Paddy Power Betfair plays down ₤ 2 stake cut impact

8 August 2018

comments

77 Comments

Gambling company Paddy Power Betfair has said it can stand up to the government's strategy to cut the optimum bet on fixed-odds betting terminals [FOBTs] to ₤ 2.

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

"Our stores are more lucrative, and exceed on sports wagering, allowing them to better hold up against the impact of lower device stakes limitations," the company said.

The stake is being cut from ₤ 100.

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

High footfall

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

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

Rival William Hill, which produces simply over half its retail profits from FOBTs, has warned 900 of its stores could end up being loss-making, possibly causing job losses.

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

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

It also gave a gauge of the government's strategy 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 additional ₤ 2.5 m of responsibility to be paid.

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

It was likewise behind the "main 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 company 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 revenue in the 2nd quarter of 2018, however income was up 9% in the duration prior to the competition."

Paddy Power Betfair has been increasing its spending on advertising given that March in an effort to apprehend its falling market share.

Peter Jackson, its president, said this was settling: "The World Cup was a display event for Paddy Power, with a series of successfully carried out marketing projects causing it being among the UK's most talked about brands in social networks conversations around the competition."