Paddy Power Betfair Plays Down ₤ 2 Stake Cut Impact
Paddy Power Betfair soft-pedals ₤ 2 stake cut effect
8 August 2018
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Gambling company Paddy Power Betfair has stated it can hold up against the federal government's plan to cut the optimum bet on fixed-odds betting terminals [FOBTs] to ₤ 2.
the yohaig code business made the statement as it reported a 4% increase in first half earnings to ₤ 106m.
"Our shops are more successful, and surpass on sports wagering, allowing them to better stand up to the effect of lower machine stakes limitations," the business stated.
The stake is being cut from ₤ 100.
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FOBTs create ₤ 1.8 bn in profits a year for the wagering industry, according to the Gambling Commission, as well as taxes of ₤ 400m for the government.
High step
"We run in high-footfall, highly contended locations, which implies we are well positioned to gain from competitor shop closures," Paddy Power Betfair said.
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"In the UK, we do not expect the federal government's proposed new ₤ 2 stake limitation for gaming machines to have a material impact on our retail strategy," it included.
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Rival William Hill, which creates simply over half its retail incomes from FOBTs, has cautioned 900 of its shops could end up being loss-making, possibly causing job losses.
Paddy Power Betfair said the proposed FOBT cut to ₤ 2 would decrease its income from gaming makers by between 33% and 43%.
Based on its 2017 figures, this might recommend profits would fall by up to ₤ 46m, which it stated totaled up to 2.6% of its total earnings.
It also provided a gauge of the federal government's strategy to increase remote gaming task to balance out a few 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 task to be paid.
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Paddy Power Betfair stated it had donated ₤ 170,000 to LGBT charities as part of its "Rainbow Russians" campaign, that included making a donation each time in the World Cup.
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It was also behind the yohaig code "official bus of gay professional footballers" that was on show at Brighton Pride.
Paddy Power Betfair is pushing into The United States and Canada by buying US fantasy sports wagering website Fan Duel.
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It said losses from the Fan Duel service and new taxes in Australia would put pressure on its full-year outcomes.
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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% boost in earnings in the yohaig code 2nd quarter of 2018, however earnings was up 9% in the period prior to the tournament."
Paddy Power Betfair has been increasing its costs on advertising since March in an effort to arrest its falling market share.
Peter Jackson, its president, stated this was paying off: "The World Cup was a showcase event for Paddy Power, with a series of successfully carried out marketing projects causing it being one of the UK's most talked about brand names in social networks discussions around the competition."