Trump's Unexpected Presidency Hurts Paddy Power Betfair 4Q Profits

January 27th, 2017


Trump's Unexpected Presidency Hurts Paddy Power Betfair 4Q Profits

In truth, the only group of people to profit from the unexpected rise of Donald Trump from business mogul to most powerful man on the planet is the 25.5% of Americans that actually voted for him. One party that was certainly less than impressed was Paddy Power Betfair, who had already paid out on a Hillary Clinton victory in its presidential betting market.

Act in haste, repent at leisure is a well-worn bon mot used by parents to scold children into behaving impeccably. The big chiefs at Paddy Power Betfair should have paid heed: their early settlement of Clinton for US President bets cost them a reported £1m in quarter four profits, with the Trump presidential victory thought to have dented their annual turnover to the tune of some £5m.

Paddy Power Pays Out on Clinton Win

Of course, this is not the first time that the bookmakers and the gambling industry as a whole have failed so miserably to correctly predict the result of a political happening. Having used the polls as their guide, bookies across the board had priced 'Remain' as an odds-on favourite during the Brexit vote.

What happened next was one of the hottest political potatoes of the past few decades as the Leave vote won, making a mockery of the 9/2 odds available on the UK bidding adieu to the EU after 40 years of membership. In the aftermath of Brexit, Ladbrokes’ head of political betting, Matthew Shaddick, told The Independent that:

"the truth is that bookies do not offer markets on political events to help people forecast the results. We do it to turn a profit...or at least not lose too much."

This was not a philosophy that aided Paddy Power’s cause. Why do online betting sites settle markets early – particularly in the volatile world of politics? Quite simply because all publicity is good publicity. The column inches generated from Paddy Power’s latest gaffe is essentially free advertising for the brand – lest we forget how expensive it is to place an advert in national print or broadcast media.

A throwaway comment from then Paddy Power chief Patrick Kennedy in a Telegraph interview confirmed the commercial boon from settling early. Regarding the firm’s decision to pay out on an Ireland victory in a rugby union match back in 2007, he said:

"We paid out £0.5m before the match. This is driving turnover."

As their annual report from 2016 states, the £5m lost from the Trump debacle was a mere drop in the ocean as a percentage of their turnover.

Paddy Power Betfair's 4Q Profits Plummet

The reality is that these 4Q losses mean very little to the financial bottom line of the Paddy Power Betfair trading group. A statement from the company revealed that its 2016 revenue is expected to have increased 18% from the previous year – a cool £1.5bn in real terms. They had confirmed that trading conditions in November and December were tough – linked inextricably to the early Clinton payout, with a -1% loss blamed on ‘customer-friendly’ outcomes.

This equates to approximately £40m. Given that Paddy Power is a company that prides itself on bending the rules of decency – certainly as far as their advertising campaigns are concerned – this latest financial forecasting has to be taken in context.

Never Too Early for Presidential Betting

Donald Trump's divisive and indeed decisive nature has resulted in a cavalcade of betting markets being opened in his honour. One of the most backed – his early impeachment – generated plenty of interest from punters in the wake of lurid allegations against him.

Ladbrokes offers a price of just Evens on 'Trump leaving office via impeachment or resignation during his first term'. He is as short as 1/2 with the same firm 'not to be re-elected in 2020', while Betfair is offering a meaty 9/2 that he 'won’t see out 2017 as US President' via their Exchange.

The market for the 2020 Presidential Election has already crept open, with William Hill quoting the Democrats as the winning party at 8/11 and the Republicans an Even money shot. A speculative winner market has been created too, with luminaries such as Trump (2/1), Michelle Obama (10/1), Hillary Clinton (25/1), Bernie Sanders (40/1) and Al Gore (66/1) all mentioned.

If you're interested in other presidential betting opportunities or just betting opportunities surrounding Trump himself, check out our article outlining the The 10 Most Insane Bets on Things Trump Might Do as US President today!

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