Paddy Power Betfair soft-pedals ₤ 2 stake cut impact

8 August 2018

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Gambling firm Paddy Power Betfair has stated it can hold up against the government's strategy to cut the maximum bet on fixed-odds wagering terminals [FOBTs] to ₤ 2.

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

"Our shops are more lucrative, and outshine on sports wagering, allowing them to much better stand up to the impact of lower machine stakes limits," the company stated.

The stake is being cut from ₤ 100.

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

High footfall

"We operate in high-footfall, highly completed locations, which implies we are well put to benefit from rival shop closures," Paddy Power Betfair said.

"In the UK, we do not expect the government's proposed brand-new ₤ 2 stake limit for gaming machines to have a product effect on our retail method," it included.

Rival William Hill, which produces just over half its retail incomes from FOBTs, has cautioned 900 of its stores might end up being loss-making, possibly resulting in task losses.

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

Based on its 2017 figures, this promotion code might suggest income would fall by up to ₤ 46m, which it said totaled up to 2.6% of its overall revenue.

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

Paddy Power Betfair stated it had actually contributed ₤ 170,000 to LGBT charities as part of its "Rainbow Russians" campaign, which consisted of making a contribution each time Russia scored worldwide Cup.

It was likewise behind the "main bus of gay expert footballers" that was on program at Brighton Pride.

Paddy Power Betfair is pressing into North America by purchasing US fantasy sports wagering website Fan Duel.

It stated losses from the Fan Duel organization 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 revealed a 13% increase in profits in the 2nd quarter of 2018, however income was up 9% in the period prior to the competition."

Paddy Power Betfair has actually been increasing its costs on advertising considering that March in an effort to arrest its falling market share.

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