market folly

We're posting up notes from the recent Sohn London investment conference.  Next up is Bernie Ahkong of UBS O'Connor who presented a long of Paddy Power Betfair (LON: PPB).


Bernie Ahkong's Presentation at Sohn London Conference

Paddy Power Betfair is an international sports betting company. It has 4 divisions: Online; Australia; Retail; US.

Ahkong’s buy case was largely based around Paddy’s ability to expand in the US. Today the US only accounts for 3% of profit. Spending on betting is far lower in the US than in the UK or Australia - largely because it has been banned. The Professional and Amateur Sports Protection Act was struck down by the Supreme Court earlier this year. It could represent a huge opportunity to expand sports betting in the US.

Paddy acquired Fanduel earlier this year. Fanduel runs fantasy league betting in the US with 7m registered customers. Only a fraction of these are active customers, though. Ahkong predicted that Paddy could take 10% market share in the US.

On the business outside the US: retail betting shops only account for 12% of Paddy’s profit – there is not as much Brexit risk as some analysts think. Regulatory headwinds in the UK are well known and priced in. The Betfair part of the business faces increased competition. It had a bad H1 but concerns that they are losing share are over stated.


Be sure to check out the rest of the presentations from the Sohn London investment conference.