FTSE higher as investors eye another Sunday deadline for Brexit and Flutter hit by $875 million court judgement in the US

“It’s Groundhog Day all over again. This week ends just like last week with the market focused on an apparent Sunday deadline to approve a Brexit deal,” says AJ Bell Investment Director Russ Mould.

“Sterling has come back a bit as Government ministers and Boris Johnson himself have appeared to pour cold water on the prospects of a deal. Overall though investors are seeing this as bluster intended to enable the UK side to claim victory in the negotiations assuming an agreement is eventually brokered.

“We wait to see if Monday brings another missed deadline and a dog ate my homework style excuse or if we will finally have clarity one way or another on what the UK’s trading relationship with the EU will be in less than two weeks.

“Elsewhere there were mixed cues for the FTSE 100 on Friday morning after the US set new records on hopes for a stimulus package last night but Asian stocks retreated.

“Ultimately the UK’s flagship index managed solid gains, although its progress across the week as a whole has been fairly sluggish – constrained by the rally in the pound.”

Flutter Entertainment

“Ouch seems the only appropriate word for gambling group Flutter Entertainment’s experience at the hands of a US court.

“The near $900 million judgement from the Kentucky Supreme Court comes like a painful echo from the past – linked as it is to The Stars Group with whom Flutter merged in 2018.

“In fact the web is even more tangled than that. The original award of damages goes all the way back to 2015 and relates to court action first brought on behalf of Kentucky residents who had incurred losses on the PokerStars website, which The Stars Group itself acquired in 2014.

“Flutter will have been aware of the issue having done due diligence on The Stars Group but presumably thought it was behind them given an appeal court reversed the initial award in 2018.

“The market reaction so far is measured, with investors perhaps reassured by Flutter’s insistence that it has legal avenues available to contest the decision and that ultimately in the worst case it would pay a ‘limited proportion’ of the reinstated judgement.

“An interesting takeaway is that in their clamour to take advantage of the opening up of the sports betting market in the US, companies may have somewhat neglected to consider the risks alongside the opportunities.

“This may be prove to be an isolated incident, a complete outlier, but the US is a litigious society, including in the corporate sphere, and this news may have a sobering effect on the sector.”

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