FanDuel Sports-Betting Growth Helps Paddy Power Betfair Forget Headwinds at Home
Posted on: May 3, 2019, 07:14h.
Last updated on: May 3, 2019, 07:14h.
For Paddy Power Betfair, the liberalization of the US sports betting markets came at just the right moment. While the UK gambling sector is beginning to feel the pinch of tightened regulations at home, the US presents ample opportunities to offset the balance.
In its Q1 trading update, Paddy Power reported that, despite headwinds at home, revenue was up 17 percent to £478 million ($621 million), thanks largely to US growth, as well as a strong performance in Australia.
The company was an early entrant to the US markets through its acquisition of the FanDuel brand, which has a presence via its daily fantasy sports offering in 41 states. FanDuel holds 50 percent of the market share in New Jersey, the most populous state to have legalized sports betting and the only one with full-scale online wagering. Total US revenues for the quarter increased 47 per cent to £78 million ($101 million), Paddy Power said.
While not directly impacting Q1 revenues, the company was able to give a clearer indication of the impact of reforms to fixed-odds betting terminals on the UK retail sector, which came into force on April 1.
Following a prolonged regulatory review, the government decided to slash the maximum stakes on the machines from £100 per spin to £2, prompting protests from the betting industry that the move would result in shop closures and thousands of job losses.
While Paddy Power is less exposed to the impact of the reforms than competitors like Ladbrokes and William Hill because it has fewer shops and machines, it had predicted the stakes reduction would cut gaming machine revenues by between 33 and 43 percent.
Paddy Poker CFO Jonathan Hill said this week early indications from April suggested the company was seeing “the upper end” of that scale.
Man U Causes Seven-Figure Hit
Headwinds at home were exacerbated by a string of customer-friendly sports results, particular in soccer. Manchester City and Liverpool are two teams that attract heavy volumes of bets to win games, but neither team has lost one since January.
Meanwhile, draws — the score most beloved of bookmakers because no one bets on them — have been few and far between. Extraordinarily, there were only four draws in 34 games in the Premier League in March.
But it was Manchester United’s unlikely victory in the Champions League at Paris Saint-Germain that did the most damage. Having managed to lose the first leg 2-0 at home, United faced the daunting prospect of going to Paris and scoring at least three.
A controversial late penalty saw the team snatch victory from the jaws of defeat. But as the best-supported soccer team in the UK — whose fans backed it despite the unlikelihood of its winning — this was not what bookmakers wanted to see. A spokesman confirmed to Business Insider this week the company had lost a “seven-figure sum” on that game alone.
As a result, UK sports betting dropped ten percent for the quarter but overall sports betting, including the US, was up by 15 percent.
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