Betting Business Bulletin 15th Jan 2018
Jackson begins to make his mark at Paddy Power Betfair
Peter Jackson took over from Breon Corcoran as Paddy Power Betfair’s chief executive last week and immediately began to make his mark at the company with the appointment of two new divisional heads.
One of the changes was forced upon Jackson, with Cormac Barry standing down as chief executive of the company’s Australian arm Sportsbet to take the same role at travel technology company CarTrawler, whose chairman is former Paddy Power chief executive Patrick Kennedy.
Barry will be replaced by Barni Evans, Sportsbet’s chief commercial officer, who joined the business as chief marketing officer in 2011 and has been with the group since 2001.
Jackson has also created the new role of chief executive of the company’s European operations which will be filled by Dan Taylor.
Taylor, who will be responsible for all Paddy Power and Betfair brands outside the US, was previously managing director of the group’s UK and Ireland operations.
Analysts at stockbroker Davy described the departure of Barry – who has been Sportsbet chief executive since the business was acquired in 2009 and has been with the group since 2001 – as “disappointing” given his role in making the business one of the biggest in the Australian gambling market.
They added: “However, he leaves the business in very safe hands – Barni Evans has been with the group since 2001 and has been a key member of the Sportsbet team since 2011.”
GVC announce record figures
GVC Holdings ended 2017 with a flourish according to a trading update issued last week which said earnings for for the year would be at the top end of expectations following a record final quarter.
The gambling group, which last month agreed a deal worth up to £4 billion for Ladbrokes Coral, announced quarterly net gaming revenue (NGR) for the last three months of 2017 of €279.5 million (approx £248m).
As a result NGR for 2017 is expected to be around €1.009bn, an increase of 13 per cent compared to the same period in 2016. Ebitda (earnings before interest, tax, depreciation and amortisation) is expected to be at the top end of management’s expectations.
GVC, the owner of Sportingbet and bwin among other brands, reported gross win margin in the final quarter for its sports brands was 13.1 per cent, significantly ahead of the expected long-term average of ten per cent.
Analysts at stockbroker Davy said: “GVC’s post-close trading update points to a very favourable run of sports results in Q4.”
GVC chief executive Kenny Alexander said of the latest figures: “I’m delighted to report another strong year for the group with underlying NGR growth of 18 per cent, reflecting the strength of our brands, technology and the hard work of our talented people.”
GVC’s takeover of Ladbrokes Coral will create one of the world’s largest gambling companies. The final price of the deal depends on what limit the government sets for FOBT stakes following its ongoing consultation, ranging from £3.2bn if it is £2 to £4bn at £50.
Hancock promotion seen as positive for operators
The ministry with responsibility for gambling has a new head with Matt Hancock last week being promoted to culture secretary as part of Theresa May’s reshuffle.
The Department for Digital, Culture, Media and Sport is in the midst of a wide-ranging consultation on gambling which closes on January 23, with its highest-profile issue being the maximum stake on fixed odds betting terminals. Speculation has already started as to what the appointment might mean.
The stake is set to be cut from the current maximum of £100, with the consultation setting out four options ranging from £2 – which bookmakers have claimed would cause thousands of betting shops to close – up to £50.
Analysts at Dublin-based stockbrokers Goodbody said Hancock was seen as “business friendly”, adding: “It’s fair to say his appointment is more positive for the industry than negative.”
Reacting to the news, Association of British Bookmakers chairman Paul Darling said: “We welcome his appointment. He has a full understanding of the industry and its dynamics and we look forward to working with him.”
Sports minister Tracey Crouch, who has direct responsibility for gambling and is regarded as being a supporter of a major cut in FOBT stakes, is however staying out.
Meanwhile their former Conservative colleague Sir Hugh Robertson, who as sports minister oversaw the delivery of the 2012 London Olympic and Paralympic Games, has been appointed chair of the new Racing Authority, which is set to take over responsibility of spending levy funds next year.
War of words continues
Relations between the different sectors of the gambling industry have deteriorated as the debate over FOBTS has raged and the latest flashpoint came last week.
The Association of British Bookmakers described a report that claims the economic cost of cutting FOBT stakes to £2 has been overestimated as flawed and funded by vested interests.
The analysis was carried out by the Centre for Economics and Business Research (CEBR) for arcades group Bacta (British Amusement Catering Trade Association) as the government continues its consultation on gambling, including the maximum stake on FOBTs.
The CEBR analysis projects that betting industry losses from a £2 stake could be up to 47 per cent lower than suggested by the government’s initial impact assessment of £639 million, claiming instead that it would result in a £335m reduction in annual gross gambling yield for high street betting shops.
It went on to say the consequent loss in tax revenue could be offset by less being spent on problem gambling and by benefits elsewhere in the economy.
In response an ABB spokesperson said: “This is a flawed report, funded by those with vested commercial interests, with no access to betting shop industry data.
“The Treasury’s own analysis, with detailed betting shop data, has estimated that the net negative cost to the UK economy of a £2 stake would be a staggering £8.5bn at worst over the next ten years, and £5.5bn at best.”
What’s happening this week
On Thursday William Hill unveil their latest trading update with analysts at Morgan Stanley expecting operating profit up five per cent at £274 million.
They also expect to see “positive momentum in online and cautious commentary on Australia”.