Paddy Power Betfair bets on beating regulatory impact with advertising boost

Paddy Power Betfair has said it can weather the impact of regulatory changes in the UK and Australia, planning to spend more on advertising in the face of slowing revenue and earnings growth.

The FTSE 100 group was formed out of a £5bn merger between Irish bookmaker Paddy Power and UK-based online gambling group Betfair in 2016.

On Wednesday, the company said it will boost its £300m marketing budget by a further £20m, admitting that its Paddy Power brand is losing market share is the face of a fierce advertising onslaught from its rivals such as Bet365, Ladbrokes Coral and William Hill. 

The move is also designed to power growth at a time bookmakers face government crackdowns in key markets. The UK is mulling new limits on fixed-odds betting terminals, which have been denounced by opponents as the “crack cocaine” of gambling, while in Australia a new “point of consumption” tax on gambling companies will hit profits further. 

Reporting preliminary results for the year ending 31 December 2017, Paddy Power Betfair said overall revenues increased 13 per cent to £1.7bn, while earnings earnings before interest, tax, depreciation and amortisation were up 18 per cent to £473m. However, this represents a slower rate of growth than the previous year. 

Peter Jackson, the new chief executive who replaced veteran Breon Corcoran last month, said the business was still enjoying “good growth,” which was allowing it to reinvest money back into the business. 

Now the Paddy Power brand is operating with an improved product, we will increase marketing spend to align with its mass market positioning and step up the retention-focused investment that we started in 2017. At the same time, we also plan to increase our investment in international markets.