The newly merged Paddy Power Betfair group has issued its first quarterly trading update, which reports a 21 percent increase in sports betting stakes.
Inside the Paddy Power Betfair numbers
Total sports betting net revenue was up by 16 percent to £254 million, compared to the first quarter of 2015. Net revenues are 7.5 percent of stakes, slightly lower than last year’s 7.7 percent.
Online sports betting grew by 23%, helping net revenues for online gaming to grow by 17% to £195 million. Total group revenues rose 16% to £339 million.
The group commented that performance would have been better were it not for a poor outcome from the UK’s Cheltenham Festival horse race meeting. During the Festival, the punters beat the bookie for a change, and by a sizable £20 million.
Despite the remaining good news in the quarter, the poor showing at Cheltenham contributed to the company’s share price falling by 3 percent after the update was issued.
Total operating profit rose 26 percent to £43 million. The new point of consumption tax in Ireland plus increased machine gaming duty in the UK took £3 million off profits.
Paddy Power Betfair’s Australian business accounted for just over 25 percent of total sports bets, with online betting responsible for 57 percent.
Fully 95 percent of the group’s revenues now come from regulated markets.
Exchange betting comes to the U.S on May 10
The U.S. business, primarily Betfair’s New Jersey online casino operations generated £20 million in revenues, up 29 percent from Q1 2015.
The report notes that “Betfair US has been awarded a licence to operate an exchange wagering platform for horseracing in New Jersey and will launch the product on 10 May.”
The company has partnered with the Monmouth Park racetrack to obtain its conditional waiver for the New Jersey Division of Gaming Enforcement.
Exchange betting takes a lot of risk out of the betting business, because it allows bettors to post odds and prices for other bettors on the exchange to accept or reject. The operator takes a cut of each transaction, rather than being at the mercy of the outcome of the bets.
Betfair’s license is the first awarded for exchange betting in the U.S.
Customer benefits from the merger
The merger between Betfair and Paddy Power was only consummated at the beginning of February, but already the merged company has begun to share products between brands.
Betfair sportsbook customers can now access minute-by-minute football betting and Gaelic sports, formerly available at Paddy Power. A number of Paddy Power’s proprietary online games are also now available on the Betfair website and mobile apps.
The distinctive brands are likely to remain separate and keep the unique identities that have helped them build their own loyal customer base.
CEO Breon Corcoran said:
All four of our brands − Paddy Power, Betfair, Sportsbet and TVG —− continue to trade well in a highly competitive environment. This good start to the financial year is a credit to our colleagues, particularly at a time when we are bringing together two businesses.
Corcoran won the battle for leadership of the new group
Former Paddy Power Chief Executive Andy McCue was appointed as the COO of the new group. However, only a month after the merger, he decided that the step down was not to his liking, and he announced that he was leaving.
“I feel now is the right time to pursue new opportunities and, in doing so, wish everybody in Paddy Power Betfair the very best for the future,” McCue announced in a public statement.
His tenure as a director of the group ended on the last day of April, leaving Breon Corcoran as the sole surviving CEO from the merger.
