Will the merger of Paddy Power and Betfair shorten their odds of success?
The global online betting market has exploded in recent years, experiencing revenues five times higher than those ten years ago. With competition fierce, there has been significant investment in betting platforms and product development and the last 18 months have witnessed a series of mergers and attempted mergers as costs rise and margins fall.
We run the numbers on Paddy Power and Betfair's merger
The latest merger in the UK, that of Paddy Power with Betfair, created the world’s largest public online betting and gaming company. With recent profit increases for Paddy Power of 7 per cent in the 15 weeks running up to November 2015 the Paddy Power bosses are confident that the merger will be a serious force in the near future.
Although market leader William Hill suffered operating losses at the end of 2015, their online performance grew by 4 per cent to £551m. We therefore ask whether this latest merger, and a potential future merger between Ladbrokes and Coral, will have the capability to exploit their scale to deliver an online odds-on favourite that will challenge the existing frontrunner?
James Hammersley is a founding partner of Good Growth. He is also the co-author of ‘Leading Digital Strategy’, a guide to e-commerce strategy.