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Betfair Reports Quarterly Results

Betfair, the world’s largest betting exchange, reported financial results for the first quarter of fiscal 2012. Core revenues dipped 7% to £81 million, with tough comparatives from the World Cup last year to blame. Despite the drop, revenues were ahead of the consensus estimate of £79 million. Betfair’s number of active sports betting customers was down 19% to 381,000, but management said the average revenue per sports bettor increased 17% to £157.

Indicative of the industry trend, mobile growth was stellar. Mobile bets of 7.4 million were up 95% from the same period last year, producing a 78% increase in revenues to £4.2 million. “Our mobile products have seen particularly strong customer traction in the quarter, with around one third of sports customers using a mobile device to place a bet,” said outgoing Chief Executive David Yu.

The beleaguered betting exchange has been swept by a wave of management departures since going public. The list is over 15 long, including Mathias Entenmann, former chief product and services officer, and David Yu, who in June announced plans to step down as chief executive next year. Betfair’s latest private poll of staff revealed that its employees think the company lacks direction and guidance.

However, Betfair is taking steps to strengthen management. Example: the appointment of Peter Marcus as new UK Director, which was announced with the quarterly results. As former Chief Operating Officer of William Hill Online, Marcus provides quality and experience in a position responsible for more than 50% of Betfair’s revenues. No further announcement, however, was made on the identity of the company’s new CEO, though rumour has it that Paddy Power’s Chief Operating Officer Breon Corcoran is the front runner.

Betfair conceded that it faces further regulatory and licensing risks in regulated and soon-to-be regulated markets. The company was forced to shut up shop in Italy, though said it is working with Italian regulators to reintroduce casino and poker games next year. Management said Germany had introduced proposals that were “unworkable” for the industry. “The regulatory challenge is to ensure that licensing frameworks that come into place in each European state are commercially viable for the operators,” Yu said.

Shares rose 27 pence, or 4%, to close at 655 pence on the news. The company’s stock price has more than halved since floatation in October 2010, reaching a low of 550 pence on August 5.

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