Paddy Power sees online business race ahead

Bookmaker Paddy Power today hailed the online gambling craze as it generated most of its profits away from its high street betting shops for the first time.

The group said its non-retail businesses accounted for 63% of operating profits of €17.8m in the six months to June 30, compared with one-third of the €18.2m earned last year.

Online poker has emerged as a global phenomenon over the past few years and Paddy Power launched its own version for the game during the period, enjoying strong growth over summer.

The potential rewards for firms and investors were underlined when PartyGaming - the world’s biggest online poker firm – floated in London this year and has seen its value rise to £6.34bn (€9.26bn).

Paddy Power already has 74,000 customers gambling via the web, with two-thirds in the UK, and operates an online casino as well as telephone betting.

The growth in non-retail businesses helped to shield Paddy Power from the impact of a poor run of results in the big horse races in the first six months of this year when many of the favourites romped home.

Finance director Ross Ivers said: “We are now reaping the rewards of our strategy of investing upfront in our start-up businesses with our online channel now generating record earnings and set for continued expansion.”

In addition to the 145 betting shops here in Ireland, Paddy Power currently has 35 sites in the UK and holds licences to open a further 14 shops.

Paddy Power said pre-tax profits totalled €18.4m in the period, which was slightly down on the €18.7m reported at the same stage of 2004.

Revenues at its betting shops improved to €401.3m from €340.4m, while the group also saw a pick up in the gross win - turnover less winnings paid out to punters.

This 17.9% increase in turnover on the high street lagged the growth in online gaming, which saw revenues expand by 62.5% to €175.2m..

However, shares in Paddy Power fell 4% today after the group said its gross win in the second half had been disappointing and was lower in all three of its divisions of retail, online and telephone gambling.

Compared with 12.4% in the first six half of this year, the gross win over the past two months at its high street betting shops has fallen to 11.4%.