Paddy Power Betfair soft-pedals ₤ 2 stake cut impact

8 August 2018

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Gambling company Paddy Power Betfair has stated it can withstand the federal government's strategy to cut the maximum bet on fixed-odds betting terminals [FOBTs] to ₤ 2.

the yohaig code business made the statement as it reported a 4% rise in first half profits to ₤ 106m.

"Our shops are more rewarding, and outperform on sports wagering, enabling them to much better stand up to the yohaig code effect of lower device stakes limitations," the business stated.

The stake is being cut from ₤ 100.

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

High step

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

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

Rival William Hill, which creates just over half its retail earnings from FOBTs, has actually cautioned 900 of its shops might become loss-making, possibly leading to job losses.

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

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

It also gave a gauge of the federal government's strategy to increase remote gaming task to offset some 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 duty to be paid.

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

It was also behind the "official bus of gay professional 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 said losses from the Fan Duel service 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 because March in an attempt to arrest its falling market share.

Peter Jackson, its primary executive, stated this promotion code was paying off: "The World Cup was a display occasion for Paddy Power, with a series of successfully performed marketing campaigns resulting in it being one of the UK's most spoken about brand names in social networks conversations around the tournament."