Online business drives bookie's growth

Analysis:Paddy Power's betting shops are a familiar sight in this country, but it's the listed bookmaker's online business that is driving a lot of its growth.

A key measure of this is gross win, the difference between the amount staked and that handed back in winnings to punters. This was over 12 per cent for the whole business, meaning that punters were getting back a little over 87 cent for €1 wagered.

The total online gross win was 12.8 per cent, and the actual figure grew 57 per cent to €67.4 million. The division generated €23.4 million of the overall €45.5 million operating profit.

The online channel is being used to bring the Irish bookie to new markets. In 2006, on the back of liberalised gambling regulation, it launched a German language site, aimed at the 100 million or so Europeans whose first language is German.

This trend towards liberalisation is a taste of things to come. Chief executive Patrick Kennedy, said yesterday that as markets in Italy and Spain open up, it will also look at getting involved with local partners.

The betting shop business, which analysts felt underperformed in recent years, was strong. It delivered a gross win of €126.8 million from a €963 turnover, well over 12 per cent, and adding €16 million to the bottom line.

Its 58 English shops delivered 12.6 per cent gross win on sports betting. However, when the €8 million contribution from gaming machines - called fixed odds betting terminals - that are a feature of its UK operation, that figure hits 19 per cent. Each machine averaged over €800 gross win a-week. The telephone business delivered €24.5 million gross win, an 8 per cent margin. The lower return here is due to the nature of the customers, whose stakes averaged €103, compared to €20.82 for retail.

Telephone punters focus on single bets, that is one bet on one result, rather than on multiples, that is one bet on a combination of results, which are popular in betting shops. Multiple bets carry far more risk for punters, and far less for bookmakers, making them more profitable.