BUSINESS

Betfair revenue jumps on World Cup wagers, mobile betting gains

TAGs: Betfair, betfair us, Breon Corcoran, Germany, New Jersey Online Gambling, Schleswig-Holstein, TVG

betfair-world-cup-corcoranUK-listed exchange betting operator Betfair says the 2014 FIFA World Cup helped drive a 30% gain in revenue during its fiscal Q1. All told, Betfair says the World Cup generated revenue of £15.9m, twice the sum generated during the Euro 2012 football tourney. The World Cup also helped customer acquisition, which rose 181% in the three months ending July 31, while ranks of active customers rose 48%.

Betfair’s Q1 revenue hit £117.3m, a 12% year-on-year gain once you exclude the World Cup bonus. Revenue from ‘sustainable’ i.e. legal markets (UK, Ireland, USA, Italy, Denmark and Malta) was up 34%, accounting for 80% of group revenue. Sports revenue rose 30% to £83m and gaming revenue rose 45% to £19.8m. Mobile revenue gained 162% thanks to new apps, with mobile’s share of sports revenue rising from 45% to 70% while mobile’s share of gaming revenue doubled year-on-year to 28%. Group earnings were up 39% to £34.5m.

Betfair US reported revenue up 14% to £14.2m thanks mainly to gains in betting handle with horseracing division TVG, which also benefited from a new iOS app. Betfair declined to offer specific numbers from its New Jersey online gambling operations, over which a large question mark now hangs given that its casino partner Trump Plaza is due to close Sept. 16 and Betfair has yet to announce where it intends to transfer its flag. Speculation had been that Betfair would shift to the Trump Taj Mahal, but it too appears teetering on the edge of bankruptcy, so watch this space.

(UPDATE: A filing with the New Jersey Division of Gaming Enforcement says Trump Entertainment Resorts may try to keep the Plaza’s online gambling operations going following the Sept. 16 shutdown. The company is “exploring the economic, legal and practical feasibility of continuing its relationship with [Betfair] following the cessation of gaming operations’ later this month.)

In a call with analysts, CEO Breon Corcoran (pictured) addressed the looming impact of the UK’s new point-of-consumption tax (POCT), which will claim 15% of revenue generated by UK-based online punters beginning Dec. 1. Corcoran suggested the only method of countering the POCT impact was to continue to grow Betfair’s business in sustainable markets. Analysts have estimated the POCT could cut Betfair’s FY profits by 65% while Corcoran suggested the tax would trim £17m off Betfair’s books in FY 2015.

Corcoran told analysts that the company was “delighted” to have received a provisional sports betting license in Germany but said the company was still “thinking through all the possible opportunities.” The losing applicants are expected to mount a legal challenge of the convoluted licensing process and politicians in the state of Schleswig-Holstein – which enacted its own more comprehensive online gambling licensing regime prior to signing on to the federal treaty – are already calling for the state to withdraw from the treaty before it collapses under the weight of a judge’s gavel.

Corcoran’s pay packet was approved at Thursday’s annual general meeting but the vote was far from unanimous. Corcoran’s fiscal 2014 envelope was worth £1.28m, down from £3.7m the year prior, but 24m shares – representing 32% of votes cast – voted against the remuneration plan, with a further 2.2m shares abstaining. That’s up from just 4.6% of shareholders who frowned at the CEO’s pay the year before. But a push by corporate governance advisers Pirc to reject Betfair’s annual report over accounting cockups fell flat, garnering just 6% of votes cast.

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