Paddy Power bets on gaming stateside

Betting services giant Paddy Power hopes to make meaningful progress on plans to expand its online gaming business into the US by the end of the year.

Speaking yesterday, on the back of a strong set of first-half figures — which included a 22% rise in net revenue, a 12% annualised boost to pre-tax profits and record earnings per share growth — chief executive Patrick Kennedy said he hoped to see the issue more clarity in the next two-to-three months.

The Dublin-based company has applied for licences in Nevada and New Jersey, the latter of which is set to become the largest US State to legalise online poker and casino gaming in November.

Mr Kennedy said the company would link up with a local partner to offer its services, but is still waiting to see the detailed conditions of operating in the State, before progressing further.

Paddy Power performed strongly in each of its geographical markets, in the first half of the year, although operating profit dipped by 14% in its Irish retail arm (although revenue was up by 2%).

Both Australia and Britain performed well and management said the company now has 20% of the sportsbook market in Italy, Europe’s largest online betting market.

Mr Kennedy said the company’s growth in the football-loving Italian market should boost its revenue from next summer’s World Cup, in Brazil, to around €100m.

Divisionally, online — which is, on average, seeing 5% migration levels from retail outlets every year — grew revenue by 29%, to €243.3m and operating profit by 17%.

But retail also did well, particularly in Britain where net revenue gained 23% to €61.6m. Nineteen shops were opened in the UK in the first half of the year and the company plans to open 40 in total there this year.

The new shops are likely to add around €100,000 to group EBITDA within the next two years.

On a group-wide basis, first-half net revenue was up, year-on-year, by 22% to just under €380m. Total amounts staked by customers grew by 15% to nearly €1.2m. Operating profit was up by 11%, to €75.4m, as was pre-tax profit, to €77m. The interim dividend amounted to 45c, outstripping earnings per share in growth terms with a 15% annualised increase. Diluted earnings per share were up by 13%, year-on-year, at 137.1c.

Management said the second half of the year had started “very well”, in turnover terms, but did note that foreign exchange patterns could lower reported full-year profits by 4%.

Overall, management said the company was “on track to achieve low-to-mid double digit operating profit growth, in constant currency”.

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