Cheltenham eats into Paddy Power-Betfair cheer

Shares in newly merged betting services firm Paddy Power-Betfair fell by nearly 4% yesterday, before recovering slightly, after the group said first-quarter revenues were affected by adverse sports results, including a €20m hit from the Cheltenham festival in March.

Leading bookmakers across Ireland and Britain lost a combined €76m at Cheltenham this year.

Ladbrokes said last month the festival had been the worst in living memory and had taken the shine off an encouraging quarter.

Despite such results, Paddy Power-Betfair yesterday reported good overall figures for the first three months of the year, with group revenue ahead 16% to £339m (€427m) and operating profit up 36% to £43m.

Revenue growth was seen across all of the group’s platforms.

Of note was a 22% rise in the US, where Betfair’s newly awarded exchange wagering platform licence for horse racing in New Jersey launches next week.

Chief executive Breon Corcoran said the post-merger integration is “on track” and the restructuring of the business has commenced, adding that customers are already benefiting from the sharing of both brands’ products.

The company’s share price closed yesterday down by just under 2% at almost £178 in London.

“With the next dividend/update not until the third quarter, Paddy Power-Betfair’s share price will be driven by big sporting results and the impact on its revenue line as a result,” said Darren McKinley of Merrion Stockbrokers.

He noted the company’s net debt of £52m, which gives it “ample flexibility to deploy capital in a shareholder-friendly way”.