Paddy Power bets on Italian expansion

Paddy Power is to enter the Italian market this summer, the latest element in its international expansion drive which continues to underpin the gaming group’s financial growth.

The leading Irish bookmaker said yesterday it would be launching an online betting and gaming service in Italy — one of the biggest betting markets in Europe — by June, to coincide with this summer’s European Championships.

The service, which is set to cost the company around €6m, will cover sports betting and gaming (casino, poker, bingo) options.

The move follows on from expansion into Canada and Bulgaria last year. Already with a sizeable presence in Australia, Paddy Power is waiting to hear if its application for a licence from the Nevada Gaming Commission, in the US, has been successful.

Yesterday’s expansion news coincided with another strong set of annual results. Pre-tax profit for 2011 amounted to €121.2m; up by 16% on the previous year’s €104.2m figure. Diluted earnings per share amounted to 212.3c, an increase of 26% and net revenue was up by 17% at €499m.

A 40% increase in the proposed final dividend took the total dividend for shareholders to 100c, 33% higher than in 2010.

While revenue at Paddy Power’s Irish-based shops fell by 6%, to just under €103m, stakes bet by punters within them were up on a like-for-like basis and operating costs per shop were down 4%.

The company’s Irish market share grew to 34% and it opened three more shops during the year. Paddy Power remains the only player in the Irish market not to have closed a shop in the past four years. In Britain, meanwhile, it opened 41 shops last year and is on course to boost its British retail portfolio by the same amount this year. Management say it is nowhere near saturation point in that market as yet, with 169 shops operating.

Saying that, however, online is where the company is really growing.

As much as 79% of its operating profit came from online activities last year, 74% of which was generated from customers outside of Ireland.

Chief executive Patrick Kennedy noted that the latest good results “demonstrate the strides we’ve made in building an international business of scale in regulated markets”.

This summer’s European soccer championships are expected to account for around 1% of the company’s 2012 revenues, likely bringing in between €50m and €60m, while the Olympic Games are only likely to contribute around 0.1% in comparison.


Lifestyle

Frits Potgieter is General Manager with Muckross Park Hotel and Spa.You've Been Served: Frits Potgieter, Muckross Park Hotel and Spa

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