James Moore: It's a gamble, but Corcoran needs to put that zing back

Welcome to the toughest job in gambling, Breon Corcoran. That might seem like a rather strange thing to say given yesterday's sprightly trading statement from Betfair, where Mr Corcoran will soon take over as chief executive.

After all, Betfair has dug out a winner in the smartphone, a device tailor-made for gambling however much some of the po-faced technology firms might wince. Smartphone gambling helped to charge up the company's numbers yesterday, as it did for Paddy Power (Mr Corcoran's previous employer) on Monday.

But the exchange was upbeat in general. Stephen Morana, the interim chief executive, has steadied a ship that looked to be wobbling. The shares have been showing some signs of life too, having risen by nearly 50 per cent from their nadir last August.

But they are still a long way from the £13 they were floated at, and it would take a courageous punter to back them to reach that level anytime soon. There are storm clouds on the horizon.

The first is regulation. Investec's gambling guru Paul Leyland notes that as much as 45 per cent of the exchange's core revenues come from unregulated jurisdictions.

Change is coming to a number of those countries, including Germany, Spain and Greece. The controversy that dogged Betfair in its early days – when the bookies cried foul against the City types who founded it and broke their monopoly by enabling punters to lay horses to lose like they do – is no longer an issue, at least in this country. But the company might need some smart lobbyists to plead its case on the Continent.

The other problem is the cost base. The aforementioned Paddy Power should generate revenues of about €280m (£234m) from its remote gaming operations by the end of its financial year, through the efforts of around 650 staff who used to be led by Mr Corcoran.

Betfair, by contrast, is set to bring in about £350m. To get that it employs 2,600 people. It isn't pleasant to be raising questions about anyone's job right now. But a company such as Betfair cannot escape the cold business logic of those numbers. Right now, Paddy Power looks a much more efficient operation. And its shares are a bargain compared to the lofty multiple Betfair enjoys.

Mr Corcoran's challenge is to re-establish some of the zing that made Betfair such an exciting proposition when it burst on to the scene, while at the same time addressing that cost base. If he can pull that off, he'll be one of the few chief executives who are worth their money.