UK bookmaker Betfred swung to an eight-figure loss in its most recent fiscal year despite a significant revenue gain.
This week, the privately held Betfred released its results for the 12 months ending September 24, 2017, which showed revenue improving 9.6% to £634.5m while earnings rose 3% to £83.3m. Total gambling turnover across Betfred’s retail, online and Tote divisions was up 17.5% to £12.7b.
The revenue improvement came largely via the company’s October 2016 addition of 322 Ladbrokes Coral betting shops, its Totepoool business signing a commingling deal with the Hong Kong Jockey Club as well as an unspecified rise in its online customer base.
Regulus Partners analysts estimated that Betfred’s online revenue improved 3% year-on-year to £90m, while the Tote improved 12% to £329m, although some of that latter figure was shared with Betfred’s B2B partners.
Despite all the positive momentum, Betfred booked an operating loss of £13.4m after recording a profit of £32.4m the previous year. The company blamed the decline on a goodwill impairment of its digital assets, rising costs and higher gaming duties.
Predictably, the usual anti-gambling suspects in the UK media are playing up the fact that Betfred founder Fred Done chose to take a £10.2m annual dividend, the same as last year.
These media types acidly note that Betfred announced last month that it could be forced to close up to 900 betting shops and lay off up to 4,500 staff if the government follows through with its plan to cut the maximum stake on fixed-odds betting terminals (FOBTs) from £100 to just £2. Last week, the government announced that the FOBT stake cut won’t happen until 2020.
Regulus noted that 83% of Betfred’s earnings were generated at the retail level – where the aforementioned FOBTs reside – which puts the company “in a particularly difficult position” given the government’s current stance. As a result, Regulus suggested Betfred’s “core business is likely to require structural change.”
Last September, Fred Done declared that his company’s “association with racing is broken” after years of disharmony between the betting and racing industries. Last month, Betfred announced a deal with Alizeti Capital as the first stage of its plan to divest its Tote holdings.