Paddy Power margins hit by continued success of Irish horses

The continued success of Irish horses in major British races has hit margins at Paddy Power, the Republic's biggest bookmaker.

In a statement issued at its annual general meeting yesterday, the company said group turnover in the first 19 weeks of 2005 was up 30 per cent, with revenues from its online business up 67 per cent.

However, its gross win margin - that is the amount staked, exclusive of tax and levies, less that returned to punters as winnings - was flat compared to the same period last year.

The statement pointed out that the gross win in the first half of 2004 was exceptionally strong as a result of a series of sports results that favoured bookmakers.

"As budgeted, 2005 has seen a return to a more typical gross win profile with total gross win being relatively flat in comparison to 2004," the company said.

"This reflects the strong growth in both bookmaking turnover and gaming revenues offset by the lower gross win percentages on the bookmaking business," it added.

"Gross win percentages have been mixed, with satisfactory results in the first quarter, while results to date in the second quarter are below average due to a high number of Irish-trained horses winning in April," according to the firm

Paddy Power's gross win margins typically run at 11-13 per cent a year. The company said that it was below the mid-point of this range on May 10th, particularly in the Irish retail division, which has the highest exposure to horse racing.

Irish retail bookmakers generally have a bigger exposure than their British counterparts to horses trained here when they run abroad.

However, Paddy Power finance director Ross Ivers said that, despite a run of Irish successes at the Cheltenham national hunt racing festival, one of the biggest betting events of the year, the company made a profit on the meeting.

Mr Ivers also said that Paddy Power was unconcerned at the imminent arrival of major UK player William Hill, which is set to take the number four position in this market with the purchase of Stanley Leisure's 51 betting shops.

"We've been competing with the UK chains since we started in business," he said.