Ladbrokes profits fall as racing and football punters clean up

Ladbrokes posted a drop in first-half profits yesterday, as the bookmaker lost out to punters at Royal Ascot and Euro 2008 and high-spending customers moved to offshore betting operations.

However, Ladbrokes' managing director of remote betting and gaming, John O'Reilly, said that punters were not cutting back on betting at its 2,600 shops, emphasising the "resilience" of the business during an economic downturn.

Following a strong first four months of the year, Ladbrokes took a beating from punters across all channels in June, particularly when underdogs triumphed in the early stages of the Euro 2008 football championship and the legendary Irish trainer Aidan O'Brien's horses romped home at Royal Ascot.

Mr O'Reilly said: "Aidan O'Brien and the Ballydoyle [stable] factor had an impact on us. Punters know if they want to make some money they back Aidan in the top races."

He added that favourites won 18 out of 24 matches during the group stage of Euro 2008 football championship.

For the six months to 30 June, the bookmaker's pre-tax profit fell to £134m from £159m the year before. Ladbrokes increased its group gross wins, the difference between the amount bet and that paid out, by 6 per cent to £648.3m.

The Kaupthing analyst John Beaumont said: "For this year, they are still bubbling along reasonably well." Despite a poor fourth week of July, Ladbrokes grew group gross wins, excluding high-rollers, by 11 per cent overall and 6 per cent in UK retail between 1 July and 5 August.

For the first half of 2008, profits from high-rollers, which account for the bulk of its telephone betting sales, fell by one-third to £40m and the number of unique customers tumbled by 7,200 to 90,200.

Ladbrokes said: "The core telephone business remains difficult, particularly impacted by competition from businesses operating offshore and benefiting from favourable regulatory and tax regimes."

The amount staked in Ladbrokes' UK betting shops rose by 14.2 per cent to £6.2bn. The average spend is less than £10. Mr O'Reilly said: "Historically, we could never claim to be recession proof, but we are relatively resilient in a downturn. People are not giving up their love of betting."

For the first half ended 30 June, Ladbrokes' over the counter (OTC) gross wins grew by 0.9 per cent to £251.8m at its betting shops. But Mr Beaumont said: "I think the consumer will bet a little less next year than they are currently doing."

Profits rose sharply at Ladbrokes' businesses in Ireland and Belgium, but fell in Italy owing to start-up costs.

Ladbrokes' online gaming division posted flat profits of £26.2m for the half-year, compared with £26.3m last year, but revenues jumped by 19.4 per cent to £86.6m. Mr O'Reilly said that 30 per cent of its online sports book revenues now come from bets placed after the start of an event.