Dublin-based bookmaker Paddy Power Betfair revealed plans to boost its advertising spending to offset the negative impact that recent regulatory changes in the UK and Australia. The announcement came at a time when the gambling operator revealed an expected increase in its 2017 annual revenue and earnings.
Today, the Irish bookmaker, which was formed after a £5-billion merger between Ireland-based Paddy Power and the British online gambling company Betfair in 2016, revealed its preliminary results for the full year 2017. The newly-appointed Chief Executive Officer of the company, Peter Jackson, commented that despite some hurdles faced by Paddy Power Betfair, the operator had been still enjoying “good growth” that would allow it to invest additional funds into the business.
The company shared that its last-year revenue marked a 13% increase, reaching £1,745 million thanks to a stable increase in the revenue generated by the sports division. In addition, according to Paddy Power Betfair’s preliminary results, the underlying earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 18% to £473 million, surpassing the previous guidance range from £450 million to £465 million due to favourable sports results in the fourth fiscal quarter.
Paddy Power Betfair 2018 Strategic and Operational Goals
Today, the gambling operator revealed that it plans to increase its marketing budget estimated to £300 million with additional £20 million, despite confirming that its Paddy Power brand has been losing market share due to aggressive advertising and marketing campaigns of rival groups such as William Hill, bet365 and Ladbrokes Coral.
The considered boost in the company’s advertising spending also comes in attempt to deal with tighter regulatory rules in some of the operator’s key markets. As mentioned above, Paddy Power Betfair has been facing a hard time in the UK and Australia, where stricter regulatory regime has been imposed.
The UK authorities are considering a crackdown on controversial fixed-odds betting terminals (FOBTs) in order to put limits on the maximum stakes allowed at the machines to tackle gambling-related harm. On the other hand, Australia has been facing a new point-of-consumption tax imposed on gambling operators, with the new tax expected to have negative impact on gambling companies’ profits.
According to company’s estimates, UK bookmakers’ spending on advertising campaigns in the sports betting market has increased 19% over the last few years. Paddy Power Betfair suffered a market share decline from 15% in 2014 to 12% in 2017.
As mentioned above, the pace of product development in the Paddy Power band had slowed due to the fact that the operator was primarily focused on the two businesses merger in one market conglomerate. The current CEO of the company, Peter Jackson, explained that at the time when the integration was carried out all product development had to be stopped, which resulted in Paddy Power losing some of its market share.