Paddy Power braces for earnings knock from Australia taxes

Paddy Power. Pic: PA Wire.Paddy Power. Pic: PA Wire.
Paddy Power. Pic: PA Wire.
Paddy Power Betfair has lifted sales and profits, but warned investors that its full-year earnings would be knocked by extra taxes in Australia and losses from its fantasy sports business.

The betting group trimmed its earnings before interest, tax, depreciation and amortisation guidance, saying the figure would come in between £460m and £480m this year.

Paddy Power Betfair has reported a 5 per cent increase in revenues for the six months ended June 30, up from £827m to £867m.

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Profit before tax at the betting group was up 4 per cent year on year to £106m.

Chief executive Peter Jackson said: “It has been a busy and successful few months for Paddy Power Betfair.

“We have made substantial progress against our strategic priorities and trading in the second quarter was good, with all brands and operating divisions contributing to the group’s double-digit revenue growth.”

The figures come after the FTSE 100 company announced plans to merge its US business with fantasy sports firm FanDuel.

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However, the inclusion of FanDuel’s operations is expected to knock earnings this year, the firm has said.

In addition, the company took an £8 million hit from changes to betting taxes implemented in Australia last year.

In the UK, bookies have also been warning about the impact of a recent Government move to slash stakes on fixed-odds betting terminals.

William Hill, which makes more than half of its retail revenues from FOBTs, said in May that the “unprecedented” decision could see around 900 of its betting shops become loss-making.

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Ed Monk, at Fidelity Personal Investing, said: “Paddy Power Betfair stands to gain from the opening up of US betting markets, confirmed earlier this year, and has moved quickly to expand its FanDuel site to capitalise.

“That benefit, though, now appears to be priced in to the shares and investors will want to see improved operational performance and a return to growing market share from here.”