One of the facts of gambling is that the longer you bet, the more likely you are to lose. No wonder then that the long-term performance of bookies highlights their strengths.
Consider William Hill, the UK’s biggest bookmaker. Since 2002, its shares have risen 70 per cent and if you had reinvested the dividends, the shares have returned an impressive 145 per cent.
William Hill is pencilled in for a full-year profit of around £270m, which would value it at around 10 times earnings. The yield stands at a respectable 3.8 per cent even though shares have climbed 48 per cent since the start of the year.
The shares of Paddy Power, the Irish bookie, have rocketed more than 900 per cent in 10 years and the total return is an even more impressive 1,170 per cent. However, it is Paddy Power’s embrace of technology that has seen it take a leading role in off-course betting.
The same can’t be said of Ladbrokes, which comes a distant third in returns to investors, who have received just 2.9 per cent in 10 years. This may be blamed on its poor digital offering.
The numbers show the only way to win is to own the bookie rather than be a punter.
David Kuo is director of advice website fool.co.uk