Paddy Power Betfair CEO Peter Jackson has stressed the importance of a “disciplined” marketing approach in the US as the company plans to make a “substantial investment” to build on early momentum in the country’s expanding sports betting sector.
Jackson was speaking this (Friday) morning after the company posted its financial results for the third quarter, a period that included the wider roll-out of its sports betting services in the US.
The firm’s FanDuel business, which it acquired in July, enjoyed a strong start to legalised sports betting in New Jersey, leading the market in the first full month of regulation and following up on this with an impressive showing in September.
This helped to push the company’s revenue in the three months through to the end of September to £483m (€550m/$629m), up 8% on a proforma basis and 12% in constant currency, with online revenues in Europe improving by 15%.
Proforma underlying EBITDA remained flat at £100m in constant currency, but was up 6% year-on-year when excluding the impact of US sports betting losses and betting tax increases.
Jackson said that Q3 was an “exciting” period for Paddy Power Betfair and added that the firm witnessed “good momentum” in all of its existing businesses in the US, as well as it new FanDuel unit.
“While it is early days, we are pleased with initial progress in the US,” he said. “Early indications in New Jersey highlight our strong position in the market.”
Jackson also set out plans for “substantial investment” in US marketing efforts in order to maintain this momentum, but warned that the company will do this in a “disciplined manner”.
As a result of this increased spend, Jackson said the company expects to post an EBITDA loss of around £25m for the current year.
Jackson added: “In the US, the exciting potential of the sports betting opportunity and the strength of our strategic positioning has been evidenced by our experience to date in New Jersey.
“FanDuel recorded a 30% share of the sports-betting market in September, driven by a market-leading customer proposition, our strong brand presence and the ability to cross-sell from our fantasy sports player base.”
Jackson also noted the changes in UK tax laws, which were set out by Chancellor Philip Hammond in his Budget announcement this week. Remote gaming duty will increase from 15% to 21% from October 2019.
Jackson said Paddy Power Betfair is “relatively well positioned to capitalise on growth opportunities in the UK”, despite higher tax rates coming into effect.
Jonathan Hill, who started as chief financial officer at Paddy Power Betfair last week, agreed that the company is in a good position to pursue growth opportunities in various markets.
Hill said: “I think the group is really well placed to take on the challenges that will come our way.”
Jackson concluded: “Overall, we are pleased with the substantial progress we continue to make against our strategic priorities. Our continued investment in brands and customer proposition means that all our businesses will exit the year with enhanced competitive positioning.”