*

Flutter said Q2 earnings a 'material outperformance'

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Investors watched for Flutter response to DraftKings ( DKNG )

charge

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DrafKings drops plans following 'customer feedback'

(Recasts, adds DraftKings ( DKNG ) statement on surcharge plans in

paragraph 6)

By Padraic Halpin

DUBLIN, Aug 13 (Reuters) - Flutter raised its

full-year guidance after a much better than expected second

quarter and said it would not hit customers with a surcharge in

high-tax U.S. states, shortly after which rival betting firm

DraftKings ( DKNG ) dropped plans to do so.

Flutter's U.S. shares, where it recently moved its

primary listing, were 11% higher in extended trading after the

world's largest online betting firm said it expects to beat its

previous forecast for a jump of around 30% in full-year core

profit.

The Dublin-based group, whose brands also include Paddy

Power and Betfair in Britain and Sportsbet in Australia, said

adjusted core profit rose 17% in the second quarter.

Flutter's U.S. FanDuel brand and DraftKings ( DKNG ) are by far the

biggest players in the booming U.S. market with a combined share

of around 70% and investors were closely watching Flutter's

response to the charge DraftKings ( DKNG ) announced on Aug. 2.

At the time, DraftKings' ( DKNG ) CEO compared the plans to similar

charges in the hotel or taxi industry and hoped it would offset

the cost of operating in states such as New York, which has a

tax rate of 51% on gambling revenues.

"We always listen to our customers and after hearing their

feedback we have decided not to move forward with the gaming tax

surcharge," DraftKings ( DKNG ) said in a statement released after

Flutter's results.

While analysts had said DraftKings' ( DKNG ) plans could boost cash

flow, they warned it also risked losing market share if rivals

did not follow suit. The charge would have applied to customers'

winnings in the four states that currently tax gaming revenues

at 20% or more.

Flutter CEO Peter Jackson said the best response to higher

taxes, based on its experience in the more established European

market, was to cut local marketing or moderate customer offers,

as it plans to do in response to recent tax hikes in Illinois.

Flutter said on Tuesday that it now expects full-year core

profit of $680 million to $800 million at market-leading FanDuel

versus the $635 million to $785 million seen in March and last

year's $167 million, which was its first full year of

profitability in the rapidly growing market.

Core profit of $1.69 billion to $1.85 billion is now seen in

its other global markets including Britain and Australia. That

compares to the $1.63 billion to $1.83 billion forecast

previously.