Paddy Power Betfair ‘Won’t Close Shops’ if FOBT Stakes Slashed

New Paddy Power Betfair chief-executive Peter Jackson has repeated the company’s stance that it would welcome a reduction of the maximum stakes on fixed-odds betting terminals.

Paddy Power Betfair chief Peter Jackson

Paddy Power Betfair chief Peter Jackson believes that his company’s betting shops are well-placed to withstand a regulatory hit on FOBT maximum stakes because they ‘outperform’ on sports betting. (Image: Racing Post)

His words, delivered during his first earnings call on Wednesday, echoed those of his predecessor Breon Corcoran who was accused of ‘stabbing the betting industry in the back’ when he broke with ranks on FOBTs last year.

Corcoran branded the machines ‘toxic’ and called for a decrease of max stakes to ‘£10 or lower’ in a letter to then Minister for Culture, Media and Sport, Tracey Crouch.

DCMS has conducted a review into the controversial machines which, it has confirmed, will lead to a reduction in stakes, with rumours suggesting they could go as low £2.

The betting industry says this would be a disaster for the retail bookmaking sector that would result in the loss of thousands of jobs and the closure of up to half the nation’s betting shops.

Retail Jobs Are Safe

But Jackson believes that Paddy Power’s shops would be safe, even in the event of a reduction to £2.

“The FOBT issue needs to be dealt with,” he said. “I’m not sure any of the proposals I’ve seen knocking around will help achieve that. It needs to be dealt with once and for all.”

“Our shops are more profitable and outperform on sports betting enabling them to better withstand reduced machine stakes limits and we don’t envisage closing any shops following regulatory changes,” he added.

“All our shops are in high footfall, highly competed locations, positioning us to benefit from competitor shop closures.”

Less to Lose at Lower Stakes

With fewer high street betting shops than competitors like Ladbrokes and William Hill, Paddy Power is less exposed to the negative financial impact of a drastic drop in stakes, and furthermore might even gain from a possible migration of land-based customers online.

Analysis by Barclays suggests that a drop to £2 would cost Ladbrokes Coral £449 million in revenues per year and William Hill £284 million, but Paddy Power only £55 million. These figures suggest that Paddy Power’s stance may be more cynical and self-serving that it may care to admit.

“Frankly, if they [the government] try to fudge it, it will only cause more problems,” said Jackson. “[However] I think there are some scare stories of the impact on jobs, tax take and horse racing.”

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