Paddy Power reveals increase in revenue from fixed-odds betting terminals

Paddy Power Betfair (Other OTC: PDYPF - news) revealed an increase in revenue from controversial fixed-odds betting machines a day after a minister resigned over delayed plans to cut players' maximum stake.

Revenue from gaming machines rose 2% as revenue in its UK and Ireland (Other OTC: IRLD - news) retail business fell 4%, the company said in its third-quarter trading update.

It said the cut to the maximum stake allowed on the machines would see revenues from them decrease by 33% to 43%, equivalent to £36m to £46m annually, or 2% to 2.6% of total group revenue.

Fixed-odds betting terminals, on which users can gamble away up to £100 every 20 seconds, have been criticised by campaigners who say they are dangerously addictive.

The government has agreed to slash the maximum amount people can bet to £2 per play.

On Thursday, sports minister Tracey Crouch resigned over plans to delay the introduction of the measure until October 2019.

Several backbenchers claimed they had been assured it was due to happen at the beginning of May.

In her resignation letter, Ms Crouch claimed "implementation of these changes are now being delayed until October 2019 due to commitments made by others to those with registered interests".

"From the time of the announcement to reduce stakes and its implementation over £1.6bn will be lost on these machines, a significant amount of which will be in our most deprived areas including my own constituency," she said.

"In addition, two people will tragically take their lives every day due to gambling related problems and for that reason as much as any other I believe this delay is unjustifiable."

The betting industry has warned that thousands of people could lose their jobs as a result.

The Association of British Bookmakers (ABB (LSE: 0NX2.L - news) ) said earlier this year the decision would have "far-reaching implications" and would cost the Treasury £1.1bn in lost tax by 2020, as well as £290m in reduced payments on horse racing.

Paddy Power Betfair, which is betting on expansion in the United States as it faces a regulatory crackdown in the UK, Ireland and Australia, said revenue rose 12% to £483m in the three months to 30 September. US sales rose 22% and online sales jumped 15%.

The FTSE 100 company expects full-year earnings to come in between £465m and £480m - up from between £460m and £480m - following a surge in betting at the Meadowlands Racetrack in New Jersey.

Paddy Power Betfair chief executive Peter Jackson said: "Quarter three was a good quarter for the group. In Europe, the encouraging momentum that we saw in quarter two accelerated further, with online revenue up 15%.

"This momentum, which was evident in both Paddy Power (EUREX: 27913021.EX - news) and Betfair, is driven by enhancements in product and good execution in promotions and marketing.

"In the US, the exciting potential of the sports betting opportunity and the strength of our strategic positioning has been evidenced by our experience to date in New Jersey."