Paddy Power Betfair could buy more businesses to add to last month's purchase of Georgian operator Adjarabet, the Irish gambling giant said on Wednesday.
Pretax profits at Paddy Power Betfair fell 11 per cent in 2018 to £219 million sterling (€255.5 million) from £247 million the previous year as the group invested in the newly liberalised US market.
The company intends asking shareholders to change its name to Flutter Entertainment plc at its annual general meeting in May to reflect that it now owns six on-line businesses in Europe, the US, Australia and 626 bookie shops in Ireland and Britain.
Speaking after it published 2018 results, chief financial officer, Jonathan Hill, indicated that Paddy Power Betfair would follow its February purchase of Adjarabet in Georgia with further deals.
Deals
He explained that the group was looking at deals that would allow it take a leading position in new markets, as it had done with Adjarabet.
“We are looking for deals in other markets that can replicate that, either in Europe or other geographies, that’s really where our M&A efforts are going to be focused,” he said.
The group said revenue rose 7 per cent to £1.87 billion last year from £1.745 billion in 2017.
Earnings per share fell 6 per cent to 241.7p sterling in 2018 from 257.9p the previous year. The group will pay investors a 200p a-share dividend, in line with last year.
Paddy Power Betfair blamed the fall in earnings on a £24 million loss in the US where it invested in expansion after a federal court lifted a ban on on-line sports betting last year.
Peter Jackson, chief executive, said that its US sports betting business, Fanduel, had taken 35 per cent of the market in New Jersey, one of the first states to liberalise sports betting following the ruling last year.
The group expects further losses in the US this year as investment continues, but the division should begin generating a profit in 2020.
Mr Jackson predicted that the opening of the US market would be one of the most significant industry developments since the advent of online betting.
A doubling of Irish betting tax to 2 per cent of turnover from January 1st this year would have cost the group an extra £20 million in 2018.
Similarly, a proposal to cut the maximum wager allowed in gaming machines in British betting shops to £2 from £100 from next month would cut revenues by £36 million to £47 million in a full year.
Rivals
While rivals including William Hill and Ladbrokes-Coral warn that the stake reduction will force shop closures, Mr Jackson said Paddy Power will not follow suit.
“With our leadership in sports betting I am confident that we will see alot of customers come into our shops who historically would have been in our competitors’ shops,” he argued.
Profits from its shops fell 19 per cent to £51 million from £63 million as revenue dipped £5 million to £223 million and costs rose.
Operating profits from its online business, made up mainly of Paddy Power and Betfair, rose 37 million to £275 million, aided by 5 per cent growth in revenue to £948 million.
Profits from its Australian Sportsbet business fell 4 per cent to £119 million as revenues remained flat at £403 million. Mr Jackson said 2019 trading was in line with expectations.
