Paddy Power boss hoping for Cheltenham ‘winner’
New boss eyes High Street acquisitions alongside a transition to digital future, writes Gavin McLoughlin
The annual Cheltenham horse-racing extravaganza starts on Tuesday and Paddy Power Betfair boss Peter Jackson is “keeping his fingers and toes crossed” for favourable results. The bookmaker is eyeing the acquisition of further stores but Jackson said it is flexible if more and more punters move away from in-store betting towards digital.
PADDY Power Betfair published strong results last week, but faces significant challenges. New chief executive Peter Jackson has to find a new chief financial officer, cope with increasing regulatory pressure, and find a way to position the company to make the most from the shift to digital.
But perhaps the most interesting story of all is the future of Paddy Power Betfair’s retail network.
Ebitda (earnings before interest, tax, depreciation and amortisation) was up 18pc across the network, and the company said it doesn’t envisage any store closures due to regulatory changes — a reference presumably to a mooted UK crackdown on fixed-odds betting terminals (FOBTs). Ministers are considering plans to cut the maximum stake wagered on these machines, dubbed the ‘crack cocaine of gambling’, to £2 (€2.25).
“Our shops are more profitable and outperform on sports betting enabling them to better withstand reduced machine stakes limits,” Paddy Power Betfair said in its results announcement.
“All our shops are in high footfall, highly-competed locations, positioning us to benefit from competitor shop closures. Our proven track record of acquiring shops and achieving significant uplifts in their revenues...means we will continue to target selective new shop openings and acquisitions.”
It was an interesting contrast with GVC — soon to acquire Ladbrokes Coral — whose boss said later in the week that shops would close if the change to FOBT rules went ahead.
Speaking to journalists last week, Jackson acknowledged that the long-term demographics are not particularly favourable for betting stores.
But he said the shops are “important social hubs” for many customers and that he believes this will remain the case “for some time”. However, future closures were far from ruled out.
“It’s an interesting question in terms of what happens to the High Street and retail more generally because of the advent of this huge switch to digital.
“We’ve obviously seen a lot of that transition happen in our industry, but we know a lot of our customers like the opportunity to socialise and hang out with their mates in our stores. Whilst that continues we’re very happy to provide it,” Jackson said. “We’re thoughtful though, we don’t have particularly long lease obligations on our estate and so if things were to change we’re able to flex and manage that well.”
Elsewhere, the company is facing the prospect of a point-of-consumption tax on its operations in Australia.
Jackson said the company would absorb the cost itself but believes “it’s inevitable that some of the smaller players will end up having to wave the white flag because they won’t be able to cope with the fierce competition that’s going on in the market and the introduction of point of consumption tax”.
Sports results have been favourable too of late, and Jackson is “keeping fingers and toes crossed” that this continues at Cheltenham.
But you can only control what you can control — and more important is digital development. After completing the mammoth task of integrating online-focused Betfair’s European platform with the Paddy Power platform, more time can now be spent developing digital products.
This will be an important way of lifting market share as regulatory changes bite.