Paddy Power Betfair boost marketing to win back punters
Paddy Power Betfair are to pour an extra £20 million into marketing after admitting that they have lost market share following their merger.
The news came as the company unveiled their results for 2017, which showed revenue up 13 per cent to £1.745 billion and underlying ebitda (earnings before interest, tax, depreciation and amortisation) up 18 per cent to £473 million thanks to bookmaker-friendly sports results in the final quarter of the year.
Paddy Power and Betfair finalised their merger in February 2016 and new chief executive Peter Jackson said they had spent the last two years completing the integration of their European platform.
He said development resources had been focused on that, adding: "So we haven't been building products for our customers and I think that has definitely impacted on the performance of the business in 2017.
"We're excited about the new products we're going to get out into the market and that's why we're beginning to do additional marketing investment, particularly behind the Paddy Power brand which we think has really suffered from the lack of product investment."
Betfair's exchange has been facing increased competition from the likes of Betdaq, Matchbook and Smarkets, and Jackson said there had been "a lot of noise from competitors about the exchange".
"It's a very important part of our business and we remain very focused on it," he added.
FOBT issue 'needs to be dealt with'
Last year the company broke ranks from other retail bookmakers when then-chief executive Breon Corcoran called for the maximum stake on FOBTs to be cut to £10 or less.
Jackson, who took over from Corcoran in January, stood by those comments as the company said they did not envisage closing any shops following the government's decision and would continue to selectively add to their estate.
Jackson said: "This has become a lightning rod for the industry. We take responsible gambling very seriously and I know many other operators do as well, but I think the FOBT issue is one that needs to be dealt with.
"I'm not sure any of the proposals I have seen knocking around so far will necessarily help achieve that. I think we need to deal with it once and for all and move on.
"We made some comments about what we thought the solution needed to be a while back and I stand behind those."
While there was no comment on claims surrounding the damage large-scale betting shop closures could wreak on racing through lost media rights and levy, Jackson did say they were proud of their horseracing sponsorships.
He added: "We look forward to maintaining these sponsorships in the years to come and confirm this will not be affected by any changes to stake limits on FOBTs. Indeed, if other firms are pulling back, we may end up doing more."
Jackson would not comment on whether the firm's Australian arm Sportsbet had been the underbidder for William Hill's business there.
Sportsbet's revenue increased by 21 per cent to £404m, while underlying ebitda was up 42 per cent to £139m.
"We're the largest of the corporate bookmakers there and I think the business goes from strength to strength," Jackson said.
Paddy Power Betfair are also monitoring the situation in the United States, where an eagerly awaited Supreme Court decision could mean sports betting becoming more widely legalised.
Jackson said he suspected progress could be slow but added: "I think we have a good head start in that market with [horseracing network] TVG, our experience with operating an online casino and exchange in New Jersey, and of course with our daily fantasy sports business Draft, which is operating there as well."
Analysts at Davy said of the announcement: "Overall the tone of the statement is confident, suggesting management sees numerous market opportunities ahead."
However, the company's share price at close on Wednesday was 7,940p, down 3.41 per cent.
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