Paddy Power Betfair plays down ₤ 2 stake cut effect

8 August 2018

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

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

"Our stores are more profitable, and outshine on sports betting, enabling them to much better endure the effect of lower maker stakes limitations," the company said.

The stake is being cut from ₤ 100.

FOBTs create ₤ 1.8 bn in profits a year for the wagering industry, according to the Gambling Commission, along with taxes of ₤ 400m for the federal government.

High footfall

"We operate in high-footfall, highly competed locations, which suggests we are well placed to benefit from competitor store closures," Paddy Power Betfair said.

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

Rival William Hill, which generates simply over half its retail earnings from FOBTs, has alerted 900 of its shops might end up being loss-making, possibly leading to job losses.

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

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

It also offered a gauge of the federal government's strategy to increase remote gaming task to offset some of the lost tax from FOBT. Each one percentage point increase - from the current level of 15% - would result in an additional ₤ 2.5 m of task to be paid.

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

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

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

It said 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, stated: "It wasn't everything about the World Cup for Paddy Power Betfair. Half-year numbers revealed a 13% boost in revenue in the 2nd quarter of 2018, however revenue was up 9% in the duration prior to the tournament."

Paddy Power Betfair has actually been increasing its costs on marketing because March in an effort to jail its falling market share.

Peter Jackson, its president, stated this promotion code was settling: "The World Cup was a showcase event for Paddy Power, with a series of successfully performed marketing campaigns causing it being one of the UK's most spoken about brands in social networks conversations around the tournament."