User Profile

Domingo Wenzel

Bio Statement

Paddy Power's parent company has warned that the cancellation and postponement of sports events could cost it up to £110million in the coming months.

Flutter Entertainment, which also owns Betfair, says the growing restrictions on high-profile sporting competitions will cause a significant financial impact to them as it relies on global sporting events for nearly 80 per cent of its revenue.

Bookmakers are expected to be severely financially impacted by the coronavirus pandemic as high-profile sports contests are either postponed, suspended or run behind closed doors.

Flutter Entertainment owns Paddy Power, a major UK and Ireland sports betting firm

These include major football leagues such as the English Premier League, which has been suspended until April 3rd, the cancellation of golf's US PGA and LPGA tour events, and the running of horse racing fixtures in Ireland, Scotland, and Australia behind closed doors.

Exceptions include some Australian sports - where Flutter operates under the Sportsbet brand, and Britain's annual Cheltenham racing festival - a major event for Paddy Power Betfair - which went ahead without restrictions last week.

US and Australian punters help Betfair's parent company... Investors bet against bookie as doubts grow over £10bn... Paddy Power owner Flutter's merger with online gaming firm... Bookies William Hill, Flutter and GVC see shares fall after...

The Dublin-based group said that should the current sporting restrictions remain in place until August, and horse racing continues without spectators, their full-year earnings will be cut by between £90million and £110million.

But they also warned that if horse racing in Ireland, Scotland and Australia is cancelled, and its UK and Ireland stores are closed, this could cost them an extra £30million incrementally per month.

Chief executive Peter Jackson remarked that Flutter Entertainment and the wider betting industry was facing an 'unprecedented' challenge financially because of the coronavirus.

The Covid-19 outbreak has added to the growing troubles affecting bookmakers like Betfair, from the new £2 maximum stake limit on fixed-odds betting terminals (FOBTs) to UK and Ireland gaming duty increases, and the incoming ban on gambling with credit cards.

He said: 'Our focus, first and foremost, is on protecting the welfare of our employees and our customers and we will leave nothing to chance in this regard.

'While our near-term profitability will be impacted by the essential measures being taken globally, the Board will remain focused on protecting shareholder value and managing the business through these turbulent times.'

Flutter's share price fell 10.9 per cent to 5,772 this morning on the announcement. It joins other bookmakers in having had their stock price fall sharply in recent days as sports matches have been increasingly curtailed due to the coronavirus.

High profile football leagues, including the English Premier League, Spain's La Liga and Germany's Bundesliga have all been suspended because of the coronavirus

GVC Holdings, which owns Ladbrokes Coral, has seen its value plummet by almost half since last Tuesday, while William Hill's stock price has plunged by 53 per cent to 62p in that time. Its worth has already dropped 30 per cent today.

Gambling firms have also been hurt in recent months by new regulations, including the £2 maximum stake limit on fixed-odds betting terminals (FOBTs), gaming duty increases, and the incoming ban on gambling with credit cards.

Sports now account for roughly half of William Hill's revenue after it closed 700 of its UK high street betting shops in 2019 over a government crackdown on slot machines.

They also made up around half of GVC's overall net gaming revenue.

Flutter's EBITDA in 2019, excluding its investment in the United States, was 426 million pounds. It said on Monday that before the raft of sporting cancellations, trading so far this year had been running ahead of expectations.

TOP DIY INVESTING PLATFORMS

Low cost portfolios

£1.50 fund dealing

0.25% account fee capped for shares

Investment ideas

0.45% account fee capped for shares

Flat-fee investing

No fees

£9.99 monthly fee

One free £7.99 trade per month

Free share trading

Commission-free

Share investing

0% commission and no stamp duty

Model portfolios

Free fund dealing

0.35% account fee capped for shares

>Compare the best investing platform for you