May 18, 2018 / 11:59 AM / 3 months ago

Paddy Power Betfair welcomes UK decision, says preparing for U.S. expansion

DUBLIN (Reuters) - Paddy Power Betfair (PPB.I) welcomed the British government’s decision to reduce the maximum stake on fixed odds betting terminals to two pounds as the issue had become a lightning rod for the industry, CEO Peter Jackson said on Friday.

FILE PHOTO: A man sits at a fixed odds betting terminal in a betting shop in London, Britain, October 31, 2017. REUTERS/Peter Nicholls/File Photo

Britain will cut the maximum stake on fixed-odds betting terminals to just two pounds to try to tackle problem gambling.

The terminals currently allow gamblers in high street shops to bet up to 100 pounds ($135) every 20 seconds on games such as roulette, which can lead to players losing large sums very quickly.

“We wanted to see the limit come in at 10 pounds, but we’re really pleased we got some resolution. There was an indication that there might be a change in some of the tax rates associated with the sector but it’s very hard to speculate on what that might mean at this stage,” Jackson told reporters.

“We just need to know when it will be implemented because that is the other uncertainty.”

Paddy Power Betfair’s welcome for the move contrasts with the reaction of rival William Hill (WMH.L), whose CEO Philip Bowcock said on Thursday that the British government had handed the company “a tough challenge”.

Paddy Power Betfair said on Thursday that the new stake limit would have had a 35-46 million pound impact on revenue in 2017, representing 2 to 2.6 percent of group revenue.

Gambling companies — most of which run internet as well as high street businesses — face a two-way squeeze as the British government plans to increase a duty on online gambling to offset the loss of income from the cut in the stake.

A U.S. Supreme Court ruling on Monday paved the way for states to legalize sports gambling after it struck down a 1992 federal law that had barred gambling in most places.

The Dublin-based company said this week it was in talks about possibly merging its U.S. business with fantasy sports company FanDuel to target the U.S. sports betting market.

The CEO would not be drawn on the discussions but said the company was preparing to expand its U.S. operations, and that he “likes the hand we’ve got”.

“We already operate a very large horse racing business in the U.S. We have 10 percent market share of the entire horse racing market, and if you look at the online market our share is much higher than that. More like a third or so,” he said.

“We know how the legislation works on a state-by-state basis. We are fully licensed by the New Jersey Department of Gaming Enforcement, and we think it will be relatively straightforward to receive our operating license to take sports betting and we are making preparations to enter that market.”

“New Jersey will be live with businesses taking bets in advance of the NFL season which starts in September, and there are a number of other states ready to follow on soon after.”

Reporting by Graham Fahy; Editing by Adrian Croft

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