Paddy Power Betfair plays down ₤ 2 stake cut effect

8 August 2018

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Gambling firm Paddy Power Betfair has said it can withstand the government's strategy to cut the optimum bet on fixed-odds wagering 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 profitable, and outshine on sports betting, enabling them to better stand up to the yohaig code impact of lower maker stakes limitations," the business said.

The stake is being cut from ₤ 100.

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

High footfall

"We run in high-footfall, highly contended places, which means we are well positioned to gain from rival store closures," Paddy Power Betfair stated.

"In the UK, we do not anticipate the federal government's proposed new ₤ 2 stake limit for gaming makers to have a product effect on our retail strategy," it added.

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

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

Based upon its 2017 figures, this promotion code could recommend earnings would fall by up to ₤ 46m, which it stated amounted to 2.6% of its total earnings.

It likewise provided a gauge of the government's plan to increase remote gaming duty to offset some of the lost tax from FOBT. Each one portion point increase - from the present level of 15% - would result in an extra ₤ 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 each time Russia scored on the planet Cup.

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

Paddy Power Betfair is pushing into North America by buying 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, said: "It wasn't everything about the World Cup for Paddy Power Betfair. Half-year numbers showed a 13% increase in profits in the second quarter of 2018, but revenue was up 9% in the period prior to the competition."

Paddy Power Betfair has actually been increasing its spending on marketing since March in an attempt to detain its falling market share.

Peter Jackson, its president, said this promotion code was settling: "The World Cup was a showcase occasion for Paddy Power, with a series of effectively carried out marketing campaigns causing it being one of the UK's most talked about brands in social media conversations around the competition."