Paddy Power hit by a spate of adverse horse racing results

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Ireland\’s biggest bookmaker warned that profits for 2005 will fall short of expectations if it continues to be hit by winning favourites and \’structural changes\’ in its domestic market.

The company expects to post operating profit of about EUR 30m for the full year, around EUR 5m lower than analysts expected.

In a trading update, the company said the trend signalled for the first half of the year continued and in particular the gross win had been EUR 4m below expectations over the past three weeks.

Paddy Power has now reduced its expectations for gross win percentages in its retail betting shops and telephone betting operations by one point and half a point respectively. But it upped the forecast for its online betting division by half a point.

In aggregate these changes represent a net increase in non retail gross win percentages due to the greater level of turnover and growth in the online betting division in comparison to the telephone business.

The company predicted that the Irish Government budget in December could lead to nationwide tax free betting, which would drive turnover growth but also increase competitiveness in the Irish market.

The outcome of the court case between Irish bookmakers and the British Horseracing Board on pre-race data rights, would generate a year on year saving of EUR 2m in 2006.

In the wake of the warning, shares of Paddy Power tumbled over 22 per cent to EUR 10.38.