Paddy Power Betfair plays down ₤ 2 stake cut effect

8 August 2018

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

The business made the statement as it reported a 4% rise in very first half revenues to ₤ 106m.

"Our shops are more successful, and exceed on sports wagering, enabling them to better endure the impact of lower machine stakes limits," the company said.

The stake is being cut from ₤ 100.

FOBTs generate ₤ 1.8 bn in profits a year for the wagering industry, according to the Gambling Commission, as well as taxes of ₤ 400m for the federal government.

High tramp

"We operate in high-footfall, highly competed areas, which indicates we are well placed to benefit from competitor shop closures," Paddy Power Betfair stated.

"In the UK, we do not anticipate the government's proposed brand-new ₤ 2 stake limit for video gaming makers to have a product influence on our retail technique," it included.

Rival William Hill, which generates just over half its retail revenues from FOBTs, has cautioned 900 of its stores could become loss-making, potentially causing task losses.

Paddy Power Betfair said the proposed FOBT cut to ₤ 2 would lower its income from video gaming machines by in between 33% and 43%.

Based upon its 2017 figures, this promotion code might recommend earnings would fall by approximately ₤ 46m, which it stated totaled up to 2.6% of its overall earnings.

It likewise provided a gauge of the government's plan to increase remote video gaming task to offset a few of the lost tax from FOBT. Each one percentage point rise - from the current level of 15% - would lead to an extra ₤ 2.5 m of responsibility to be paid.

Paddy Power Betfair said it had actually contributed ₤ 170,000 to LGBT charities as part of its "Rainbow Russians" project, that included making a contribution whenever Russia scored on the planet Cup.

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

Paddy Power Betfair is pushing into North America by purchasing US dream sports wagering site Fan Duel.

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

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 showed a 13% boost in income in the 2nd quarter of 2018, however earnings was up 9% in the yohaig code duration prior to the competition."

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

Peter Jackson, its president, said this promotion code was paying off: "The World Cup was a display occasion for Paddy Power, with a series of effectively performed marketing campaigns leading to it being among the UK's most spoken about brand names in social networks conversations around the competition."