The bookie shop is now history, Paddy Power's future is online
(Sunday Independent)
Sunday March 13 2011
THE bookies' 2010 results, published last week, show thatPaddy Power is now mainly an online company, with the vast bulk of its business and profits coming from its internet arm. With its UK retail business inherently unprofitable and betting well down at its Irish shops, maybe it's time that Paddy Power went exclusively online.
The company had an outstanding year in 2010. Its operating (pre-interest) profits soared by 56 per cent to almost €104m. However, the 2010 results were very much a tale of two contrasting businesses.
Even when one excludes Paddy Power's Australian operations, of which it took 100 per cent ownership for the first time last year, online operating profits increased by 20 per cent to €57.5m.
Throw in the Australian business, which is exclusively online, and online operating profits were up by 54 per cent to €77m.
Meanwhile, Paddy Power was finding the going much tougher on the high street. Operating profits at its Irish shops rose by just 8 per cent to €17.6m.
Across the water, profits at Paddy Power's UK shops rose by 350 per cent to €7.4m. However, these numbers were flattered by the €24.2m that was earned from in-store one-armed bandits. Without the slot machines, the UK shops would have lost almost €17m in 2010.
Working in the Irish shops' favour has been the rapid reduction in the number of shops servicing the market, with the total number falling from a peak of 1,365 in 2008 to its current level of 1,140.
Among the latest to close were several of Ivan Yates' Celtic Bookmakers outlets, which went into receivership in January.
Unfortunately for Paddy Power, despite reduced Irish retail competition the amount staked in its shops actually fell by 4 per cent to €908m last year.
While its Irish and UK shops remain profitable, one has to wonder if Paddy Power was starting up in business today, would the company bother with retail outlets instead of concentrating exclusively on the online business?
Internet gambling has much lower overheads than retail-betting shops. This means that not alone is it much more profitable for bookies such as Paddy Power, it also allows them to offer punters significantly better odds.
In 2010, Paddy Power's Irish shops paid out 88 cent of every euro gambled by punters. By comparison, its internet-betting operation, excluding Australia, paid out 92 cent of every euro gambled.
However, despite this significantly higher payout to punters, the internet business recorded an operating profit of €57.5m -- more than five cent of every euro gambled -- compared to the €17.6m operating profit generated by its Irish betting shops, which was less than two cent of every euro gambled.
If Paddy Power could persuade its existing Irish and British retail customers to switch their business online, it would, at a stroke, boost its operating profits by a further €60m.
This combination of higher profits for the bookie and better odds for the punter means that the future of gambling is going to be online. Retail bookmaking is a legacy business that is headed straight for the museum.
So my advice to Paddy Power chief executive Patrick Kennedy is to stop spending money on his shops and move the whole business online pronto.
Betting shops to dissapear ?
That's a very good pointZapata wrote:And its so much easier to identify and ban successful punters.
I started my career working in ladbrokes betting shops, so I know the cat & mouse games that used to go on, where the professional punters travelled the country going to new shops, or spread their bets under certain amounts
To a point.
I know people who open up accounts' in friends' names when their own accounts have been closed.
I'd considered doing so myself, but was advised on a legal forum that it would be considered fraud in the eyes of the law, so I now use the shops.
Jeff
I know people who open up accounts' in friends' names when their own accounts have been closed.
I'd considered doing so myself, but was advised on a legal forum that it would be considered fraud in the eyes of the law, so I now use the shops.
Jeff
Zapata wrote:And its so much easier to identify and ban successful punters.
IMHO, people often bet in shops for the same reason they go out to the pub rather than drinking at home - because it gives them the opportunity to get out of the house and socialize.
So for that reason, I think bookie shops have a long-term future.
Jeff
So for that reason, I think bookie shops have a long-term future.
Jeff
LeTiss 4pm wrote:I think some companies see betting shops as brand awareness.
Yeah, sorry Jeff, but I was meaning to add something to the example of BetFred
When they started their shop expansion into the south, they were still going under the banner of Done Bookmakers. Then they had a rebrand as they tried to push their website, and all their shops changed to BetFred.
You just got the impression that their Southern shops were all about brand awareness and the long-term benefits of online betting, not necessarily about their shops
When they started their shop expansion into the south, they were still going under the banner of Done Bookmakers. Then they had a rebrand as they tried to push their website, and all their shops changed to BetFred.
You just got the impression that their Southern shops were all about brand awareness and the long-term benefits of online betting, not necessarily about their shops
As long as they're allowed to keep the roulette machines most will be okay - take them away though and suddenly a lot would be in trouble. I was talking to an independant bookie the other day who told me he made nearly 1k in the last week from the machines, but less than 100 from racing. The big bookies core businesses are looking good though, the money they take online still dwarfs what goes through betfair
Great Scott Jeff, either the bookies in Preston are completely different to those around here, or your old work skills are re-surfacing, unbidden,people often bet in shops for the same reason they go out to the pub rather than drinking at home - because it gives them the opportunity to get out of the house and socialize
cheers, P
Preston folk aren't the most cheerful or gregarious people in the world, but you do get punters chatting with each other and the staff...Predicton wrote: Great Scott Jeff, either the bookies in Preston are completely different to those around here
Yesterday, for example, I heard one chap telling his fellow punters that he would be putting his dog down if said dog befouled his carpet again! They insisted he didn't mean it, but he was quite adamant!
I'm not quite sure what this means!Predicton wrote:or your old work skills are re-surfacing, unbidden,
Jeff
