Grand Slam, winning Irish horses dent Paddy Power

IRELAND’S SIX Nations Grand Slam and victories for Irish horses and jockeys at leading race meetings hit first-half profits at listed bookmaker Paddy Power.

The company yesterday reported that operating profits for the first six months of year were down 26 per cent at €33.5 million from €45.1 million during the same period in 2008.

Chief executive Patrick Kennedy said that a swing in sporting results in favour of its customers “has driven a reduction in our operating profit in the period”, but he added that the group was happy with its underlying performance.

The swing in sporting results included Ireland’s clean sweep in the Six Nations rugby tournament, and the fact that favourites – the teams most popular with punters – won 14 out of the 15 games played.

The Aidan O’Brien-trained Yeats’s fourth consecutive win in the Royal Ascot Gold Cup and Irish jockey Ruby Walsh’s seven winning rides at the Cheltenham festival in March, also hit the bookmaker’s winnings, particularly in its Irish business.

Total amounts staked across all channels were up 8 per cent at €1.15 billion during the six-month period. Of this, Paddy Power’s winnings were €132.7 million, a gross win margin of 11.6 per cent, meaning the bookmaker made 11.6 cent for every euro bet with it by punters during the first half.

During the same period last year, its winnings were €151.8 million from €1.067 billion, giving it a win margin of 14.25 per cent. Gross win margins in all of its businesses were down on 2008, with the exception of the UK retail division, where they were level.

The group’s online business delivered 3 per cent operating profit growth to €22 million on the back of €431 million in turnover, an increase of 32 per cent.

The number of active customers is up 21 per cent at 265,188. About two-thirds of this business is in sterling, but Mr Kennedy said yesterday that the group had customers in 162 countries.

During the period, Paddy Power bought 51 per cent of Australian operation, Sportsbet, for €27.8 million. That company in turn agreed to acquire rival operator International All Sports Ltd (IAS) in a deal that will require a further €9.6 million from its Irish shareholder.

The purchase is subject to getting the agreement of shareholders at a meeting next month. If this goes through Paddy Power said yesterday that it hoped Sportsbet would complete the takeover of IAS in early October.

British-based competitors Ladbrokes and William Hill both announced this month that they were moving their online businesses to Gibraltar because of lower costs and taxes.

Mr Kennedy said yesterday that Paddy Power, whose online and telephone businesses employ 640 in Tallaght in Dublin, had no plans to follow suit.