Paddy Power Betfair to be done by December, but questions remain

Betfair’s agreed merger with Paddy Power could be closed as soon as December, Betfair CEO Breon Corcoran said in an analysts’ call this morning.

While Corcoran did concede a January closure was more likely and that regulatory hold-ups in Ireland might even delay it until March, the man who will head up the combined group was more evasive on what the deal might actually mean for the firm he joined from Paddy Power in 2011.

Asked about whether Paddy Power’s sportsbook would be linked to Betfair’s exchange, Corcoran said that he saw such a link as a “platform for further revenue growth”, but added that further details wouldn’t be revealed until both firms sit down to discuss the options.

Speaking more broadly about the deal, he said the increased scale will allow the merged firm to “invest in product, technology brand and people”, and added that Paddy Power’s retail business will give Betfair a chance to tap into the kind of multi-channel opportunities which are particularly popular with horse racing customers.

Speaking with eGaming Review this morning, Paul Leyland, a partner at Regulus Partners, said the two firms are a great fit and the deal creates an operator with broad appeal across the market.

“Culturally they are very similar and they are very complementary brands,” Leyland said. “They are clearly sports-led, but have sophistication on one hand and entertainment on the other. That covers the spectrum of why people want to bet. The customer proposition of exchange sophistication to entertainment to offers is fantastic.”

Leyland said that while Betfair had done an excellent job of growing its mass market appeal through its fixed-odds sportsbook, Paddy Power allows it to instantly capture a large chunk of casual players who might have been put off by Betfair’s perceived complexity.

It surely would have been noted during the merger discussions that a survey reported in Betfair’s full-year results in June showed that ease of betting was the primary reason punters were put off the operator and Paddy Power has perhaps addressed this problem better than any other operator.

What all this means for the future of Betfair’s sportsbook is less clear. While on one hand it appears stuck between Betfair’s exchange product and Paddy Power’s entertainment-driven sportsbook, it could still provide a key part of group’s revenue.

“I don’t see why you would have spent the time and effort on the brand build they’ve done at Betfair only to drop it and make it a more niche product,” Mark Davies, one of Betfair’s founding team who served as its public affairs director, said.

Instead, the sportsbook could be freed from its previously tricky role of servicing casual players as well as more sophisticated users who occasionally require a fixed-odds product.

The exchange, on the other hand, should have a larger role to play. While there is potential to overlay another brand on the technology, it is likely that exchange functionality will be added to the Paddy Power sportsbook to create a more flexible customer proposition. Either way, both brands will remain.

Leyland cautions against bringing the two too close together, with a need for distinctive brand messages paramount. “They don’t have to worry about making the Betfair sportsbook mass market and diluting their brand. It could be a roaring success even if it makes up just 30% of revenue, as they have Paddy Power for the rest,” said Leyland.

Some may have speculated that Betfair and Paddy Power’s relatively strong performance over the last year would have kept them out of the consolidation race, but this deal could place the new Paddy Power Betfair at the head of the newly consolidated pack going into 2016.

Read more: Betfair and Paddy Power reveal merger talks