Paddy Power profits rise 16% as it gambles on Italy

The bookmaker had a stonking 2011 - and now it wants to enter Europe's largest gambling market.

by Emma Haslett
Last Updated: 04 May 2012
It’s a pretty established fact that during a downturn, gambling sees an upsurge as people try to find new ways to improve their lot in life. So it’s no surprise that Paddy Power (which came sixth overall in MT’s Most Admired Companies awards) has reported a whopping 16% rise in annual profits, with pre-tax profits for the year to the end of December rising to 121.2m euros (£100.9m). That was largely driven by a huge upsurge in the number of people gambling online: the company reckons it made as much online last year as it did in its entire business in 2010. Impressive.

The figures make for very encouraging reading (or very depressing, depending on your stance on gambling): the company increased the number of UK online customers by 50% to 710,043, pushing up online revenues by a quarter. In fact, so popular is it that online now accounts for 79% of Paddy Power’s profits. And taking a flutter on your mobile is becoming increasingly popular, too: having said last month that 49% of its online sports betting customers had used their mobiles to place bets, it added today that revenues from customers using their phones had risen by 225% to 366m euros.

But while its online side was flourishing, the chain’s high street arm didn’t exactly struggle, either: Paddy Power opened 41 new branches in the UK last year, pushing its total up to 165 – and it reckons it’ll open another 35-40 branches a year over the next few years. That said, it wasn’t happy about Mary Portas’ government-commissioned high street review, which heavily criticized betting shops and suggested making it more difficult to open them. ‘We would be disappointed if job creation on the high street would be hampered by the introduction of anti-competitive policies without a proper body of evidence,’ it said.

Considering it’s based in Ireland, one of Europe’s shakier economies, it might seem surprising that Paddy Power now has its sights set on Italy – which is similarly economically dodgy. But finance director Jack Massey reckons it’s the next logical step. ‘Italy is overall the largest (betting market) in Europe… [but] it’s actually relatively small at this point in terms of an online market,’ he told Reuters. Apparently, only 4% of Italians bet online, compared with 19% in the UK.

Seems sensible enough. What’s the Italian for ‘double or nothing’?

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