* Online gambling company narrows focus on fewer markets
* Revenues down but profitability rises after bid rejection
* Simpler betting product introduced to widen appeal
By Keith Weir
LONDON, Sept 5 Betfair is starting to
reap the benefits of cost-cutting and its focus on attracting
more punters in well regulated betting markets such as Britain
and Ireland, the online gambling company said on Thursday.
Betfair has been forced to defend its strategy after
rejecting a 1 billion pound ($1.5 billion) takeover by private
equity firm CVC Capital Partners in May.
Revenues fell 13 percent to 90.4 million pounds in the three
months to the end of July, reflecting a decision to pull out of
markets including Greece, Germany, Cyprus and Spain where
regulatory risks or tax hurdles were too high.
The absence of a major international soccer tournament also
depressed revenues compared to last year when the Euro 2012
competition pulled in gamblers.
However, profitablity in the form of underlying EBITDA rose
16 percent to 24.9 million pounds in the quarter, helped by a
cost cutting programme that has seen the company shed 500 jobs
from a peak of around 2,300 workers.
"Betfair's first quarter performance is in line with our
plan and leaves us on track to meet our expectations for the
full year," Chief Executive Breon Corcoran said.
SIMPLIFYING SPORTS BETTING
Betfair shares, which have climbed to 2-1/2 year highs in
recent weeks, were little changed at 990p by 0730 GMT after a
trading statement that was broadly in line with expectations.
The recent rise has pushed the shares above the 950p offer
price that the company rejected, giving Corcoran some breathing
space as he reshapes the company after joining from Irish
bookmaker Paddy Power a year ago.
Launched in 2000 as an online exchange where gamblers could
bet against each other, the company now also offers conventional
fixed-odds betting on sports events to appeal to a wider
audience wanting a simpler product.
The move brings Betfair into more direct competition with
companies like Paddy Power and British market leader William
Betfair said an advertising campaign to coincide with the
start of the soccer season last month had driven a 26 percent
increase in customer numbers in Britain.
Betfair is focusing on Britain, Ireland, Denmark, Malta,
Gibraltar and the United States and said revenues had grown by
more than 10 percent in these markets last month.
Online gambling companies face a 300 million pound bill from
December 2014 when Britain closes a loophole that has allowed
companies to avoid taxes by basing themselves offshore in
locations like Gibraltar.
Corcoran said Betfair could benefit if the tax meant smaller
online players were unable to compete.
"There could be market share gains. We see that as an
opportunity," he told reporters. ($1 = 0.6399 British pounds)