Paddy Power Betfair plays down ₤ 2 stake cut effect

8 August 2018

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

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

"Our shops are more successful, and exceed on sports wagering, allowing them to much better endure the effect 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 wagering industry, according to the Gambling Commission, along with taxes of ₤ 400m for the government.

High footfall

"We operate in high-footfall, extremely contended places, which means we are well positioned to benefit from competitor shop closures," Paddy Power Betfair stated.

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

Rival William Hill, which creates just over half its retail revenues from FOBTs, has actually warned 900 of its stores could end up being loss-making, potentially leading to job losses.

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

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

It likewise provided a gauge of the government's strategy to increase remote video gaming duty to offset some of the lost tax from FOBT. Each one percentage point increase - from the current level of 15% - would result in an extra ₤ 2.5 m of duty to be paid.

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

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

Paddy Power Betfair is pressing into The United States and Canada by purchasing US dream sports wagering site Fan Duel.

It stated losses from the Fan Duel company and brand-new taxes in Australia would put pressure on its full-year outcomes.

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 revealed a 13% boost in earnings in the yohaig code second quarter of 2018, but income was up 9% in the duration prior to the tournament."

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

Peter Jackson, its chief executive, said this promotion code was settling: "The World Cup was a display event for Paddy Power, with a series of effectively executed marketing campaigns resulting in it being one of the UK's most spoken about brands in social networks discussions around the tournament."