November 18, 2010

Paddy’s invests in Ireland despite downturn

Paddy Power has announced it will create 375 new online jobs in the stricken Irish economy as the bookmaker continued its momentum from the first half of 2010, with stakes from its core sportsbook growing 34% year-on-year from 1 July to 15 November 2010.

Amounts staked on gaming and by B2B channels, via the operator’s deal with former French horse racing monopoly Pari-Mutuel Urbain (PMU) to provide fixed-odds risk management and pricing tools, were up 33% year-on-year during the period.

The jobs expansion in its international online business headquartered in Tallaght, West Dublin, will increase Paddy Power’s Irish employee base to 2,210. It will also add 130 online jobs in Australia, where it owns Sportsbet and IAS, as part of a total of 1,440 jobs to be created across its online, retail and telephone businesses by December 2013.

Ireland’s minister for Enterprise Trade and Innovation, Batt O’Keeffe TD said: “Paddy Power’s rapid international expansion has direct revenue benefits for the Irish Exchequer and, as overseas markets deregulate, growth prospects are strong for the firm’s online business.”

Jack Massey, finance director at Paddy Power said that Irish economic conditions had become “more challenging” during the period but that its international business in the UK and particularly in Australia had “offset” its figures in Ireland. Amounts staked in Australia rose 6% year-on-year from 1 July to 15 November, with online stakes growing 22%, with gross win from online up by 70%. Net revenues in the last three months in the UK were up 17%, but up only 9% in the Irish Republic due to an 8% drop in gambling.

“The economic conditions in Ireland reflect the reality of the situation. In January the government set its stall out saying it would take €7.5bn out of the budget deficit, this then grew to €15bn in the summer and now people are speculating whether or not the government has the capacity to make that change. Fortunately we have a strong international business that can offset these difficulties.”

Massey said that Paddy Power’s online gross win in Australia was approximately AUS$50m for the second half of last year, and that if growth patterns continued at their current pace gross win would increase to around AUS$75m.

Summing up 2010 Massey called 2010 a “very significant year” for Paddy Power. “We have benefited from a number of good sports results, while there has been a strong momentum in our international activities. This now accounts for two-thirds of our operating profit. Five years ago it was 20%. We have steadily shifted a lot of emphasis towards online and this will continue,” he said.

“We have entered France on a B2B basis with PMU and are looking at other regulating markets, but have yet to make an official statement on where could go next. We have the option to do this either by acquisition, organic growth or via a B2B partnership.”

Asked which markets had the most potential, Massey said the US in “scale terms”, while “closer to home Greece and Denmark are also regulating and are “attractive”.

“At the moment we are driving growth in the businesses we have, but we are always looking n to grow in scale, technology and in mobile, for example, where we have been emphasising our credentials recently,” Massey added.

He called yesterday’s decision by Australia’s Federal Court to overturn its original decision over Racing New South Wales's right to impose a fee of 1.5% of turnover under racefields legislation introduced in September 2008 “disappointing”. The Federal Court on Tuesday ordered Paddy Power-owned Sportsbet to pay, according to Massey, “a seven figure sum” in costs after overturning the decision that the fee was protectionist towards the TAB.

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