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Paddy Power hit as punters win

2 March 10 14:59 GMT
By Russell Padmore
Business reporter, BBC World Service

The Irish bookmaker Paddy Power has described 2009 as a "cracking year for punters" after its profits took a dent.

The company reported profits of 67.2m euros ($90.7m; £60.8m) for last year, down 15% from 2008.

Paddy Power suffered as punters enjoyed a series of winning results, especially with bets placed on horse racing and Ireland's Six Nations rugby grand slam.

The bookmaker continues to develop its online gaming businesses, Sportsbet and IAS in Australia and PMU in France.

Paddy Power chief executive Patrick Kennedy told the BBC World Service: "It was a great year for punters. Ireland had a great week at Cheltenham, Ireland had a great year at rugby."

The company's unusual marketing strategy of paying out on bets before an event is finished backfired in 2009.

Mr Kennedy admitted that some of the drop in profits was self inflicted. "We paid out early on Tiger Woods to win the US PGA. We paid out on Tiger as a winner after two rounds and then YE Yang caught him.

Soccer and horse racing attract most of the money wagered with the company and it hopes punters do not enjoy a repeat of last year's success at the Cheltenham racing festival, this month.

This year's World Cup in South Africa could add to the company's revenues as people bet on individual matches in the tournament.

"For us the attraction of the World Cup is not the short term turnover in profitability. It's the fact that customers come to us and they get an opportunity to see how different we are and how many more betting opportunities we offer," he said.

Online profits

In common with other gaming operators, revenues from the internet are an increasingly important part of the business.

Mr Kennedy said: "Online is growing very fast for us and bet volumes were up 55% last year. In the second half of the year online was 85% of our profits."

The consolidation of the Australian acquisitions Sportsbet and IAS, as well as the online deal with PMU in France, will enhance internet revenues for Paddy Power.

This year's World Cup will test the company's ability to make money from online sports betting.

"We'd like to think we'd double what we took in the European Championship in 2008, which was of the order of 35 to 40m euros, we'd like to think we could double that," Mr Kennedy said.

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