This story is sponsored by Paddy PowerPaddy Power boss Patrick Kennedy yesterday called 2012 “the year that mobile really began for us in gaming”, as the channel grew its share of the company’s online gaming revenues to 25% from just 6%.
The Irish online and retail bookmaker launched mobile bingo, mobile casino, the Roller smartphone and tablet-led casino brand in 2012, also bolstering its mobile games portfolio.
Total net revenue from mobile devices was up 185% to €129m, representing 32% of online revenue during 2012.
The bookie claimed it now had an approximate 27% share of the UK mobile sports betting market, “around double our share of the total online sports betting market”, according to Kennedy, who told analysts in the full-year earnings call that the 41% of sportsbook turnover derived from mobile last year put it “significantly ahead of our closest competitors” such as Ladbrokes (27%), William Hill (26%) and Betfair (13%).
“We do find that mobile has greater margins, so there’s a sort of mass-market effect around mobile. So the greater our mobile penetration, the better our margins”, added Kennedy.
He also told analysts it believed the scale of the Paddy Power online business would prove “critically important” in mitigating the effects of the forthcoming point-of-consumption tax in the UK, due to be introduced from December 2014. The company estimated this “would have increased our tax payable by €31m”, compared to €22m in 2011, had this been in place last year.
“We’ve done the work, as I’m sure you have as well, in looking at what happens to the EBIT margins - the bottom line - of a lot of players in the sector. And at 15%, if that’s the rate, the bottom line becomes very problematic for them, and [for] some relatively substantial high-profile names”.
You’re going to see operators potentially going to have to compromise their offer. I think that will present opportunity for the scale, better-invested operators,” said Kennedy.
The Paddy Power chief was speaking as the company unveiled a 27% rise in net revenues from its flagship online division, excluding Australia. While operating profit tumbled 2.1% to €72.7m in 2012, due to €20.5m of investment in new ventures - entry into the Italian market, its Cayetano mobile games division, Roller Casino and social betting game Betdash – earnings would have been up 23% with these start-up losses stripped out.
The company said it expected to reach break even point in Italy, which accounted for €15m of the losses last year, by 2014.
In Australia, revenues from its Sportsbet business were up 46% to €156.4m, with operating profit up 24% to €30.8m.
Article written by Stephen Carter
