THE rationale for a Paddy Power/Betfair merger is twofold. In today’s more restrictive regulatory climate for the bookmaking industry, too many shops do not pay their way, while online there are big economies of scale.
And both companies have obviously looked at the wave of consolidation in the gambling sector and thought they don’t want to get left at the starting post, amid rival Ladbrokes’s tie‑up with Coral and the £1 billion battle between 888 and Sportingbet owner GVC for Bwin.party.
The logic of the latest proposed deal looks impeccable. It creates an online betting giant, to be called Paddy Power Betfair, with £1.1 billion in annual revenues.
It fuses Betfair’s betting exchange – which allows punters to bet against each other – and presence in Europe and the United States with Paddy Power’s well-established, online gambling business, UK and Irish high street outlets and Australian operation. There also looks little likelihood of unexpected dangers in the tie-up. The combined new entity will have Betfair chief executive Breon Corcoran as its boss, and he already knows Paddy Power intimately from his time as chief operating officer at the company until 2011.
Not only are both companies marrying from a position of financial strength, they also share a somewhat similar irreverent marketing, never being afraid to shake up the bookmaking industry with sometimes controversial offers.
Operationally and culturally, then, the deal stacks up. The prospects for it proving a success look as near to a sure thing you can get in the gambling industry.
Bonus culture thriving
Total bonuses in the UK rose 2.7 per cent to £42.4bn in the latest financial year to March, according to the Office for National Statistics. It seems some of us are leading more austere lives than others.
There are still hundreds of councils cutting and outsourcing services, public services pay is under the cosh, there are plenty of food banks, the £1 shops are flourishing, and many working in part-time jobs when they would prefer full-time.
But the bonuses show that, for a fair slice of the country, times remain pretty good.