Three of the biggest names in bookmaking admitted yesterday they have taken a bath at the hands of lucky punters.
Ireland's largest bookie, Paddy Power, paid out far more than expected on winners at the horse racing festival it sponsored at Cheltenham last week and at other recent meets, and expects profits this year to fall well shy of expectations.
Separately, Hilton Group - the owner of Ladbrokes' 2,100 British betting shops - told investors that two or three high-rolling telephone punters had taken it to the cleaners. And William Hill said results had gone against it in recent weeks, and trimmed its profits targets for this year. It expects to make between £230m and £240m, about £15 lower than earlier estimates.
Paddy and Ladbrokes cautioned that the retail betting market is tough, with the amount they won from customers falling sharply.
Traditional bookies have seen margins squeezed hard over the past couple of years by burgeoning online betting exchanges such as Betfair. Just a few big winners can force gaming groups to take the red pen to profits forecasts.
The news thumped shares in Paddy, which fell 22 per cent to €10.38. Hilton eased 3p to 336p, while William Hill - which recently swallowed Stanley Leisure's betting shops - dropped 21p to 511p.
The Dublin-based Paddy expects operating profits of €30m (£20.5m) this year, €5m less than City targets. Forecasts for next year were trimmed to €38m from €45m. Paddy also warned that win margins - the difference between stakes and payouts - are set to decline at the hands of stiffening competition in Ireland and its wider subsidy of tax-free betting for punters there.
Ross Ivers, the finance director at Paddy, said: "Our growth plans for the business remain intact. Bookmaking is by its nature an up-and-down business. When favourites win, we lose." He said turnover was growing strongly across the business, with online and phone betting doing well.
Ladbrokes caught a cold on the horses last month, when a string of favourites came in. Racing accounts for 65 per cent of the company's betting business. Its gross win - the amount Ladbrokes customers lose - plunged 58 per cent on phone bets after hefty wins by punters staking at least £10,000. The gross win was slightly lower in its high street betting shops, offsetting solid growth in its eGaming internet business.
David Michels, Hilton's chief executive, said: "Ladbrokes is performing well against a betting market that is having a slightly difficult month. I have no doubt it will turn." James Dawson, an analyst at Charles Stanley, said the performance of the betting and gaming divisions was lacklustre.
There was chink of light among gaming businesses yesterday. BetonSports, an Alternative Investment Market-listed internet gambling company, unveiled a strong trading update. The number of new customers has surged 37 per cent to 29,227 this year. They placed almost one-quarter more bets, with the poker rake well up on last time.Reuse content