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 yohaig code 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 shops are more profitable, and exceed on sports wagering, allowing them to better hold up against the effect of lower maker stakes limitations," the business stated.
The stake is being cut from ₤ 100.
FOBTs produce ₤ 1.8 bn in earnings a year for the betting industry, according to the Gambling Commission, along with taxes of ₤ 400m for the government.
High step
"We run in high-footfall, highly completed areas, which indicates we are well positioned to take advantage of competitor shop closures," Paddy Power Betfair said.
"In the yohaig code UK, we do not anticipate the yohaig code federal government's proposed new ₤ 2 stake limitation for gaming devices to have a product influence on our retail strategy," it added.
Rival William Hill, which produces just over half its retail revenues from FOBTs, has warned 900 of its stores might become loss-making, potentially leading to task losses.
Paddy Power Betfair stated the proposed FOBT cut to ₤ 2 would lower its revenue from gaming machines by between 33% and 43%.
Based on its 2017 figures, this promotion code might suggest profits would fall by as much as ₤ 46m, which it said amounted to 2.6% of its total earnings.
It also provided a gauge of the government's plan to increase remote video gaming responsibility to offset a few of the lost tax from FOBT. Each one percentage point increase - from the present level of 15% - would lead to an extra ₤ 2.5 m of task to be paid.
Paddy Power Betfair stated it had actually donated ₤ 170,000 to LGBT charities as part of its "Rainbow Russians" campaign, which included making a donation each time Russia scored on the planet Cup.
It was also behind the "main bus of gay professional footballers" that was on show at Brighton Pride.
Paddy Power Betfair is pressing into North America by buying US dream sports betting site Fan Duel.
It said losses from the Fan Duel service and 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% increase in revenue in the second quarter of 2018, however profits was up 9% in the period prior to the competition."
Paddy Power Betfair has been increasing its costs on marketing considering that March in an attempt to arrest its falling market share.
Peter Jackson, its president, said this promotion code was paying off: "The World Cup was a showcase occasion for Paddy Power, with a series of effectively performed marketing projects causing it being one of the yohaig code UK's most talked about brands in social media discussions around the tournament."
