Paddy Power outline possible cost of UK legislation on fixed odds betting terminals
Gambling group Paddy Power Betfair has outlined the possible impact to its revenue from UK legislation on fixed odds betting terminals (FOBTs).
The Department of Digital, Culture, Media and Sport in the UK confirmed today that it was proposing to reduce maximum stakes on FOBTs in the UK from £100 to £2.
Paddy Power Betfair said that it estimates that the direct impact of this new stake limit would be a 33pc to 43pc decrease in its total machine gaming revenue.
Last year this would have equated to a £35m to £46m revenue impact, representing 2pc to 2.6pc of group revenue.
"We have previously highlighted our concern that the wider gambling industry has suffered reputational damage as a result of the widespread unease over stake limits on gaming machines," Peter Jackson, CEO of Paddy Power Betfair, said.
"We welcome, therefore, the significant intervention by the Government today, and believe this is a positive development for the long-term sustainability of the industry."
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However the group said that it does not envisage that the proposed change will have a material impact on its UK Retail strategy.
The group said that there were a number of ways it could mitigate for the potential impact on its profits including through a reduction in direct variable costs associated with the terminals (including the Machine Gaming duty of 25pc), new product development, substitution to other betting products and market consolidation.
Paddy Power Betfair's market valuation surged more than €400m yesterday, after the betting giant confirmed talks to merge its US business with America's FanDuel to capitalise on the expected liberalisation of US betting laws.
The move comes in the immediate wake of a US Supreme Court ruling which this week struck down a federal law that has severely restricting sports betting there since 1992.