Breon Corcoran, head of new betting giant Paddy Power Betfair. Despite headwinds, the newly merged company is showing outstanding growth.
Paddy Power Betfair profits sky-rocketed by 36 percent in the first quarter of 2016, the newly-combined company said this week. This is despite a disastrous Cheltenham horse racing festival that cost the company £20 million in just four days.
If it can survive that and come up smelling of roses, we imagine it can also cope with Leicester City winning the English Premier League too. And with the frenzy of betting that is the Euro 2016 soccer championships around the corner, everything points to a strong year for the new betting powerhouse.
Of course, the merger between Paddy Power and Betfair was only finalized on February 2nd, so the financial report released this week has been calculated as though the two businesses had been operating as a single entity since the start of the year.
Overall operating profit grew to £43 million, said the company, a 36 percent increase on the same period last year while EBITDA (earnings before interest, taxation, depreciation and amortization) were up 27 per cent to £59 million. Meanwhile, Revenues grew to £339 million, up 16 per cent on last year.
Growth Despite Upheaval
Paddy Power Betfair with chief executive Breon Corcoran praised his colleagues and the strong results which come at a time of integration and upheaval.
‘All four of our brands, Paddy Power, Betfair, Sportsbet and TVG, continue to trade well in a highly competitive environment,’ he said. ‘This good start to the financial year is a credit to our colleagues, particularly at a time when we are bringing together two businesses.
‘Our marketing, technology, and operations performed well throughout the key spring racing period and we are now focused on preparations for Euro 2016.’
While online revenues increased 17 per cent to £195 million, revenues at its 601 high street betting shops fell 1 per cent to £67 million on a like-for-like basis. This was mainly due to ‘poor sporting results,’ the company said, such as the aforementioned Cheltenham Festival, where victories for a string of favorites handed the UK bookmaking industry its worst week in living memory.
Corcoran also addressed the restructuring of the newly merged company, which is aiming to create £50 million per year in cost savings, mainly through cutting around 650 jobs.
‘The post-merger integration is on-track,’ he said. ‘A strong leadership team is in place and restructuring of the business has commenced. We are working to bring the best of each business to the combined group and customers are starting to see some early benefits as we roll out product features across the brands.’
Packer to Sell $800 Million-Worth of Shares in Melco-Crown and Step Down as Co-Chairman
James Packer looking like he just realized he might have forgotten to turn the gas off before he left for his soiree. Or is he just worried about his company’s credit rating? (Image: news.com.au)
James Packer’s Crown Resorts is to sell $800 million of its shares in Melco-Crown back to the company, reducing its stake in the Macau-based operation from 34 percent to 27 percent. Packer will also step down as co-Chairman of Melco-Crown. His co-chair Lawrence Ho will increase his stake in the company and is said to be supportive of the move.
It’s a surprising one, nevertheless. Just six months ago Packer celebrated the opening of Melco-Crown’s new integrated casino resort, Studio City, Macau, a $4.5 billion project on the Cotai Strip, that was years in the making. At the time, he declared himself to be incredibly excited about ‘the long-term macro picture for Macau,’ despite the region’s persistent decline in revenues.
It seems Packer is reining in his Eastern expansion, an ambition until recently he pursued tenaciously, and concentrating instead on projects closer to home, and in Las Vegas.
Credit Where Credit Is Due
Crown is in building casino resorts in Sydney, Melbourne and Perth and is also finally about to make its mark on the Vegas Strip. Packer has acquired the plot of land on which the New Frontier Hotel and Casino once stood, where work has begun on the construction of Crown’s Alon development, a $1.9 billion casino resort.
Analysts have estimated that Crown will need almost $3 billion over the next five years to fund these projects, and the sale of the shares in Melco-Crown may be a means of keeping the company’s credit rating on the straight and narrow as it seeks investment.
Late last year it was reported that Crown was having trouble raising the $425 million it wants for the Alon project to help it reduce risk, a fact that may delay the development beyond its 2018 scheduled completion.
Zero Chance of Privatization
Australian financial analyst Bell Potter said this week that the sale of the shares showed that Crown is concerned about its current debt level and is ‘lightening the load.’
‘The major Crown shareholder wanted them to do it, hence the potential for a capital return with part of the $US800m,’ it said.
Bell Potter also believes that the sale suggests there is ‘zero chance’ of Packer taking the company private, as had been recently speculated. This speculation was fueled by Packer’s decision to step down as director of Crown Resorts last December, just four months after he surprised many by resigning as company chairman.
April Sees Maryland Casinos Push Past $100 Million for 17 Percent Jump, Market Now Halfway to Atlantic City
Maryland casinos cruised past the $100 million monthly revenues benchmark in April for the first time since commercial gambling came to the state six years ago.
Two Baltimore-area venues played the most substantial role in Maryland casino revenue for April, topping $100 million in a month for the first time since the land-based industry kicked off. (Image: investor.caesars.com)
The five casinos, Hollywood Casino Perryville, Horseshoe Casino Baltimore, Ocean Downs, Maryland Live!, and Rocky Gap Resort, generated $103,891,225, their highest 30-day period by almost $5 million.
Compared to the same month in 2015, Maryland casinos were up nearly $15 million in April.
Gordon Medenica, lottery and gaming director for the state, said in an issued statement that he expects the continued growth of the Maryland casino industry to help fund more state programs.
Maryland has one of the highest casino tax rates in the country, with 67 percent of all gross gaming revenue going to the state. The state’s Education Trust Fund, the main beneficiary, received $36 million from April’s bounty.
More Where That Came From
The first casino in Maryland opened in 2010 with the Hollywood Casino in the small town of Perryville, but the state really dealt into gambling when voters approved the legalization of table games in 2012.
That created an environment suitable to open venues near more populated areas.
Maryland Live! in Hanover, located about 15 miles southwest of Baltimore, opened in 2012. Caesars invested in the Maryland casino market two years later, bringing a Horseshoe Casino to downtown Baltimore just steps from the stadiums where the Ravens and Orioles play.
Together, the two Baltimore-area casinos accounted for $88 million last month, with Live! pulling in $57.7 million.
It’s no surprise that casinos in densely populated regions would perform well. In the coming months, Maryland will welcome yet another city-based venue with the MGM National Harbor.
Located just across the Woodrow Wilson Bridge from Alexandria, Virginia, and some 10 miles south of Washington, DC, the $1.2 billion resort is scheduled to open this summer or fall.
New Maryland Revenue
While revenues popped 16.8 percent year-over-year in Maryland, gaming in Atlantic City isn’t quite so robust. The collapsing industry has seemed to stabilize recently as only eight brick-and-mortar casinos remain in Atlantic City, but revenue was still down 1.7 percent in March, the most recent statistical month released by New Jersey.
Casinos won $187.4 million in Atlantic City during that month, meaning the Maryland gambling market is now roughly 55 percent the size of the east coast’s longstanding New Jersey gaming epicenter.
Aside from New Jersey, regional gaming is up in states such as Ohio and Pennsylvania.
Money that would have otherwise traveled from Maryland to New Jersey certainly seems to be staying home. That’s great news for Marylanders, state lawmakers, and the residents that benefit from the gaming tax programs.
In addition to the Education Trust Fund and horse racing industry, Maryland casinos provide local grants and aid small, minority, and women-owned businesses.
‘It’s a healthy market,’ Gaming USA Corp. President Alan Woinski told The Baltimore Sun this week. ‘The economy is better, there is job growth and there are lower gas prices.’
‘The Perfect Bet’ Shows Link Between Science and Gambling, According to Mathematician Adam Kucharski
‘The Perfect Bet’: Unfortunately, no such animal exists, but UK mathematician Adam Kucharski argues that casinos and card games have played an important role in many theories that have helped shaped the modern world. (Image: Basic Books/amazon.com)
British mathematician Adam Kucharski says in his debut book ‘The Perfect Bet: How Science and Math Are Taking the Luck Out of Gambling’ that scientific pursuits and the development of the modern world have benefited greatly from gambling.
Now, you might not think this particular topic would be the bailiwick of a lecturer in Infectious Diseases at the London School of Hygiene & Tropical Medicine. But there you go.
Kucharski, who holds a degree in mathematics from the University of Warwick and a Ph.D in applied mathematics from the University of Cambridge, says card games and other casino formats have been used by scientists and mathematicians in developing theories that have had a great deal of impact on our everyday life.
Spanning mathematics, psychology, economics, and physics, Kucharski says his book ‘explains why gambling continues to generate insights into luck and decision-making today.’
‘From Galileo to Alan Turing, betting has been scientists’ playground for ideas: dice games in sixteenth-century bars gave birth to the theory of probability, and poker to game theory,’ his book cover reads.
‘The line between luck and skill, and between gambling and investing, is rarely as clear as we think,’ Kucharski recently stated.
Gambling is defined as ‘the activity or practice of playing at a game of chance for money.’ Of course, seasoned players and especially pros believe there’s a fundamental element of skill involved with many table games, such as poker and blackjack. Or even baccarat, if you’re Phil Ivey.
Kucharski says the same skillset professional gamblers utilize in their decision-making process has been employed by many of mankind’s most distinguished philosophers and theorists.
In an interview this week with Britain’s The Guardian newspaper, Kucharski says gambling and the games it spawned played a role in the development of probability theory, expected value concepts, random events and luck, the concept of utility, chaos theory, the Monte Carlo method, and game theory.
Though Kucharski argues in his book about the role gambling and outcomes play in applied sciences, unfortunately for gamblers, there remains no ‘perfect bet’ at a casino.
‘In sport, as in betting, the best teams don’t get it right every time. But they know how to win more often than their opponents,’ Kucharski wrote in UK magazine the New Statesman, which focuses on politics and the modern zeitgeist.
Gambling Theory Has Long History
Kucharski’s book is garnering much press, especially in his native country, but research into the correlation between science and gambling is nothing new.
The earliest forms of recorded gambling date back some 5,000 years to the ancient Egyptians, who spun a small bone on a board divided into four sections with wagers on where the marker would land. We’re guessing it goes back much further than that, though. Prehistoric man most likely did Rock, Paper, Scissors, but without the scissors. Or the paper.
Roman Emperor Claudius was an obsessive gambler who even authored a piece titled ‘How to Win at Dice.’ That’s the equivalent of penning a book today about how to win at slots (spoiler alert: it’s unlikely in the long run).
Countless books have been written on how to overcome the odds at roulette, craps, and blackjack, not to mention how to best one’s opponents in poker. But when it comes to scientific research and gambling, the statistical data from games is used to further theories and intelligence algorithms.