Paddy Power Betfair takes £5m hit from Trump election win

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No one saw Trump winning the election to become the President of the USA, not even the bookies

Powered by Guardian.co.ukThis article titled “Paddy Power Betfair takes £5m hit from Trump election win” was written by Rob Davies, for theguardian.com on Monday 23rd January 2017 12.30 UTC

Paddy Power Betfair blamed the unlikely pairing of Donald Trump and the Manchester United striker Zlatan Ibrahimovic as it cut its full-year profit forecast.

The “unexpected US election outcome”, in which Trump triumphed over Hillary Clinton in November, cost the bookmaker £5m as it paid out to punters who backed him for the White House.

The impact was exacerbated by the group’s decision to pay out £800,000 to gamblers who backed Hillary Clinton even before the polls closed, on the assumption that the Democrat candidate would win.

With just a month to go until the election, Betfair gave Trump just a 14% chance of winning after a tape emerged of the presidential candidate boasting about groping women.

The bookmaker still gave Clinton a 74% chance of winning two weeks later, after the FBI reopened an investigation into her use of private email servers.

An outsider’s victory usually favours bookmakers because they end up paying out to very few people. And if a flurry of bets are placed on an outsider, at a horse race for instance, the bookmaker will usually respond by shortening the odds to limit what it will pay out.

But in the case of Trump, bookmakers refused to believe he had a good chance of winning right up until election day and did not adjust his odds.

That meant big returns for punters who believed all along that he had a chance.

Created last year by the merger of Paddy Power and Betfair, the group also suffered a £35m hit from “customer friendly” sports results towards the end of 2016.

These included 12 goals in 12 games for Ibrahimovic, who the bookmaker said typically attracts the biggest stakes from gamblers betting on a goalscorer.

Revenues were up 11% but the group cut its forecast for full-year underlying profits, which it had previously said could reach £405m, to about the “mid-point” between £390m and £405m.

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