The merger between Paddy Power and Betfair is all set to be completed early next year, according to Betfair CEO Breon Corcoran. During the exchange operator’s half year results, the company confirmed that all relevant regulatory filings have been submitted and the merger is on track for completion in Q1 2016, subject to shareholder and regulatory approval
Betfair appears to be in rude health going into the merger. For the six months ended 31 October 2015 the firm reported revenue up 15% to £274.4m against a comparative period containing the World Cup and it even managed to absorb an extra £26.8m in costs from the UK’s point of consumption tax to report a 9% increase in EBITDA to £80.5m.
Corcoran commented: “Betfair traded strongly in its key markets throughout the first half of FY16. These results, which came against a tough comparative period featuring last year’s football World Cup, are ahead of our original expectations and demonstrate the group’s continued strong momentum.
“Our strategy of focusing investment in markets with good regulatory visibility continues to pay off. Betfair’s relatively low exposure to unregulated jurisdictions meant that even though revenue decline in these markets accelerated, primarily due to the impact of suspending operations in Portugal, it was more than offset by growth in sustainable markets.”
Betfair said that its two largest markets, the UK and the USA, accounted for most of the growth. The Sportsbook product continued to take market share in the UK with stakes up 93% year on year. In the US, TVG’s acquisition of HRTV in February 2015 gave it greater distribution and access to premium content, which, together with the business’ existing momentum, resulted in H1 revenue growth of 38%.
Corcoran added: “Our markets remain highly competitive and, alongside our strategy of giving customers generous pricing and promotions, we believe it is essential that we continue to invest. Over the last twelve months we have added more than 100 people to our product development teams, and, adjusting for the World Cup, our sales and marketing costs were up 13%.
“Notwithstanding this investment, and the significant burden of higher gaming taxes, strong revenue growth and continued cost discipline resulted in 9% higher EBITDA.”
Betfair’s fledgling Italian business is attracting new customers despite ‘the limitations that result from product restrictions and ring-fenced national liquidity’.
The firm explained: “Cash Out, which is only permitted on exchanges in Italy, is proving very popular and compares favourably with Cash Out usage on Betfair.com; in October, 55% of Italian Exchange football customers used Cash Out compared with 35% in other regions. This is reflected in customer satisfaction, with 85% of customers now rating the Exchange positively, compared to 63% in the prior year.”