Paddy Power redoubles efforts to lure in punters after losing market share

Bookmaker Paddy Power Betfair will beef up the amount it spends on marketing after admitting it had lost market share to rivals. 
Chief executive Peter Jackson said the company would put an additional ?20m into marketing than initially planned to encourage customers to stick with the company after its pace of product development had slowed while it focused on the merger of the Paddy Power and Betfair businesses in 2015.
“To get the integration done quickly we had to stop all product development and so Paddy Power has lost market share and is a little bit behind from a product perspective,” he said.
The chief executive said the company’s marketing budget was roughly ?300m in 2017 and that the extra investment comes on top of what would have been a higher spend due to it being a World Cup year.
Paddy Power Betfair estimates that spending by UK bookmakers on advertising in the sports betting market has risen 19pc in the last few years and that the company had not kept up with this. As a consequence, its share of the market has declined from 15pc in 2014 to 12pc last year.
Paddy Power Betfair chart
The company also admitted that a "sustained period" of bookie-friendly sporting results this year had "significantly affected customer activity, including reduced re-cycling of customer winnings".
Investors were unnerved by the announcement, sending shares down 4pc to ?78.65 in spite of a solid set of results.
Sales in 2017 rose 10pc to ?1.74bn helping profits hit ?246m, well up on the ?12m it made the year before, when it was hit by more than ?300m in one-off costs.
Mr Jackson said the company would remain in the Australian market, where it is the largest operator under the Sportsbet brand, despite the introduction of new taxes and a ban on companies extending credit to customers with which to bet.
He said that Paddy Power would not shut any of its 354 shops whatever the outcome of the UK Government’s review into controversial fixed odds betting terminals. The Government is currently reviewing whether the maximum stakes on these machines - dubbed the "crack cocaine" of gambling by critics - should be slashed from ?100 to as little as ?2.
Paddy Power redoubles efforts to lure in punters after losing market share

New Culture Secretary Matt Hancock will rule on the level of stakes on fixed odds betting terminals within the next few months

Mr Jackson admitted the stake limit on FOBTs needed to “come down substantially”.
“Frankly, if they try to fudge it, it will only cause more problems,” he said. “[However] I think there are some scare stories of the impact on jobs, tax take and horse racing.”
Rival bookie William Hill last month warned that cutting FOBT stakes to ?2 could result in "a significant number of shop closures" and deliver a multi-million pound hit to the horse racing industry, which derives a lot of its income from betting.
Mr Jackson said Paddy Power Betfair would open three new UK betting shops this year and would consider opening more if rivals started selling off sites.
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