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Paddy Power Betfair's Progress Slows Following Customer-Friendly Results

Customer-friendly results at major sporting events have "conspired to knock progress" at betting firm Paddy Power Betfair, according to Bradley Gerrard of the London TELEGRAPH. The Irish-based business said that while the Cheltenham horseracing festival had been "kinder to bookmakers this year," with 19 of the 28 races being profitable for it compared to 11 in '16, other events had "not been so successful." CEO Breon Corcoran said that results from the Grand National, Premier League football and the Masters golf tournament had "favoured customers" and "knocked its overall gross win margins in April" (TELEGRAPH, 5/3). MARKETWATCH's Razak Musah reported revenue for the three-month period ended March 31 increased by 23% to £416M ($535.6M). This included a £23M ($29.6M) benefit from the "translation of non-U.K. revenue due to the weakness of sterling." The company said that on a constant currency basis, revenue was up 15%. Corcoran: "Reversing the trend of the past two years, results at Cheltenham 2017 favored bookmakers and this contributed to good revenue growth. Combined with the actualization of merger-related cost savings and continued focus on operating efficiency, this resulted in a doubling of operating profits in the first quarter" (MARKETWATCH, 5/3). RTÉ reported competition has "intensified among gambling firms seeking to offset higher taxes and tighter regulation with increased revenues." This has resulted in a "flurry of mergers" including last year's £6B tie-up between Betfair and Paddy Power. Corcoran said that the "ensuing aggressive pricing and promotional activity has made it tougher to win new business." This meant that the Dublin-headquartered firm was "a little bit behind where we hoped" on increasing its customer numbers in Europe. Corcoran added, "The competitive nature of this industry right now is pretty extreme. What we have to remind our shareholders and indeed our competitors is that we have plenty of appetite to compete" (RTÉ, 5/3).

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