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

The business made the declaration as it reported a 4% rise in first half profits to ₤ 106m.

"Our shops are more rewarding, and outperform on sports betting, allowing them to much better hold up against the effect of lower device stakes limitations," the company stated.

The stake is being cut from ₤ 100.

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

High footfall

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

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

Rival William Hill, which creates simply over half its retail incomes from FOBTs, has actually alerted 900 of its shops could end up being loss-making, possibly resulting in job losses.

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

Based on its 2017 figures, this might suggest profits would fall by as much as ₤ 46m, which it said amounted to 2.6% of its overall income.

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

Paddy Power Betfair said it had donated ₤ 170,000 to LGBT charities as part of its "Rainbow Russians" campaign, that included making a donation whenever Russia scored in the World Cup.

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

Paddy Power Betfair is pressing into North America by buying US dream sports wagering site 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 all about the World Cup for Paddy Power Betfair. Half-year numbers showed a 13% boost in profits in the 2nd quarter of 2018, but earnings was up 9% in the duration prior to the tournament."

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

Peter Jackson, its president, stated this promotion code was settling: "The World Cup was a display event for Paddy Power, with a series of effectively carried out marketing projects causing it being one of the UK's most talked about brand names in social media discussions around the competition."