Paddy Power Betfair plays down ₤ 2 stake cut impact

8 August 2018

remarks

77 Comments

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

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

"Our shops are more profitable, and surpass on sports wagering, enabling them to much better stand up to the impact of lower machine stakes limits," the company said.

The stake is being cut from ₤ 100.

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

High tramp

"We run in high-footfall, extremely contended areas, which indicates we are well positioned to benefit from competitor shop closures," Paddy Power Betfair stated.

"In the UK, we do not anticipate the government's proposed new ₤ 2 stake limitation for video gaming machines to have a material effect on our retail method," it added.

Rival William Hill, which generates simply over half its retail revenues from FOBTs, has actually alerted 900 of its stores could end up being loss-making, possibly leading to task losses.

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

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

It likewise gave a gauge of the government's plan to increase remote video gaming duty to balance out a few of the lost tax from FOBT. Each one portion point rise - from the existing level of 15% - would lead to an additional ₤ 2.5 m of responsibility to be paid.

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

It was likewise behind the "official bus of gay professional footballers" that was on show at Brighton Pride.

Paddy Power Betfair is pressing into North America by buying US dream sports betting site Fan Duel.

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

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

Paddy Power Betfair has been increasing its costs on marketing since 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 event for Paddy Power, with a series of successfully executed marketing projects leading to it being one of the UK's most talked about brands in social media conversations around the competition."