March 04, 2008

Net profit rises 52 pct at Irish betting company Paddy Power

Paddy Power PLC, Ireland's dominant betting company, reported a 52 percent surge in full-year profits Monday because of growing business on the Web and a string of losses by locally favored sports stars.

For the year ending Dec. 31, the Dublin-based company registered €62.8 million (US$95.3 million) in net profit, up from €41.2 million a year earlier. Its betting volume rose 13 percent to €2.03 billion (US$3.08 billion), led by increased online business.

The company said it was strongly positioned to weather the global economic downturn, because financial fears do little to deter gamblers from trying to forecast the future.

Investors agreed. Paddy Power shares bucked a broadly negative market to rise 1.8 percent and close at €21.53 (US$32.68) on the Irish Stock Exchange.

Paddy Power rolled out several new products and markets in 2007, including a Spanish-language Web site, casino-style games and financial "spread betting," which permits online gamblers to wager on the movement of stocks, bonds, currencies and commodities.

But the company's 3-year-old Web site for German gamblers is shutting down on March 17 — St. Patrick's Day — following German authorities' efforts to outlaw Internet gambling there.

Chairman Fintan Drury said the company was now attracting a majority of bets over the Web, not in traditional corner shops, but would keep opening retail outlets in gambling-friendly Ireland and Britain, where face-to-face business continues to grow.

He said Paddy Power planned to double its number of British outlets within the next three years. Paddy Power has 58 British shops, chiefly in London, but plans to expand into the largest Scottish city, Glasgow, and the northwest English city of Manchester this year.

The company's profits soared thanks, in part, to a string of Irish sporting failures in 2007, both on Irish and British horse racing grounds and in the Rugby World Cup, when Ireland's highly rated team failed to get beyond the first stage.

Drury said Paddy Power did suffer its "biggest-ever payout" when Dublin hometown favorite Padraig Harrington won his first major golfing trophy, the British Open, in July.

Paddy Power — which was formed by the merger of three Irish betting firms in 1988 and is not named after a real person — has thrived on Ireland's deep-seated passion for horse racing and sports betting.

It was one of the first European bookmakers to gamble on the Internet, and has grown steadily despite the efforts of authorities in the United States and some European countries to prevent their citizens from betting on line. People with U.S.-based credit cards are barred from depositing money on Internet gambling sites.

Paddy Power also attracts international attention with its exceptional irreverence, offering odds on political and celebrity futures. Its current site on the U.S. presidential race, for example, offers gamblers the chance to identify the next scandal to hit campaigning: "Adultery" is the favorite, while "bigamy," "shoplifting" and "terrorist link" are rated least likely.