Paddy Power Betfair blames FOBT crackdown for profit slump

Flutter Entertainment has pointed to higher taxes and tighter gambling regulations in the United Kingdom after recording a significant drop in profits.

The owners of Paddy Power and Betfair raked in £81 million for the first half of 2019, which marks a 24 per cent slide compared to the same period last year.

However, the company claims it would have recorded a 15 per cent increase in profits if not for a £47 million hike in taxes and duties.

It also said the British government’s reforms for fixed odds betting terminals (FOBTs) have slashed the profitability of its High Street betting shops.

Maximum bets on the highly controversial FOBTs were recently slashed from £100 to £2, leading UK bookmakers such as Ladbrokes and William Hill to close thousands of betting shops.

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“While both changes are impacting the profitability of our estate, the strength of our sports-led estate means we are confident we will continue to grow our share in both markets as less profitable competitors start to re-trench,” Flutter officials said in a statement this week.

“We are starting to see announcements of shop closures from competitors and anticipate that more will follow.”

Flutter’s online betting services are flourishing, however, as are operations abroad.

The firm’s interests in the nascent US sports betting scene have enjoyed a 50 per cent year-on-year boost, while the Betfair and Sportsbet brands in Australia are on track to meet full-year earnings targets despite raised taxes.

“All divisions are performing strongly on an underlying basis and have responded well to the challenges faced,” said Flutter CEO Peter Jackson.

“We are pleased with the progress we are making to build a more diversified and sustainable business.”