Mere hours after the Irish government has announced that it would seek to increase the taxation on sports books and gambling companies in the country, Paddy Power Betfair already estimates dire consequences for its operations in Ireland.
If you have been reading us, you will know that Ireland has just doubled its tax on the sports betting facilities in the country, prompting industry specialists, business representatives and the Ireland Bookmakers Association (IBA) to issue a warning that the majority of active bookies will begin to withdraw from the country should this legislation comes into effect.
But the warning has seemed to fall on deaf years, or so it would appear. Meanwhile, one of the flagship multinational betting conglomerates, Paddy Power Betfair, has taken a sore hit to its stock value. Shares of the FTSE100 company felt by £250 million in a single sweeping move, or 5% of the value of the operator.
Ireland’s Minister of Finance Paschal Donohoe estimates that this is a temporary setback and a necessary one, with the industry long not paying its due. However, the implications for even the largest companies can be significant. Paddy Power Betfair will specifically have to pay heftier duty, up to £20 million.
Donohoe deferred a proposed taxation once at the end of 2017 when he was warned about the danger that existed for many of the jobs in the sectors.
Meanwhile, Paddy Power Betfair’s competitors, including William Hill, Ladbrokes Coral, and GVC have been rather satisfied with the developments as their operations in Ireland have been kept to a minimum.
From UK to Australia Paddy Power Betfair Feels the Heat
Australia has proven another difficult market for the operator. Freshly-introduced consumption taxes have taken a toll on business. And now, more headwinds may be coming for the operator. In Europe, Paddy Power is also quite openly buffeted by controversial legislations that keep piling on left and right.
Italy is putting the crack on all advertisement of gambling products, meaning that the reach of companies in the country will significantly reduce. Any and all forms of public advertisement will be banned, leading to a considerable drop in the number of new customers from the country.
Not only that, but restrictive action will also lead to job loss, which, strangely, seldom features in the concerns of the politicians slapping the regulators. Lawmakers have failed to regulate and instead – they are working on measures that end up damaging the industry and posing risk to sustainable jobs.
Paddy Power Betfair now has to tackle slow revenue growth in the United States among other things. While investors welcomed the news that the operator will spearhead its activities in the burgeoning market in the United States, there has been no definitive proof that the operations have been any successful so far.
The clouds gathering on Paddy Power Betfair are definitely not going to be easy to disperse, but there is quite a bit that the operator can do to weather the storm. Diversifying its portfolio in markets that are beginning to expand might be a good start in the very least.