Paddy Power delays NJ entry; continues to “explore opportunities”

Despite having been named eligible for a New Jersey transactional waiver by the state’s Division of Gaming Enforcement, Paddy Power has confirmed that it is not ready to enter the market, citing a number of concerns with the current state of the market.

Paddy Power CEO Patrick Kennedy said Tuesday that the decision to delay entry had been taken “based on [the company’s] assessment of the market structure.”

“We see fragmented poker liquidity, a highly competitive B2B landscape, and fewer restrictions on grey play than we would have liked, so we will continue to explore opportunities but will not launch at the opening of the market,” Kennedy explained in a conference call following the release of the company's interim management statement yesterday.

The operator had long been tipped as a potential partner for the Revel Atlantic City, and been an active participant in discussions with regulators through Paddy Power North America president Eamonn Toland but has yet to announce concrete plans to enter the market.

While its North American strategy remains unclear, the operator revealed plans to continue its focus on mobile, looking to increase gaming revenues from the channel by pursuing a strategy of developing tablet-optimised content with software supplier Playtech.

Mobile development assets owned by Playtech founder Teddy Sagi’s Skywind Holdings company, made available to the supplier through a licensing deal, were employed to develop Paddy Power’s first tablet-optimised product Roller Casino.

The company's head of Paddy Power Online, Peter O’Donovan, revealed that further products would be released in the coming weeks.

He explained that new content “across games, casino and bingo” would be rolled out with games repurposed and optimised for tablet devices, using gesture controls, and made available in web app and native app forms.

This would be followed with further updates to the company’s sportsbook offering including its first cash-out products for football betting and a marketing campaign to publicise its real-money Facebook app, Paddy Power In-Play!

O’Donovan explained that the app was “still in beta,” with sign-ups and deposits “not material at this stage.”

He said that the company was currently working on improving new user experience and tweaking the sign-up funnel to ensure as seamless an experience from registering to depositing, as well as capturing some initial learnings about what works in the product.

“As we improve that funnel and the underlying product we’ll begin putting some increased marketing behind it to push it harder,” he explained.

However, despite the company’s US strategy yet to be fully formed and further investment in products, Paddy Power's chief financial officer Cormac McCarthy denied that the operator would look to aid these efforts through further acquisitions, with Paddy Power’s last high-profile deal being the purchase of software developer Cayetano Gaming in November 2011.

“We think there is plenty of change happening in the industry, and it makes sense for us to hold onto our cash as that change goes on,” McCarthy said. “We’re still in the foothills of what mobile can do, but we think it’s right to keep the cash for the moment.”

Shares in Paddy Power plc (Co. Data) (LSE:PAP) are currently trading at €57.67 per share in London this morning.