Chief executive Producer of the giant Paddy Power Betfair betting firm Peter Jackson claims that the firm’s winning streak is back after a well-done performance of the world cup despite facing harsh challenges in the U.S and Australia markets.
Most of their investors got disappointed after they missed to meet their 9.9% expectations on their returns growth. The half-year returns on revenues reached 5% of which it cuts down the full year earnings to approximately £470m from the expected value of £482.5m. Despite the lagging in returns growth, the company had gross profits of 4pc higher at £106m for the past six months before the world cup. The CEO defended the firm against the negative performance indicated in the stock share markets arguing that the changes were as a result of a change in tax regime imposed by the Australian government to sport gambling firms as well as mixed reactions about whether U.S Supreme courts will legitimize sports gambling casinos.
The company management, therefore, decided to beef up on their marketing strategies to ensure they boost their market share prices. They agreed on a World Cup campaign that was meant to pledge donations of £10,000 for each goal scored by the Russian team in the entire tournament which was to go to an LGBT charity. Thanks to their world cup strategy it worked perfectly well and boosted their profit margin to give back glory to the company’s reputation. During the world cup, the company netted more than £22m as revenues that comes with a £8m in profit.
It was in 2009 when Betfair owned TVG, the largest U.S. horse racing firm with members in more than thirty-five states as well as broadcasting TV channel viewed in more than 45 million homes. Paddy Power which later merged terms with Betfair owns an online gambling casino, and they are still they are the biggest horse racing bookmakers in New Jersey. In 2017 they also owned a daily fantasy sports (DFS) company. Recently in June they also took over FanDuel (a U.S fantasy game site) after paying the firm $770m.
Despite deploying the key strategies in sports gambling, with all these sister companies to Paddy Power Betfair earns about $2 billion annually from the U.S casino gambling markets. According to revenues earned from other countries, this value seems that Paddy Power Betfair is not maximizing on these U.S markets. It is an undeniable fact that the U.S has a higher population of people interested in sports. After its merger with FanDuel and a contractual agreement with Boyd Gaming(another major online sports gambling casino company), the betting company is promising it’s investors to expect positive growth in the emerging U.S sports wagering market.
As of now, there are high hopes emerged after the U.S Supreme Court in May declared the legalization of sports betting and casino operations and should still pose reasonable taxes for the sports betting sites. The U.S CEO Kip Levin urges that they are already doing markets for all U.S. sports because it’s growing in popularity, especially in Australia. At the same time, they are ensuring their betting offers are more tailored to the U.S market. He also added that if more taxes are imposed on them, there may not be any probability of having promising rewards as well as it will remain a big challenge to eradicate illegal markets. Additionally, he suggested it could be better if all states in the U.S will have a constant rate so as to enable them to offer the same bets countrywide. Ed Monk who is an associate director at Fidelity personal Investing said “before the World Cup the bookmaker share value was up at almost 9% and therefore Paddy Power Betfair stands to gain from the opening up of US betting markets, confirmed earlier this year, and has moved quickly to expand its FanDuel site to capitalise. That benefit, though, now appears to be priced into the shares and investors will want to see the improved operational performance and a return to growing market share from here.”
The company has an optimistic approach to their strategies in increasing market share in the U.S markets. The management is focusing on brand recognition, market accessibility and operational capabilities and substantial investments to increase their customer base across the U.S wagering market. A strong coverage by their very own racing channel TVG will be their key advantage in increasing their customer base and brand recognition.