growth opportunities, it also presents integration challenges that FDJ United continues to navigate. The company’s Q1 results reflect some of these difficulties, particularly in harmonizing operations across different regulatory environments.
Market Response and Financial Health
The market responded positively to FDJ United’s Q1 2025 results, with the stock rising 1.53% to close at 30.50 USD following the earnings announcement. This favorable reception came despite the mixed operational performance, suggesting investors remain confident in the company’s long-term strategy and financial health.
FDJ United maintains robust financial fundamentals, with a healthy gross profit margin of 55.4% and strong cash flows. The company’s Altman Z-Score of 4.37 indicates excellent financial stability, providing a solid foundation for navigating current market challenges. Reflecting this confidence, FDJ United has proposed a 15% dividend increase to €2.05 per share.
Analyst consensus remains optimistic about FDJ United’s prospects, with price targets ranging from 30.81 USD to 53.05 USD. The company’s current P/E ratio of 15.28x suggests reasonable valuation metrics relative to growth potential.
Prospects for 2025: A Challenging Environment
Looking ahead, FDJ United faces a complex operating environment in 2025. While regulatory pressures in key markets will continue to impact performance, the company’s diversified business model, strong retail presence, and growing digital capabilities provide multiple avenues for resilience and growth.
The integration of Kindred assets remains a critical focus area, with significant potential for cross-selling opportunities and operational synergies as systems harmonization progresses. Meanwhile, the company’s digital transformation agenda continues to advance, positioning FDJ United to capitalize on evolving consumer preferences for online gaming experiences.
FDJ United’s management remains committed to its international and digital strategy, viewing current regulatory challenges as temporary headwinds rather than structural impediments to long-term growth. With robust financial health and a clear strategic vision, the company appears well-positioned to navigate the complex European gambling landscape while delivering value to shareholders.
