Paddy Power unwilling to bet big on US growth plan

Paddy Power-Betfair has poured cold water on suggestions the US betting market could substantially open up in the wake of Pennsylvania liberalising its gaming laws.

Earlier this week, the US state passed laws legalising certain betting activity such as online poker, casino games and betting on fantasy sports leagues. Paddy Power-Betfair has a strong presence in the US — via its TVG online horse racing outlet, its New Jersey-based online casino offering and Draft, a New York-based outlet focused on fantasy sports league betting, which it acquired earlier this year — and has welcomed the move in Pennsylvania.

However, outgoing chief executive Breon Corcoran told analysts on the company’s third quarter earnings call that it is unlikely to usher in a wholesale loosening of US betting laws.

“With respect to sports betting [in the US], in particular, I think we’re probably less bullish than most people. We think there’s an awful long way to go from where we are today to a legalised framework for sports betting that’s accessible to offshore operators,” he said.

“Draft is showing that we can acquire customers that we wouldn’t have acquired through the horse racing business. But, we still think sports betting, as we know it in Europe, is a long way away [in the US],” Mr Corcoran — who is formally leaving the company in early January — added.

Chief financial officer Alex Gersh, however, said that if that opinion was to be proven wrong, the group has substantially more ability than its competitors to invest in the US.

Paddy Power-Betfair’s third quarter trading update showed a 9% year-on-year increase in group revenue to £440m (€502m) and a 7% rise in underlying earnings to £121m. Mr Corcoran called the performance “encouraging” — particularly with the absence of any major football tournament in the late summer months.

Online revenue fell 3%, year-on-year, to £216m and gaming revenue was flat at £60m, with management saying it has no idea when that part of the business will return to growth. Overall, management expects full-year group earnings to be between £450m and £465m. Last year it generated earnings of £400m.

Third quarter retail revenues rose 12%, with the group announcing it has reached agreement — with an unnamed party — for the acquisition of another five UK shops. On a geographical basis, US revenues rose 18% and Australia-based revenues were up 29%. Most of the bets the group took on September’s Conor McGregor/Floyd Mayweather boxing match came via its Australian online avenue.



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