Paddy Power Betfair soft-pedals ₤ 2 stake cut effect

8 August 2018

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

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

"Our shops are more lucrative, and surpass on sports wagering, enabling them to better hold up against the effect of lower device stakes limitations," the business stated.

The stake is being cut from ₤ 100.

FOBTs create ₤ 1.8 bn in earnings a year for the betting market, according to the Gambling Commission, in addition to taxes of ₤ 400m for the government.

High tramp

"We run in high-footfall, highly competed places, which implies we are well put to take advantage of rival shop closures," Paddy Power Betfair said.

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

Rival William Hill, which creates just over half its retail incomes from FOBTs, has actually cautioned 900 of its shops could become loss-making, potentially resulting in task losses.

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

Based upon its 2017 figures, this might recommend earnings would fall by up to ₤ 46m, which it stated amounted to 2.6% of its overall earnings.

It likewise offered a gauge of the government's plan to increase remote gaming task to balance out some of the lost tax from FOBT. Each one percentage point rise - from the present level of 15% - would result in an additional ₤ 2.5 m of responsibility 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 each 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 pushing into The United States and Canada by buying US dream sports wagering 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, said: "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, but income was up 9% in the duration prior to the competition."

Paddy Power Betfair has been increasing its spending on advertising because March in an attempt to detain 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 performed marketing campaigns leading to it being one of the UK's most spoken about brands in social networks discussions around the competition."