How Betfair is profiting from last year's mergerThursday, May 25, 2017 10:04
At the time, the company warned of job losses. These were part and parcel of the Paddy Power and Betfair merger and aimed at saving some £50 million in annual cost. A year on, Betfair has gone from strength to strength. In the first quarter of 2017, the combined company made profits of £91 million. That is a 114% increase and holds huge potentials for the Betfair brand.
Are both companies equals?
Let's be honest: at first, it seemed as if Betfair was getting a raw deal here. The merged company was named Paddy Power Betfair as opposed to Betfair Paddy Power, and Betfair shareholders did not get an equal share. Betfair shareholders own 48% of the combined business.
However, the merger created a company with world-class capability. The combined business resulted in shrinking its competition significantly. Today, the company is the largest listed online company worldwide and no British gambling house can keep up with Betfair's high street offers and its online growth.
While the majority of Betfair's positive development can be accredited to the merger, Breon Corcoran, CEO of the combined business, explained that some of the profits are the result of surprising sporting events. "Reversing the trend of the past two years, results at Cheltenham 2017 favoured bookmakers and this contributed to good revenue growth," commented the CEO.
It's all about the tech
An increase in revenue tends to go hand in hand with an increase in spending. Over the past years, plenty of investments have been made in technological development.
Betfair has launched its developer program. This program allows developers to integrate Betfair data (for example odds) into any kind of application, whether it's for mobile devices or for desktop. This comes in particularity handy for developers that create a betting-related app and want to integrate Betfair offers.
This could include apps for one's own use that compare odds throughout several betting providers and apps that aim at attracting business. Aside from recent data, the Betfair Exchange also gives users access to historical data which lets developers create apps that compare similar past events to current events.
In terms of growth, Betfair's strategy to embrace technological trends and allow developers access to their data holds numerous advantages. In doing so, brand awareness of Betfair increases thanks to applications that have been developed without straining the company's resources. Furthermore, Betfair ensures that it continues to be in control of the type of applications that use their data and the type of data it uses.
Aside from the fact that the combined business profits from the exchange of ideas concerning technology, Paddy Power Betfair are also taking the next step and are migrating all customers onto one integrated platform. While both brands will remain separate for now, customers at Betfair will be serviced on the very same technology platform as Paddy Power customers. Not only should this further improve the technology that drives Betfair, it also holds the advantage that the costs for development are halved.