Paddy Power in Australian move

BOOKMAKER Paddy Power has significantly expanded its international reach by entering the Australian market, via the A$48.5 million (€27.2m) purchase of a controlling stake in the Darwin-based online betting company, Sportsbet.

The initial consideration will see Paddy Power gain a 51% stake in the Australian firm, with an option in place to buy the remaining 49% at a later date.

In addition, the Irish firm will also pay Sportsbet a further A$10m (€5.6m) early next year, should the Australian company generate earnings before interest, tax, depreciation and amortisation of more than A$16.5m (€9.2m).

Speaking yesterday, after the company’s annualgeneral meeting in Dublin, Paddy Power chief executive, Patrick Kennedy, said the Sportsbet brand would remain – it has been built up, over the past decade, into the leading online betting service in Australia – and that there was no immediate plan to introduce the Power brand in Australia. Sportsbet made profits of nearly A$8m last year and expects to see an 85% increase this year.

Paddy Power will have four directors on the Sportsbet board, including Mr Kennedy and managing director, Breon Corcoran.

Mr Kennedy said this move was in the planning stages for the past 18 months and was prompted by the popularity in online betting in Australia and the country’s well-regulated market.

There are currently no plans for the company to spread outside of the online market in Australia.

In response to one shareholder asking about calls for legalising online betting in the American market, Mr Kennedy said that if such moves came to pass in the US then the company would definitely look closely at the potential for entering that marketplace too.

He reiterated that most of the remainder of the company’s expansion (both here and in Britain) would mainly be organically driven rather than through acquisition, but stopped short of saying that the company was giving up on continental European markets (as rival operator William Hill has just announced) – even though indicating a real cooling of enthusiasm for such markets.

In terms of trading for the current year – the company reported strong figures for 2008 just a couple of months ago – the company has seen a 32% increase in amounts bet across its online and retail outlets to date.