Paddy Power Betfair soft-pedals ₤ 2 stake cut impact

8 August 2018

comments

77 Comments

Gambling company Paddy Power Betfair has said it can stand up to the federal government's plan to cut the optimum bet on fixed-odds betting terminals [FOBTs] to ₤ 2.

the yohaig code company made the statement as it reported a 4% rise in very first half profits to ₤ 106m.

"Our shops are more profitable, and exceed on sports wagering, allowing them to better stand up to the effect of lower maker stakes limits," the company stated.

The stake is being cut from ₤ 100.

FOBTs generate ₤ 1.8 bn in income a year for the betting market, according to the Gambling Commission, in addition to taxes of ₤ 400m for the government.

High step

"We operate in high-footfall, highly contended places, which suggests we are well put to benefit from competitor shop closures," Paddy Power Betfair said.

"In the UK, we do not expect the federal government's proposed brand-new ₤ 2 stake limitation for gaming devices to have a material influence on our retail method," it included.

Rival William Hill, which generates just over half its retail incomes from FOBTs, has warned 900 of its stores might end up being loss-making, potentially causing job losses.

Paddy Power Betfair said the yohaig code proposed FOBT cut to ₤ 2 would reduce its earnings from gaming devices by between 33% and 43%.

Based upon its 2017 figures, this promotion code might recommend revenue would fall by approximately ₤ 46m, which it said amounted to 2.6% of its total revenue.

It also gave a gauge of the federal government's strategy to increase remote gaming duty to balance out a few of the lost tax from FOBT. Each one percentage point rise - from the present level of 15% - would result in an additional ₤ 2.5 m of responsibility to be paid.

Paddy Power Betfair stated it had donated ₤ 170,000 to LGBT charities as part of its "Rainbow Russians" campaign, which consisted of making a donation whenever Russia scored worldwide Cup.

It was also behind the yohaig code "official bus of gay professional footballers" that was on program at Brighton Pride.

Paddy Power Betfair is pushing into The United States and Canada by buying US fantasy sports betting website Fan Duel.

It said losses from the Fan Duel business and new taxes in Australia would put pressure on its full-year results.

Ed Monk, associate director of Fidelity Personal Investing's share dealing service, stated: "It wasn't all about the World Cup for Paddy Power Betfair. Half-year numbers revealed a 13% boost in earnings in the 2nd quarter of 2018, however earnings was up 9% in the duration prior to the tournament."

Paddy Power Betfair has been increasing its spending on advertising because March in an attempt to jail its falling market share.

Peter Jackson, its chief executive, said this promotion code was paying off: "The World Cup was a showcase event for Paddy Power, with a series of successfully carried out marketing campaigns leading to it being among the UK's most discussed brands in social networks conversations around the tournament."