Despite a noticeable spike in revenue, the PaddyPower-Betfair merger has reportedly cost over $65 million dollars in expenses.
It was all the way back in August of 2015 that GamingZion first made UK gambling news by discussing the PaddyPower-Betfair merger. It was a significant move by the two internet gambling behemoths, and likely inspired a number of other companies to follow suit.
It seems the two companies are still feeling the effects of that merger, as it was reported to have cost over $65 million in losses during their first year. What’s interesting about this news is it comes after reports that revenue for the companies is up by 18%. Online revenues increased 20%.
The heavy loss is due mainly from merger expenses. PaddyPower has continued to spend heavily on marketing. Their marketing budget has risen by 31%, or £37 million over the past six months.
Executives at PaddyPower Remain Confident
Breon Corcoran has recently stated that he is happy with the PaddyPower-Betfair merger thus far, and expects a massive profit boost in the near future. He has predicted a £65 million increase from cost synergies related to the merger in 2017.
Corcoran is opposed to the idea of increasing gambling charges to customers. “Operating margins in betting shops are very, very skinny,” Mr. Corcoran said. “Doubling the tax would almost certainly lead to closures.”
Vaughn Lewis, a Morgan Stanley analyst, predicts that the merger could return up to £375 million to shareholders in 2016. “It ended the half with net cash of £2m, excluding customer balances, and both companies had a strong record of returning excess cash to shareholders,” he said.
Do you think the PaddyPower-Betfair merger will benefit the companies in the future? What will this mean for the gaming industry moving forward? Leave your comments below, and make sure to check out GamingZion’s list of online gambling sites in the UK to find the best websites for betting on everything from sports to politics!