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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 withstand the federal government's plan to cut the optimum bet on fixed-odds betting terminals [FOBTs] to ₤ 2.

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

"Our shops are more rewarding, and surpass on sports wagering, allowing them to better stand up to the impact of lower machine stakes limits," the business said.

The stake is being cut from ₤ 100.

FOBTs produce ₤ 1.8 bn in earnings a year for the betting market, according to the Gambling Commission, along with taxes of ₤ 400m for the federal government.

High step

"We run in high-footfall, extremely competed locations, which implies we are well put to take advantage of rival shop closures," Paddy Power Betfair said.

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

Rival William Hill, which generates simply over half its retail profits from FOBTs, has actually cautioned 900 of its stores could become loss-making, potentially leading to task losses.

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

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

It also offered a gauge of the government's plan to increase remote gaming responsibility to balance out a few of the lost tax from FOBT. Each one percentage point rise - from the current level of 15% - would result in an extra ₤ 2.5 m of task to be paid.

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

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

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

It said losses from the Fan Duel business 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, stated: "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 income was up 9% in the period prior to the competition."

Paddy Power Betfair has been increasing its spending on marketing because March in an attempt to jail 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 executed marketing campaigns leading to it being among the UK's most talked about brands in social networks conversations around the tournament."