Paddy Power up despite UK betting clampdown
SHARES in Paddy Power Betfair were up over 2pc yesterday on the Irish Stock Exchange, despite confirmation from the Department of Sport in the UK that it was clamping down on Fixed Odds Betting Terminals (FOBTs).
The British Department said that it was proposing to reduce maximum stakes on FOBTs in the UK from £100 to £2.
Estimates from Paddy Power Betfair suggest that the direct impact of this new stake limit would be a 33pc to 43pc decrease in its total machine gaming revenue.
Last year this would have equated to a £35m (€40m) to £46m revenue impact, representing 2pc to 2.6pc of group revenue.
“We welcome the significant intervention by the government, and believe this is a positive development for the long-term sustainability of the industry,” Peter Jackson, CEO of Paddy Power Betfair, said.
However the group said that it does not envisage that the proposed change will have a material impact on its overall retail strategy in the UK.
Paddy Power Betfair outlined a number of ways it could mitigate for the potential impact on its profits including through a reduction in costs associated with the terminals, new product development, and substitution to other betting products.
Earlier this week the company’s market valuation surged more than €400m after it confirmed talks to merge its US business with America’s FanDuel to capitalise on the expected liberalisation of US betting laws.
The move comes in the immediate wake of a US Supreme Court ruling which struck down a federal law that has restricted sports betting there since 1992.