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Sportsbet Reports Huge Profit Compared to Domestic Rival Tabcorp

Thu, Aug 17, 2:51pm by Staff Writer

When the Irish-based Paddy Power / Betfair online gaming conglomerate released its interim financial results, which cover the first six months of 2017, the company’s Australian-facing site Sportsbet.com.au posted encouraging numbers.

Sportsbet generated £46 million (AUD$74.8 million) in underlying operating profit, based on nearly £1.7 billion (AUD$2.8 billion) in accepted wagers. That underlying operating profit mark represents a 78 percent improvement over the previous half-year period, while the total revenue figure grew by 35 percent year-on-year.

In terms of active customers across Australia, Sportsbet grew its player base to 688,000 – up 13 percent year-on-year.

Using all three metrics, Sportsbet appears to be dominating its domestically owned rival Tabcorp – which counted only 475,000 active Australian customers in the company’s 2017 full-year financial reports released two week ago.

Tabcorp is also lagging behind Sportsbet in terms of total revenue over the last six months, as the former generated AUD$2.4 billion to fall $400 million short of the latter.

Within the 45-page half-year report, which outlined financials for the full Paddy Power / Betfair conglomerate, the company repeatedly pointed to Sportsbet’s success in Australia as a stabilizing factor:

“In Australia, we commenced new marketing partnerships, meaning that Sportsbet now has key marketing assets across all major sports.

Our distinctive, modern brands are strongly positioned to leverage social and digital channels … (and) in Australia, Sportsbet’s share is almost 50%, reflecting our brands’ unique ability to engage in rich, valuable and fun sports themed conversations.”

The report also highlighted the array of advertising tactics used to put Sportsbet at the forefront of Australia’s sports betting industry:

“Our marketing, such as the controversial ‘Putting the roid in Android’ ad, continues to focus on highlighting our key products and leading promotions while deepening the distinctive position of Sportsbet.

We commenced key marketing partnerships in recent months, including sponsorship of free-to-air TV coverage of AFL to complement our continued sponsorship of the equivalent NRL coverage and a new Racing.com partnership.

This means that Sportsbet now benefits from key marketing assets in all major sports.”

Sportsbet was founded in 1993 as Australia’s first licensed bookmaker, and the company’s rapid ascent to national leader prompted the European-focused Paddy Power to acquire a 51 percent stake for AUD$200 million in 2009. Paddy Power completed a full takeover two years later, paying another $132 million for another 39 percent stake.

In 2016, Paddy Power completed a merger with U.K.-based iGaming operator Betfair.

Today, the combined Paddy Power / Betfair entity is said to be struggling as a whole, as evidenced by last week’s resignation of chief executive officer Breon Corcoran.

Corcoran oversaw the AUD$8 billion merger between the two European betting titans, but Paddy Power / Betfair has seen its share price fall by nearly 25 percent since.

That decline can’t be attributed to its ownership of Sportsbet, however, as the company’s Australian division pumped AUD$62 million into advertising and marketing campaigns across the country between January and June.

Even so, the interim results report predicted a sharp decline in that number going forward, based on the federal government’s ongoing efforts to reduce “primetime” adverts – or spots which air between 5:00 p.m. and 8:30 p.m. local time during live sporting matches.

The company also cautioned that South Australia’s recently implemented 15 percent point-of-consumption tax – which taxes wagers based on the location of the bettor, not the operator – would further dampen future performance:

“At current revenue levels, the additional cost would be approximately £4 million [$6.6 million] per annum.”

Another governmental reform said to reduce Sportsbet’s productivity is the ban on “in-play” wagers, or bets placed as a live event is in progress. Per the interim results, Sportsbet reports that in-play betting has decreased by nearly half, representing just 8 percent of wagering turnover compared to 15 percent last year.


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