Cantillion: Paddy Power backers’ punt pays off

All punters would welcome a windfall within two weeks of the Cheltenham Festival in March and those who have backed bookmaker Paddy Power look set to get just that.

The listed bookmaker plans to pay €141 million in dividends to shareholders on March 2nd, made up of a special dividend due after its merger with Betfair, a final 2015 dividend, and a payment for the first month of this year, its last before joining forces with its rival.

Paddy Power’s list of retail shareholders includes a few people who, because they like a bet, know that the bookie always wins, and invested accordingly. You can take short odds about some of them using their dividends to boost their betting banks for the Cotswolds showdown. After all, their shares have practically doubled in value since this time last year, so they’re already ahead.

The merger with Betfair is a big part of that share price increase. That deal now looks set to go through next week, but it does not appear that punters will notice any practical impact at Cheltenham 2016. Both companies will be chasing a big slice of its estimated €650 million betting turnover and see it as a good opportunity to recruit customers, so each will have already mapped out a plan of campaign for the four days.

In some ways, it is hard to get a handle on just what Paddy Power Betfair will mean for customers. The enlarged group plans to maintain the two brands, so nothing outwardly will change. So far, the companies have talked a lot about the benefits to clients of bringing two of the industry’s stronger technology teams together.

They say it will mean more innovation, more betting products, more tailored and personalised wagers, not necessarily more value but not less of it either. The reality is that, until now, the focus has been on what the merger will mean for shareholders, so punters will have to wait a little longer before finding out what it means for them. Presumably, they will have a clearer picture by Cheltenham 2017.