Paddy Power Betfair hopes for boost from US legal changes
Revenues rose 9% in third quarter despite lack of major football tournament
Revenues at bookmaker Paddy Power Betfair rose by 9 per cent to £440million in the group’s third quarter, driven by 11 per cent growth in sports revenue. Photograph: Paddy Power Betfair/PA Wire
Paddy Power Betfair hopes that moves to legalise sports betting in the US will boost parts of its business there, the bookmaker’s chief executive Breon Corcoran said on Wednesday.
Revenues at the gambling giant rose 9 per cent to £440million sterling (€502 million) in the three months to September 30th, the third quarter of its financial year.
Speaking to market analysts, Mr Corcoran, agreed that moves to repeal a US law that heavily restricts sports betting and legal changes in Pennsylvania could boost its TVG horseracing broadcasting and betting network.
He also noted that it could be good for Draft, the fantasy sports start-up that Paddy Power Betfair bought in May.
“With respect to sports betting in particular, we are less bullish than most people we speak with or whose commentary we read,” he said. “We think that there’s awfully long way to go from where we are today to a legalised framework for sports betting that is accessible to offshore operators.”
The group’s US operations include TVG, Draft, and an on-line casino and betting exchange in New Jersey.
At the same conference, Mr Corcoran did not rule out buying another company in order to expand its Italian division, which it is moving from the Paddy Power to the Betfair brand.
“A whole bunch of people would like to scale up in Italy and we are amongst that group,” he said. But just because we want to do it does not mean that it can be done.”
He added that the Italian division was continuing to grow, but would “struggle to be material to the group” under its current structure.
Mr Corcoran confirmed that Peter Jackson would succeed him as chief executive on January 8th.
Paddy Power Betfair announced the chief executive’s planned departure and named his successor in August.
On Tuesday, the UK government announced its intention to crack down on betting machines, dubbed by some as gambling’s “crack cocaine” , in the country’s bookie shops.
Mr Corcoran recently wrote to the UK government calling on it to cut the maximum amount that can be wagered in the machines to £10 from £100.
He argued that this would not threaten the viability of any business, but warned that the controversy over the machines could damage the industry.
Paddy Power Betfair’s outgoing chief executive described the group’s third quarter as “encouraging”, with good stakes growth despite the absence of a major football tournament.
The group now expects full-year earnings to be in the range of between £450 million and £465 million.
The group’s online division saw revenues decline by 3 per cent to £216 milion, on the back of a tough comparative period in 2016 that included a strong contribution from the concluding stages of the Euro 2016 tournament.
Sportsbook stakes were up 10 per cent, but sportsbook revenue was down 2 per cent due to a 0.8 percentage point decrease in the sportsbook margin due to sporst results.
Across retail, revenue was up 12 per cent to £85 million, and the group opened two shops in the UK and one in Ireland during the quarter, bringing its total up to 623 shops.
Paddy Power Betfair said it has signed an agreement to acquire a further five UK shops and expects this transaction to complete in the next few months.